Description: 

The Program contains both Investment and Advisory Services component to support the scale up of Energy Efficiency (EE)/Renewable Energy (RE)/Energy Service Company projects in Thailand’s large corporate, SME, commercial, residential and municipal sectors.

Background:

Thailand’s greenhouse gas (GHG) emissions have been steadily increasing. The program design aims to boost the banking and leasing sector’s involvement in EE/RE/ESCO financing and to promote low carbon technologies applications in different sectors in EE production lines, such as air conditioning related facilities of buildings, factories, motors etc. IFC submitted a separate program focusing on renewable energy projects, particularly on solar and wind sectors.

The annual average growth rate for final energy consumption over the last 25 years was 6 percent, and electricity consumption grew faster at 9 percent. Thailand’s economic output per unit of energy has declined by over 10 percent between 1996 and 2004. The driving forces for greater energy and carbon intensity are industrial development and increasing transport fuels demand.

Therefore, Thailand’s development policies have increasingly focused on GHG emission reductions and improved energy intensity. The Government recently announced the 15-year Alternative Energy Development Plan (AEDP) with a long term vision and strategic direction for reducing dependence on fossil fuels.

Objectives and Outputs:

The Program is expected to generate many environmental and economic benefits. The capacity of local banking and leasing sectors to finance EE/RE/ESCO will be built and the financing for energy service companies will be secured.

The prioritized activities will be clean energy advancement in line with the national renewable energy targets. The Specialized Financial Institutions (SFIs) will catalyze clean energy investments. Private commercial banks and Public utilities – the Electricity Generating Authority of Thailand (EGAT) and the Provincial Electricity Authority (PEA) will advance public investments in clean energy. A comprehensive GHG emissions reduction program under the Bangkok Metropolitan Authority will support urban transformation, including Bus Rapid Transit program.

The Program has great replication potential with a large spillover effect to other places through FIs. Target sectors need to be financed through new innovative financial mechanisms to implement energy efficient projects. The financial products for energy efficient and renewable energy equipment will help end users to find adequate financial instruments and to learn about finance availability among industries.

The implementation of EE/RE/ESCO projects will increase long-term operational sustainability, improve competitiveness, and bring financial benefits through lower costs and improved efficiencies. EE-related investments mainly include modernization and optimization of existing production systems, so it will not reduce jobs. This program will develop a new market in SMEs /residential sector and expand existing EE related markets in commercial sectors.

In Thailand, generally women’s labor participation is higher than neighboring countries Indonesia, Philippines etc. On average, it is estimated that 40-50% of new jobs would be occupied by women.

The main beneficiary is corporate sector because companies will be able to reduce their energy costs through the energy intensity reduction. The Energy Conservation Promotion Act in Thailand requests factories and building to conserve energy and to audit and analyze energy utilization. The number of targeted factories is estimated about 3,000.

This project summary is drawn from draft project proposals [such as the PAD, PID, SAR, and country investment plan] and may not contain the most up-to-date information.

Project Details
Project Proposal | Proposed Decision
Approved on October 5, 2010 (Approved Decision)
Approved amount(s):
USD 30.0 million