2011 International Conference on Alternative Energy in Developing Countries and Emerging Economies
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mechanisms are crucial and involved heavily in the
renewable energy technology development, from
research and development to commercialization and
full-scale deployment (see Fig.3. Roles of public and
private finance in the development of renewable
energy technology).
Fig. 3. Roles of public and private finance in the development of
renewable energy technology.
Typically, governments use public finance at a
margin to mobilize private finance activities and
build commercially sustainable markets for
renewable energy technologies. In Thailand, apart
from the feed-in tariffs programs, several public
finance mechanisms were created to help develop the
use of energy from renewable sources. Important
public finance programs are as the following:
Energy Conservation Promotion Fund (Escon).
The fund’s objectives are to invest in energy
conservation promotion including research, study,
development, demonstration, incentives (grants or
soft loan), capacity building and policy study. Small
levy of Baht 0.05 – 0.25 per liter is collected from
domestic sales of gasoline, diesel, fuel oil, and
kerosene. Currently, average annual revenue ranges
between Baht 2 and 2.5 billion ($60 - $75 million).
The fund is supervised and managed by Energy
Conservation Promotion Fund Committee – chaired
by Deputy Prime Minister [12].
Revolving Fund Program.
The program is a
public-private initiative where 8 commercial banks, 2
state-owned banks, and the Ministry of Energy
provide joint-loans to energy efficiency and
renewable energy related projects. The loan program
offers low interest rate, equal or lower than 4 percent
per annum, via participated banks. Loan tenure
covers 7 years with 1 year grace period with loan
amount up to Baht 50 million ($1.3 million) per a
project. From 2002 to 2008, the program supported
over 250 projects with total investment around $500
million, $150 million was from government’s
revolving fund. Energy savings of $120 million per
year was estimated as an outcome of these projects.
In 2009, the program secured additional $60 million
of budget to support potential projects. Going
forward, government hopes to reduce DEDE roles on
funding sources, moving to more technical
assistance. The fund should mobilize and boost up
more loans from commercial banks participating in
the programs. Furthermore, a portion of budget will
be spending on training banking professionals on
energy efficiency and renewable energy technologies
(Sinsukprasert, 2009).
Energy Service Companies (ESCO) Fund
Program
. The fund is co-invested by government and
private sector. Its services include equity investment,
venture capital, equipment leasing, carbon credit
trading, technical assistance, and credit guarantee
facility. In 2008, the fund was set up with an initial
budget of $15 million under the management of two
fund managers; Energy Conservation of Thailand
Foundation and Energy for Environment Foundation.
In 2009, promoting and marketing campaigns will be
implemented and the fund expects to provide services
to at least 20 projects, leverage at minimum of $50
million, and energy savings of $10 million. In the
long-term, the program expects to reach $100 – $200
million of fund and privatize to be an investment
company opening to private investors (Sinsukprasert,
2009).
Tax Incentives
. There are three types of tax
incentives for renewable energy investors.
a) Cost-based: investors can deduct 125
percent of energy efficiency investment
costs. From 2002 to 2008, 94 projects
were supported under this cost-based
program, resulting in energy savings of
$10 million per year. The leverage
energy efficiency investment and tax
reduction provided to investors reached
$17 million and $3.2 million,
respectively.
b) Performance-based: taxable income is
reduced based on actual energy savings.
From 2002 to 2008, 200 projects were
supported under this performance-based
program, resulting in energy savings of
$30 million per year. The leverage
energy efficiency investment and tax
reduction provided to investors reached
$52
million
and
$3
million,
respectively.
c) Thailand Board of Investment (BOI):
renewable energy companies are
entitled to import duty exemption on
machines and equipment. Moreover,
firms (located outside Bangkok) are
exempted from corporate income tax for
8 years after incorporation plus 50
