Government Fund for ESCO Business (ESCO Fund)

Transcription

1 Government Fund for ESCO Business (ESCO Fund) Dr. Watcharee Jornjumrus Technical Advisor Energy for Environment Foundation Workshop on APEC Cooperative Energy Efficiency Design for Sustainability (CEEDS) Phase 4 Promotion of Energy Service Company: ESCO At Queen Sirikit National Convention Center (QSNCC) 22 nd January

2 Presentation Outline About E for E ESCO Fund and its facilities Process to assess, approve and monitor projects under ESCO Fund Projects as approved for investing under E for E s management Predominant Energy Efficiency Measures 2

3 About E for E An independent not for for profit organization, founded in 2000 Missions: To support both government and private sectors in activities relating to renewable energy as well as energy and environment conservation To promote heat and power generation from renewable energy and other alternatives by providing policy recommendations to the government and providing information/financial i i l/ /technical assistance to project developers and financial institutions To disseminate information, knowledge and innovation and demonstrate technologies relating to renewable energy and energy conservation To organize the projects awarded from ENCON Fund E for E s services : Technical Advisory, Financial Advisory, Information & Outreach Service and Policy Study Fund manager of ESCO fund, hired and appointed from DEDE 3

4 E for E s Services Technical Cell Financing Cell Information & Outreach Cell Policy Cell Providing technical advisory services such as technical feasibility studies of the RE power plants and EE projects, technical trouble shooting services and any other services in the course of the project development. Providing financial advisory services including sources of fund, seeking projects for the keen investors, the financial feasibility studies, and preparing financial proposals of RE and EE projects. Providing right information on RE, EE, and general energy issues to the specific target groups and general public, providing energy issues relating articles for media and the website and also organizing community relations program for energyproject development. Providing advisory services about policies and regulations concerning the RE and EE projects and the revision ii of rules and policy framework to the policy makers. RE and EE Project Consultancy Service Knowledge Service RE and EE Policy Development 4

5 Final Energy Consumption by Economic Sector FinalEnergy Consumption by Sector (2011) Commercial 8% Transportation 36% Residential 15% Agriculture 5% Industry 36% Ref : Energy Statistics Information, DEDE Industry Sub Sector Food & Beverages Textiles Wood & Furniture Paper Chemical Non Metallic Basic Metal Fabricated Metal others (Unclassified) Economic Sector Energy Consumption (ktoe) Growth (%) 1. Agriculture 3,499 3, Industry 25,571 25, Residential 10,963 10, Commercial 5,620 5, Transportation 24,594 25, Total 70,247 70,

6 Policy instruments to promote energy efficiency and renewable energy Oil Shortage Prevention and Alleviation Act Energy Conservation Act 1992 Industrial Product Act Electricity Generating Authority Act (amendment 1992) Energy Industry Act 2008 Oil Fund Energy Conservation Fund Price incentive for biofuels Soft loans DSM bidding ESCO venture capital fund Investment subsidy Technical assistance Building codes Labelling for buildings Standards for appliances Labelling Utility DSM program SPP/VSPP regulation Adder to normal tariff Permits for CHP/DG/RE TGO CDM, carbon trading 6

7 About ESCO Fund Established by Department of Alternative Energy Development and Efficiency i (DEDE) in 2008, under the financial i support from Energy Conservation Promotion Fund (ENCON Fund) Aimto encourage investment in energy efficiency and renewable energy projects in Thailand Managed by TWO fund managers; Energy for Environment Foundation (E for E) Energy Conservation Foundation of Thailand (ECFT) Period ; Phase 1 : October 2008 September 2010 Phase 2 : October 2010 December 2012 Size of Fund : 500 Millions baht for each phase Fund amount in responsibility of E for E 250 million baht in phase million baht bhin phase 2 7

8 Supporting Facilities of ESCO Fund Energy Conservation Promotion Fund (ENCON Fund) 500 Million Baht ESCO Fund Investment Committee Fund Managers: 1. E for E (300 Million Baht) 1. ECFT (200 Million Baht) ESCO Venture Capital Equity Investment Equipment Leasing Carbon Credit Facility Technical Assistance Credit Guarantee Facility 8

