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Energy Efficiency
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17-11-2016 | Original Article

Lessons learned from studying public initiatives to support energy efficiency finance in Thailand from 1992 to 2014

Authors: Verena Streitferdt, Surapong Chirarattananon, Peter Du Pont

Published in: Energy Efficiency | Issue 4/2017

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Abstract

Despite the huge technical and market potential for cost-effective energy efficiency investments in Southeast Asian markets, only a small fraction of this potential has been realised. Given that the major share of global future energy demand, and associated greenhouse gas emissions, will come from emerging economies, it is important to understand the barriers to mainstreaming energy efficiency into the financial sector. This paper focuses on public initiatives that support one of the main barriers: access to capital. The researchers chose Thailand as a case study because of the range of energy efficiency finance programmes that have been designed and implemented since the early 1990s. Interviews with 21 experts from government, the private sector and academia provided the core data for this research. The analysis employed a multi-level perspective and focused on the historical evolution of public support of energy efficiency finance in the country. We identified three distinct phases of public policy development over the past two decades. Despite an impressive variety of ambitious and creative programmes, the initiatives have not yet succeeded in integrating energy efficiency into the financial sector in a meaningful way. Some of the key lessons found are that (a) it is better to treat energy efficiency and renewable energy in separate financing initiatives, (b) governments find it challenging to design effective mechanisms to de-risk financial investments, and (c) international organisations play an important role in testing and facilitating the introduction of new financing approaches and mechanisms. In emerging economies, cost-effective implementation of energy efficiency measures is a promising alternative that can reduce the need for investment in large-scale power generation capacity. The researchers hope that this paper will contribute to more effective design of programmes to incentivise energy efficiency financing in Thailand and in other economies in Southeast Asia.
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Footnotes
1
The fund was established by legislation in 1992, which converted a petroleum levy, which had previously been used to stabilise the price of gasoline, for use as a dedicated fund for energy conservation research and programs.
 
2
DEDP was moved to the new Ministry of Energy in 2003 and renamed the Department of Alternative Energy Development and Efficiency (DEDE).
 
3
Full subsidies were provided from the ENCON Fund for “preliminary” audits, and partial subsidies were provided for “detailed” audits.
 
4
The Thai government understands energy conservation to encompass renewable energy projects, as it reduces the amount of fossil energy needed.
 
5
The World Bank provided $9.5 million of technical assistance funding to the DSM effort through the Global Environment Facility (GEF) and US$ 6 million from Australia, and the Japan’s Overseas Economic Corporation Fund (OECF) pledged $25 million of concessional loans for the DSM initiative. Subsequently, throughout most of the 1990s, the German government provided technical assistance to the Thai government through a series of in-house advisors in the Department of Energy Development and Promotion (DEDP) (Sing & Mulholland 2000).
 
6
The mechanism, called the Ft, included some different cost elements, one of which was for DSM programs. The DSM component was a tiny share of the Ft.
 
7
An indication of the importance of ESCOs in Thailand is that the first international ESCO Conference in Asia, the Asia ESCO Conference, was held in Thailand in October 2005, with support from the Japan Association of Energy Service Companies (JAESCO) and in cooperation with the Thailand Department of Alternative Energy Development and Efficiency (DEDE).
 
8
Energy intensity has been defined as final energy consumption divided by the Thai GDP (Ministry of Energy of Thailand 2011).
 
9
In June 2015, Kasikorn Bank signed an agreement with AFD, which provided THB3 billion (€77 million) co-finance to the ‘Green Credit for Green Building Programme’, which runs over 3 years (Kasikorn Bank 2015).
 
10
Energy Conservation Foundation of Thailand data for the first two faces were provided by one of the interviewees.
 
11
Conversation with representative from the Energy Conservation Centre for Thailand in August 2015.
 
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Metadata
Title
Lessons learned from studying public initiatives to support energy efficiency finance in Thailand from 1992 to 2014
Authors
Verena Streitferdt
Surapong Chirarattananon
Peter Du Pont
Publication date
17-11-2016
Publisher
Springer Netherlands
Published in
Energy Efficiency / Issue 4/2017
Print ISSN: 1570-646X
Electronic ISSN: 1570-6478
DOI
https://doi.org/10.1007/s12053-016-9492-1

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