Piloting the Way to a More Effective Energy Strategy: Thailand’s Simplified Subsidy and Finance Initiatives

Sirinthorn Vongsoasup and Prasert Sinsukprasert, Thailand Department of Energy, Development and Promotion
Peter du Pont and Thomas Hernoe, Danish Energy Management A/S

Keywords

Abstract

For the past five years, Thailand has been implementing its Energy Conservation Promotion Act, which requires large commercial and industrial end users to conduct energy audits, develop plans, and implement energy-efficiency projects. The Act is accompanied by a “carrot” in the form of the Energy Conservation Promotion Fund (ENCON Fund), which provides financial incentives to install energy-efficiency measures. Unfortunately, due to a number of factors – lack of interest in energy conservation, lack of capital due to the economic crisis of the late 1990s, and excessively bureaucratic procedures and paperwork -- implementation of the Act has progressed at a very slow rate, and inflows to the ENCON Fund far exceed subsidies allocated to energy-efficiency projects.

In order to reduce bureaucratic procedures, more effectively disburse the ENCON Fund, and expedite the implementation of energy-efficiency projects in large buildings and factories, Thailand is launching three large-scale pilot programs, which it will implement over the coming 18 months. One is a US$50 million revolving fund, which will be initiated in early 2002 and which will provide zero-interest funds to banks for lending at a low interest rate to commercial and industrial end users. The second and third programs are simplified subsidy schemes that will provide a 30% incentive for buildings and factories that implement
energy-efficiency projects. The schemes are based on the Standard Measures and Individual Projects program concepts, which have been successfully implemented in Denmark since the mid-1990s.

Implementation of these three pilot programs could provide the basis for the Thailand Department of Energy Development and Promotion to shift its focus from a primarily stepby- step approach focused on energy audits and reporting, to a more results-based approach that emphasizes simplified procedures, measurable results, and market-based project development.