Thailand

TH-5:Energy Conservation Promotion Fund (ENCON Fund)

Policy Description

The Energy Conservation Fund (ENCON Fund) was established to provide financial support for the implementation of the ENCON Program (TH-2). It supports all the energy conservation related programs and activities, such as energy efficiency improvement, renewable and alternative energy development, R&D projects, human resources development, public education and campaigns.

There are three major financial programs to encourage energy efficiency under the ENCON Fund, namely tax incentives (TH-6), the ESCO Fund (TH-7) and the Energy Efficiency Revolving Fund (EERF, TH-8). The ENCON Fund provides capital to these three programs.

Description

The Energy Conservation Fund (ENCON Fund) was established to provide financial support for the implementation of the ENCON Program (TH-2). It supports all the energy conservation related programs and activities, such as energy efficiency improvement, renewable and alternative energy development, R&D projects, human resources development, public education and campaigns.

There are three major financial programs to encourage energy efficiency under the ENCON Fund, namely tax incentives (TH-6), the ESCO Fund (TH-7) and the Energy Efficiency Revolving Fund (EERF, TH-8). The ENCON Fund provides capital to these three programs.

For industry energy efficiency improvement activities in ENCON Program Phase 3, the ENCON Fund has a particular focus on [5]:

  • Providing financial subsidies to speed up energy efficiency improvement
  • Promote the energy services company (ESCO) business
  • Support measures for SME energy conservation

Sources of Funding

ENCON Fund (Section 24, ENCON Act) collects the revenue from a tax of 0.07 THB (0.002 USD) per litre on all petroleum products, with annually around 7 billion THB (200 million USD) of funds [4].

Governance

The ENCON Fund Committee manages the Fund, which consists of ministerial level personnel from various ministries and departments. The Ministry of Energy keeps the money and assets of the Fund and handles the procedures of fund disbursement as outlined in the ENCON Act.

Factories/buildings, energy efficiency equipment manufacturers or distributors under the scope of the ENCON Act (*1) can apply for grants or subsidies from the ENCON Fund for investment in and operations of energy conservation (Section 26, ENCON Act).  

The ENCON Fund Committee appoints sub-committees to assist with the tasks, such as screening and evaluating projects and proposals and other relevant matters prior to submission to the ENCON Fund Committee. Each sub-committee is entitled to deliberate and approve projects with budgets not exceeding the 10 million THB each (about 0.3 million USD). The sub-committee also evaluates the performance of the funded projects.

Policy Information Expand this section for information on the key features of the policy, such as its date of introduction, categorization, main objective(s) and linkages with other policies.

Policy Categorisation

Policy Instrument Type: Economic, Incentives & Subsidies

Position in the Pyramid

About Us

Participation: Voluntary

Period

Start Date: 1992

Policy Linkages

Supports Energy Conservation Promotion (ENCON) Act Effort Defining
Supports Thailand 20-Year Energy Efficiency Development Plan (2011 - 2030) (EEDP) Effort Defining
Complements Energy Conservation (ENCON) Program Effort Defining
Supported By Tax incentives Supporting Measure
Supported By ESCO Fund Supporting Measure
Supported By Energy Efficiency Revolving Fund (EERF) Supporting Measure

Agencies Responsible

National Energy Policy Office (NEPO)
Ministry of Energy: Department of Alternative Energy Development and Efficiency (DEDE)
Energy Conservation Foundation of Thailand (ECFT)

Primary Objective: Energy

Objective

­- To provide financial support to designated factories and buildings for investment in and operations of energy conservation programs. ­- To support other agencies that wish to undertake energy conservation, including activities on renewable energy projects, energy-related research and development, human resource development and training, and public awareness campaigns.

Target Group

Designated factories/buildings, manufacturers or distributors of energy-efficient machinery or equipment or materials contributing to energy conservation or other persons interested in energy conservation implementation.

Driver of energy consumption or emissions affected by policy: Total energy use/total emissions/relative efficiency/institutional capacity

Implementation Information Expand this section for information on targets, monitoring, verification and enforcement regimes, and implementation requirements and tools.

Coverage

Designated factories/buildings, manufacturers or distributors of energy-efficient machinery or equipment or materials contributing to energy conservation or other persons interested in energy conservation implementation.

Quantitative Target? no

Progress Monitored? yes

Verification Required? yes

Enforced? yes

Requirements on the Target Group

Support by Government

  • Funding support: the Fund will cover the cost of the preliminary audits as long as the entities are proved to have achieved sound energy efficiency improvement (*2).
  • Financial support for capacity building and training to:
    • Industrial plant owners for hiring energy managers
    • Engineers and architects on energy efficiency techniques
    • Energy managers in industry plants
  • Financial support to academic and R&D studies, including meetings/seminars
  • Funding to develop the technical guidelines on providing assistance to industrial plants for energy efficiency improvement

Implementation Toolbox

Implementation strategies and guidelines, criteria, conditions and priorities of the ENCON fund expenditures.

Complexity of Implementation

Government

The different sub-committees to manage three different sub-programs under ENCON programs make the fund complex

Target Group

There are several different parties involved in the Funds as there are several different specific purposes of the spending and supporting (e.g. loans, venture capital, tax & subsidiaries, etc).

Impacts, Costs & Benefits Expand this section to find information on policy effectiveness and efficiency.

Impact Quantitative Estimate Qualitative Estimate
Estimated effect on energy consumption or emissions ­For the existing designated factories, it is expected that about 3,832 million kWh of energy can be saved per year, equivalent to a saving of 7,664 million baht per year. ­Power demand will be reduced by about 547 MW, which will delay investment in power plant construction accounting to a value of about 24,615 million baht (0.8 billion US Dollars exchange rate Feb 2012) [3]
Estimated costs/benefits for industry Information not readily available
Estimated cost for government During the fiscal period 1995-1999 (phase 1 of the ENCON program), the Fund’s total expenditure was 19,286 million THB (0.6 billion US Dollars exchange rate as of February 2012) (*1) From the 2000-2004 (*2) (phase 2 of the ENCON program), the Fund’s total expenditure was 29,111 million THB (0.9 billion US Dollars exchange rate as of February 2012)

References & Footnotes

References

[1] http://www.eppo.go.th/encon/encon-fund00.html

[2] APEC, Compendium of Energy Efficiency Policies of APEC Economies-Thailand, 2010

[3] Prasert Sinsukprasert, Financing Energy Efficiency and Renewable Energy: Thailand’s ENCON Fund, Sep 2010 Available at: http://www.unece.org/energy/se/pp/eneff/Astana_EEForum_Sep2010/d1s4_3_Prasert_e.pdf

[4] The Energy Conservation Fund, ESCAP Virtual Conference, http://www.unescap.org/drpad/vc/conference/bg_th_14_ecf.htm

[5] Thierry Lefevre, CEERD, Opportunities for Sustainable Energy Technology and CDM Development in Thailand, presentation in SETatWork workshop

Footnotes

(*1) As defined by ENCON Act, Designated Factory, Designated Building, and Designate machinery or equipment. Particularly, the Designated Factory, as defined by “Royal Decree on Designated Factory” – it means the factory with installed capacity no less than 1 MW or 1175 KVA, and the an annual electricity consumption no less than 20 million MJ

(*2) Energy efficiencyimprovement will be reviewed for approval by the Fund committee, and the cost reimbursed criteria set by ENCON fund committee.