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N ational Energy Policy Office

“SPPs and the ENCON Fund of Thailand” by Mr. Viraphol Jirapraditkul Director, Energy Conservation and Renewable Energy Division National Energy Policy Office (NEPO) “ASEM Green IPPs Network- First Regional Workshop” 24-25 October 2002 Sofitel Silom Bangkok. N ational Energy Policy Office.

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N ational Energy Policy Office

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  1. “SPPs and the ENCON Fund of Thailand” by Mr. Viraphol Jirapraditkul Director, Energy Conservation and Renewable Energy Division National Energy Policy Office (NEPO) “ASEM Green IPPs Network- First Regional Workshop” 24-25 October 2002 Sofitel Silom Bangkok National Energy Policy Office

  2. MAIN DRIVING FACTORSPROMOTING RENEWABLE ENERGY • Energy Security • Self-dependency – Reduce energyimport • Reduce Emission Page 2

  3. Energy Security • Projection that: • fossil energy reserves will be decreasing • fossil energy prices will constantly increase if no new resources are developed Hence: • emphasis on diversification of energy supplies • promotion of REutilization and technology development Page 3

  4. Self-dependency – Reduce energyimport • Thailand -- heavily dependent on fossil fuels • Oil, gas, and coal -- 80% of the total primary energy demand in 2001 • speed up exploration and development of indigenous energy resources, including RE • major potential in Thailand: solar, wind, biogas, biomass Page 4

  5. Reduce Emission • Air pollution from fossil fuel combustion: the transport, electricity and industry sectors. • In 1999, about 67% of total SO2 emissions resulted from electricity generation. Improvement: • Installation of Flue Gas Desulfurization Units (FGD) at lignite-fired plants. • Increased use of natural gas. • Transportation sector - the improved specifications of diesel oil for vehicles. • Use of RE: solar energy in power generation/biofuel in the transportation sector. Page 5

  6. Energy Conservation Promotion Fund(ENCON Fund) - The Government Tool • Established in 1995 • Unique resource for supporting RE and ENCON projects in Thailand • Revenues -- from the premium rates imposed on petroleum products at 0.04 Baht/litre. • Currently, ~ Baht 13,000 million (US$ 300 million) in the ENCON Fund • Annual revenue is ~ Baht 1,000 million (US$ 23 million). Page 6

  7. The ENCON Fund supports projects on: • improvement of energy efficiency; • demonstration and dissemination of RE technologies; • R&D; • enhancing a market of RE technology equipment; • training and public relations. Page 7

  8. Major Means to Promote Use of RE • Financial Assistance for RE Projects • Soft Loan for RE Projects • Public Awareness Campaigns & RE Information Centers Page 8

  9. Financial Assistance for RE Projects ENCON Fund provides “Project Owners” with financial assistance or grants for: 1) preparation of a comprehensive project plan 2) project management 3) financial assistance for investments of “Project Participants” in RE technologies. • “Project Owners” must be government agencies/ state-enterprises/educational institutions/ non-profit organizations. • Private entities can join as “Project Participants” • Proposed projects must have EIRR > 9%. Page 9

  10. Soft Loan forRE Projects • One paramount barrier is financing mechanisms. • RE projects are often considered “not eligible” for financing by financial institutions. • “Soft Loan” – new channel, currently under consultation with financial institutions. • Appropriate criteria, procedures and interest rates will be established. Page 10

  11. Public Awareness Campaigns & • RE Information Centers PA Campaigns will focus on: • dissemination of progress and achievement of funded RE projects • R&D on RE technologies and applications in Thailand. • RE information centers: • to provide information and technical advice on renewable energy technologies • to create positive attitude towards the use of RE. Page 11

  12. Strategies to Increase RE Utilization • Thailand’s Strategic Plan for Energy Conservation during 2002-2011 has been developed, comprising4 main elements: • Energy Conservation • Renewable Energy Utilization • Human Resources Development • Public Awareness Campaigns. Page 12

  13. EightTechnologies are targeted in the Strategic Plan: Solar Wind Biogas Biomass Hydro Biofuel Geothermal Fuel cells. Targets in 10 years’ period: to increase use of RE by 9% from the current rate =a decrease of primary commercial energy consumption by 5,068ktoe/year. Page 13

  14. Promotional Schemes for SPPs in Thailand So far, 3 major programs have been undertaken: 1. Power Purchase Programs from Small Power Producers (SPPs) 2. Subsidy for Renewable Energy SPPs 3. Very Small Renewable Energy Power Producers (VSREPP) Page 14

  15. 1. Powers Purchase from SPPs -- “The SPP Program” Started in 1992 – 1st government policy instrument promoting RE use in the power sector. • As ofJuly 2002, 107 SPP project proposals have been submitted to EGAT. • 64 projects accepted, with a total proposed sale of 2,233 MW. • 60 projects signed PPA with EGAT • 50 SPPs now in operation, selling a total of 1,970 MW to EGAT. Of the 1,970 MW, 1,353 MW or 68.7%, use natural gas as fuel. Only 178 MW or 9% is generated by RE, wastes or residues. Page 15

  16. Table1 : Power Purchase from SPPs by Type of Fuel (as of July 2002) Page 16

  17. 2. Subsidy for Renewable Energy SPPs -- “the Subsidized SPP Program” • In May 2001 “the Subsidized SPP Program” was approved. • Baht 2,060 million (US$ 47 million) from the ENCON Fund was allocated for this project. • About 300 MW generated from RE is expected, as a pilot scale. • In October 2001, 43 proposals were received, with a total proposed sale of 775 MW. • 17 SPPs with a total sale of 313 MW have initially been selected. Page 17

  18. “The Subsidized SPP Program” (Cont’d) • An additional budget of Baht 1,000 million (US$ 23 million) was approved. • In May 2002, 14 SPPs selected, with a total proposed sale of 198 MW. • A total of 31 SPPs selected, with a total proposed capacity sale of 511 MW. • PENDING organization of a public hearing process. Page 18

  19. Table 2 : SPPs Selected for Subsidy by Type of Fuel (as of May 2002) Page 19

  20. 3. Very Small Renewable Energy Power Producers – “the VSREPP Program” On 14 May 2002 the regulations on power purchase from VSREPP was approved. • A VSREPP is defined as a generator • with own generating unit; • utilizing RE sources, agricultural and industrial wastes and residues, or by-product steam; • selling no more than 1 MW of electrical power to a distribution utility. Page 20

  21. “The VSREPP Program” (Cont’d) • Objective: to promote • participation of small generators in power generation; and • efficient use of domestic natural resources that are environmentally friendly. • VSREPP regulations: • allow for net metering arrangements • streamlined interconnection process to minimize VSREPP connecting costs • Targets: pig farms and food processing industries. Page 21

  22. Effectiveness of Existing Policies • Existing policies for promoting RE utilization are favorable. • Review will be made to determine power purchasing rates for RE SPPs, taking into account externality benefits. • Additional promotional mechanisms are being explored. • R&D activities, training programs, experience sharing and cooperation are essential. Page 22

  23. Conclusion • Thailand has well-targeted policies promoting utilization of RE resources & high-efficiency technologies for power generation. • ENCON Fund has been a unique resource facilitating the policy implementation. • Information dissemination on the benefits of RE applications is essential. • RE applications will play a significant role in Thailand’s energy sector during the next decade. Page 23

  24. Thank you Energy Conservation and Renewable Energy Division National Energy Policy Office Tel: 0 2612 1555 Ext. 332 www.nepo.go.th

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