TH-8:Energy Efficiency Revolving Fund (EERF)

Policy Description

Thailand’s Energy Efficiency Revolving Fund (EERF) was established in 2003 and aimed to stimulate energy efficiency investment in large-scale energy consuming industrial sectors. The fund was launched with 2 billion THB, which was originally from the ENCON Fund.


Thailand’s Energy Efficiency Revolving Fund (EERF) was established in 2003 and aimed to stimulate energy efficiency investment in large-scale energy consuming industrial sectors. The fund was launched with 2 billion THB, which was originally from the ENCON Fund.

The EERF engaged the Thailand commercial banks to develop and streamline procedures for appraising and financing energy efficiency projects. It provides loans with 0% interest rate and 7-year final maturity to local commercial banks as an incentive to encourage the banks to lend to EE projects’ owners/developers and ESCO companies at a maximum interest rate of 4% (*1).  The government’s dedicated credits line lowers the banks risks, which makes the energy savings and financial paybacks “tangible” to the commercial banks. This partnership has helped unlock the EE financing bottleneck.

EERF’s contract with commercial banks

The DEDE execute a standard contract with each participating bank [1]. The provisions include:

  • the maximum amount loaned by the bank for any specific project,
  • the total amount loaned by the bank for all EE projects,
  • the interest rate charged by DEDE to the bank,
  • the maximum interest to be charged by the bank to borrowers,
  • terms for the loans,
  • repayments of EERF funds by the bank upon receipt of loan repayments from the borrowers,
  • treatment of default by the borrower of repayment of the bank loan, and
  • treatment of default by the bank in repayment of the EERF funds.

The Governance of the EERF

The participating banks take the responsibility to manage and provide the loans and report to the government authority (the Department of Alternative Energy Development and Efficiency, DEDE). DEDE focuses on:

  • Ensuring that all projects achieved real energy-saving, instead of simply equipment replacement
  • Monitoring the banks’ performance to ensure they meet the targets in terms of lending and repayment
  • Evaluating the program to measure energy savings

DEDE uses a range of KPIs to monitor the EERF performance [1]:

  • Development of the project pipeline (number of inquiries received by DEDE and how inquirers heard about the fund);
  • number of days taken by DEDE to approve projects for loan applications;
  • estimated and actual energy savings per project;
  • performance of each participating bank;
  • Number of loans approved; and total value of loans approved.

Major steps for applying for the loan under EERF

The major steps of applying for the bank loans include [3, page 57]:

  • The banks identify the eligible EE projects (*2) for a loan
  • the banks conducts the financial analysis of the project
  • DEDE assessment – i.e. does the project meet certain specified criteria and conditions such as whether proposed energy-saving measures are technically feasible.
  • Bank approval of the loan
  • Project implementation
  • Loan repayment

Phase I of the EERF was launched in 2003 as a three-year programme and has been renewed for two additional three-year terms. The funds were allocated across the three phases, as follows: in Phase I: about THB 1.5 billion, in Phase II: about THB 1.5 billion, and in Phase III: about THB 2.27 billion (including THB 0.77 million for renewable energy). For a longer plan of the Fund, DEDE will likely reduce the funding sources and will engage more banks for co-financing projects, but will provide more technical assistance to the banking officers on EE technical knowledge.

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


Start Date: 2003

End Date: 2011

Policy Linkages

Supports Energy Conservation Promotion (ENCON) Act Effort Defining
Supports Energy Conservation (ENCON) Program Effort Defining
Supported By Energy Conservation Promotion Fund (ENCON Fund) Supporting Measure
Complements Tax incentives Supporting Measure
Complements ESCO Fund Supporting Measure

Agencies Responsible

Ministry of Energy: Department of Alternative Energy Development and Efficiency (DEDE)

Primary Objective: Energy


­- Simulate and leverage commercial investment for EE improvement ­- Familiarize commercial banks with EE, RE lending market and opportunities ­- Reduce oil imports and power demand

Target Group

Industry and buildings, industrial and commercial facility owners, ESCOs, and energy efficiency and renewable energy project developers.

Driver of energy consumption or emissions affected by policy: Total energy use / Specific energy consumption / Relative efficiency / Reduction of demand during the peak.

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


Industry and buildings - industrial and commercial facility owners, ESCOs, and project developers.

Quantitative Target? no

Progress Monitored? yes

Verification Required? no

Enforced? no

Sanctions: N.A.

Requirements on the Target Group

In order to receive funding the applicant needs to:

  • Submit to the banks the energy audit of the facility executed by an ESCO or other energy services provider
  • Hand in a feasibility study of the technical feasibility, estimation of the potential energy and cost savings
  • Determine the financing needs and loan repayment requirement by using EERF scheme
  • Submit the loan application to EEFR’s one participating bank
  • After the project is implemented, the borrower repays the loan principal and interest to the bank, and submits the reports to DEDE on the actual energy savings of the project.

Support by Government


  • ensures that the projects are genuinely energy-saving projects, not simply equipment replacement
  • monitors the performance of the banks to ensure that they meet their targets in terms of projects, lending and repayment
  • evaluates the program to measure energy savings
  • provides guidance and assist the banks to get a better understanding of EERF in the early stage of EERF

Implementation Toolbox

ESCO companies provide energy audit, technical feasibility and other services to identify the opportunity for EERF.

Complexity of Implementation


Government simplify the evaluations, appraisals and loan processing. In exchange, the banks take the responsibility for evaluating the loan applications before they reaches DEDE; and DEDE and banks jointly together develop the project pipeline, publicity and promotion.

Target Group

Clear application process and the necessary assistance from ESCOs and energy service providers.

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 By April 2010, the total number of projects financed by EERF was 335 EE projects and 112 renewable energy projects. The total investment in these projects was THB 12.5 billion, and the estimated annual energy cost savings were THB 4.2 billion, providing an average payback of about three years [1]. ­Not available.
Estimated costs/benefits for industry ­Not available.
Estimated cost for government ­Not available.

References & Footnotes


[1] IEA, Joint-Public-Private Approaches for Energy Efficiency Finance, 2011 (a.o. p.56, p.58)

[2] APEC, 2010, Peer Review of Energy Efficiency in Thailand, Report for the APEC Energy Working Group. Available at:

[3] Department of Alternative Energy Development and Efficiency, Ministry of Energy, Thailand Financing Programs for EE and RE: Revolving Fund and ESCO Fund, (Presentation by Dr. Prasert Sinsukprasert, Director of Energy Regulation Division), 2009


(*1) The maximum loan size is THB 50 million (USD 1.5 million).

(*2) The eligible energy efficiency measures are defined by ENCON Act: improvement in combustion efficiency of fuels; prevention of energy loss; recycling of energy wastes; substitution of one type of energy by another; more efficient use of electricity through improvements in power factors, reduction of maximum power demand during peak demand, use of appropriate equipment and other approaches; and use of EE machinery or equipment as well as use of operation control systems and materials that contribute to energy conservation.