Financial support programmes for Energy Efficiency in Thailand.

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1 Financial support programmes for Energy Efficiency in Thailand

2 Opportunities for Project Financing for Energy Efficiency Financial support from Government Revolving Fund Programme ESCO Fund Programme Tax Privileges Grant support Programme DSM Bidding Fund

3 Revolving Fund Program Description Low interest loan for Energy Efficiency via financial institutes Less than 4% interest Loan period of 7 years with one year grace period Up to 50 million baht (1.3 milion USD) Results Support over 240 EE/RE projects Total investment around 500 million USD of 150 million USD of Government s Revolving Fund Energy savings of 120 million USD per year. Future Plan Secured additional 60 million USD of budget Long term Plan Reduce DEDE roles on Funding Sources providing more technical assistance More co-financing from the banks Training banking officers on EE technical knowledge

4 ESCO Fund Program Description Co-investment fund with private sector/investors Equity Investment Venture Capital Equipment Leasing Carbon Credit Trading Technical Assistance Credit Guarantee Facility Results 2008 Set up the Fund (initial budget of 15 million USD Selected 2 Fund Managers - Energy Conservation of Thailand Foundation - Energy for Environment Foundation Approved 17 projects for the total investment of 125 million USD. The investment from ESCO Fund is around 8.8 million USD with generating energy saving around 14 million USD /year Future Plan Promoting and Marketing the Fund Support at least 20 projects Leverage minimum of 50 million USD Energy Savings of 10 million USD Long term Plan Increase the Fund to 100 to 200 million USD Corporatise the program to be Investment Company Open for private investors

5 Tax Privileges Description Thailand s Board of Investment (BOI) s tax incentives for energy efficiency (& renewable energy) projects: Results up to Year 2012 Corporate income tax holidays up to 8 yrs. Additional 50% reductions of corporate income tax for 5 yrs Import duty reductions or exemptions on equipment and raw materials Double deduction of public utility costs Deductions for infrastructure construction/installation costs Year 2013 onwards Corporate income tax holidays up to 8 yrs. Import duty reductions or exemptions on equipment and raw materials Double deduction of public utility costs Deductions for infrastructure construction/installation costs

6 Grant support programme Description Results up to Year 2012 Development and Efficiency (DEDE) had supported the investment on NEW equipment & technology that have the high energy efficiency and can reduce the energy consumption. (support the Demonstration & Dissemination) The Financial Support is up to 50% of the Investment. (up to the supporting policy each year) but limited to 7,000,000 Baht (1 EUR = 40 Baht) In 2010, KST had been supported 7,000,000 baht on the regenerative burner investment. Regenerative burner is heat recovery technique which can reduce heat loss from exhaust gas. By employing regenerative burner in reheating furnace one can reduce over 20% of fuel consumption, equally approximately 37.2 liter/ton.

7 DSM Bidding Proposal Provide financial support to encourage business operators to invest in higher energy efficiency machines/equipment. Subsidy is based on actual units of energy saving achieved in a year. (subsidy = annual energy saving x subsidy rate (as bid by each company)) Max. subsidy rate for each energy type is shown below: Energy Type Electricity Heat from liquid and gas fuels e.g. fuel oil, LPG, natural gas, etc. Heat from solid fuels e.g. coal, wood, rice husks, sawdust, bagasse and other agricultural waste Maximum Subsidy Rate 1 Baht/kWh 75 Baht/MMBtu 15 Baht/MMBtu Company requesting lower weighted subsidy rate will be subsidized first, i.e. bidding mechanism. Therefore, this program will result in higher energy saving to subsidy ratio.

8 Opportunities for Project Financing for Energy Efficiency Financial Institutions Small and Medium Enterprise Bank (SME Bank) Source: SME Bank Kasikorn Bank (K-Bank) Source:

9 Opportunities for Project Financing for Energy Efficiency SME Bank Governmental Policy on Loan Package Loan Target Loan Productivity Improvement Loan

10 SME Bank Governmental Policy on Loan Package Benefits from governmental loan: Project approval by the cabinet Interest/Income Compensation: for future damage Support on low-investment funding source Consideration on capital increase Separation from normal KPI Support on promoting project Financial Support on seminar and training Financial Support on project processing and management Financial Support on Insurance

11 SME Bank Loan Target Tourism Business: Hotels, Restaurants, Souvenir etc. Petro Station Mill Logistics Franchise Gems and Jewelry Poultry

12 SME Bank Productivity Improvement Loan Total amount of 20,000 Million THB (500 Million EUR) Amount of loan for each enterprise: not over 5 Million THB Objective To support Thai SMEs on production, purchasing and improvement of machines Machine Improvement Loan To support Thai SMEs on investment, expansion or improvement of their personnel/labour, Logistic Layout and Stock/Refinance Process Improvement Loan

13 SME Bank Productivity Improvement Loan Type: Term Loan not over 7 years Machine Improvement Loan Term Loan not over 5 years Process Improvement Loan Interest Rate: Year 1 2: MLR -3% per year From year 3 onwards: MLR per year 1 year of grace period Insurance: Clean Loan with some compensation on the tax from the government

14 Opportunities for Project Financing for Energy Efficiency K-Bank Energy Saving Guarantee Loan Energy Saving Loan

15 K-Bank Energy Saving Guarantee Loan Leasing Loan Loan for Machine and Equipment Purchasing Long-term Loan

16 K-Bank: Energy Saving Guarantee Loan Objectives: To support investment on Energy Efficiency Project through Energy Saving Company - ESCO To guarantee Energy saving and efficiency as a result from the investment Advantages: Up to 100% investment loan Self-financing Project Reduction of operation cost whilst increase competitive edge in the long run Corporate Social Responsibility

17 K-Bank: Energy Saving Guarantee Loan Terms and Condition: Being an enterprise with sales volume from 50 Million THB (1.25 Million EUR) Being Energy Efficiency oriented project with energy management guarantee from ESCO Project s ESCO Company must be qualified by K-Bank

18 K-Bank Energy Saving Loan Objectives: To promote Energy Efficiency and Renewable Energy in factories, building and ESCO companies. Advantage: Long-term Loan with interest rate secured at 4.0% per year

19 K-Bank: Energy Saving Loan Terms and Conditions: The loan is for Energy Efficiency or Renewable Energy Project under Energy Conservation Promotion Act, BE 2535 (A.D. 1992) Not over 50 Million Baht per project (1.25 Million EUR) Not over 7 years with no more than 12 month of grace period Not being under implementation or for refinance

20 K-Bank KASIKORNBANK, Clinton Foundation, and three major companies namely Philips Electronics (Thailand), Trane (Thailand) and Azbil (Thailand) are fully driving energy-saving business undertakings placing emphasis on advisory service as well as complete energy saving credit to support long-term cost and emission reduction. The Bank targets to extend 3 billion Baht of credits for energy savings. Source:

21 Opportunities for Project Financing for Energy Efficiency VIELEN DANK THANK YOU KOP KHUN KHRAB See you in Thailand Dipl.-Ing. Torsten Fritsche GIZ

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