9 Equity Investment Co-Investment ESCO Fund Owner / ESCO RE/EE Project Subcontract Dividend/ Return Sub contractor t -Equipment -Installation / Maintenance Investment in equity part of Energy Efficiency and Renewable Energy Project Size of investment: 10%-50% of total equity or project cost but limited to 50 MB per project Not as a Majority Shareholder Return : dividend and capital gain Investment period: 5 7 years or until owner ready to buy share back, or find a new strategic partner, or list in SET/MAI, but limited to 7 years Exit Price: Put Option and Call Option or Market price BOD-seat is needed 9

10 ESCO Fund ESCO Venture Capital Co-investment Dividend /Return) ESCO Co.,Ltd (Energy Service Company) Energy Service Energy Performance Contract RE/EE Project Venture with Energy Service Company (ESCO): 10% 30% of registered capital but limited to 50 MB per project Not as a Majority Shareholder Return: annual dividend in the proportion of investment Investment period: 5 7 years or until owner ready to shared buy back or find a new strategic partner, or list in SET/MAI but limited i to 5 years Exit Price: Put Option and Call Option or Market price BOD-seat is needed Remark: Because of Registered Capital of Thai ESCO Company is normally low, so this service is not interesting to ESCO 10

11 Leasing Contract Equipment Leasing ESCO Fund RE/EE Project Equipment purchase agreement Principal and Interest Repayment Producer/ Supplier/ ESCO Long Term Leasing Service in Purchasing equipment for energy efficiency and renewable energy Providing 100% of equipment cost Repayment within 5 years Interest rate at 4% per annum Equipment ownership belongs to EfE till complete repayment Energy Performance Contract Equipment purchase agreement Principal and Interest Repayment ESCO Fund ESCO Co.,Ltd Leasing Contract (Energy Service Company) Share Saving RE/EE Project Leasing Contract 11

12 Carbon Credit Facility E for E facilitate project owners in developing CDM and accessing to CER buyer at lower service rate Project Owner ERPA / CDM Revenues LoI CER Buyer E for E (ESCO Fund) Remark: E for E helped develop a Project Idea Note (PIN) and find CER buyer for Solar Power (Korat 1) Co., Ltd., one of ESCO Fund s co-invested projects. 12

13 Credit Guarantee Facility ESCO Fund (by E for E) guarantees commercial bank for project loans, limited to 10 million baht Service charge at 1.75% pa. of guarantee amount Loan guarantee term not more than 5 years Credit Guarantee Contract ESCO Fund Paid Fee Credit Guarantee Contract RE/EE Project Bank Credit Facility Agreement Remark: - Same principle as the Small Business Credit Guarantee Corporation (SBCG) - However, according to the risk management principle, EFE allows project developers to choose one between Equity Investment and Credit Guarantee Facility and all developers decide to choose Equity Investment. 13

14 Pi Primary Conditions for considering i the Projects Conditions for Equity Investment Conditions for Equipment Leasing 1. Security of fuel supply in long term 1. Reliability of Technology and Equipment 2. Technological Reliability 3. Good financial profile of investors and reasonable return of project 4. Obtaining Government License /Permit for power plant/ Community Acceptance or related license according to the regulation 5. Requirement Documents - Feasibility bl Study Report which h including Project Cost, Technology usage, Financial Structure, Return of Project and Fuel Supply Management - Financial Statement for the last three year of Shareholdersh - Loan/ Credit Facility Agreement or Term Sheet from bank - Environment and Safety Assessment report or Environment related report - Community Acceptance Report or reliable Community Acceptance Plan 2. Guarantee saving and Equipment Performance Guarantee Contract 3. Reliability of entrepreneurs/company financial statement 4. Personal Guarantee/ Bank Guarantee 5. Requirement Documents - Feasibility Study Report which including Project Cost, Saving Calculation Method, Payback Period, Project s Return, How the equipment works, Specification of Equipment, M&V Plan - Copy of electricity bill for the last three year of Company - Guarantee Saving Agreement 14

15 Approval Process ProjectApproval Process ENTREPRENEURS / ESCO / INVESTOR Financial Instruments/services EQUITY INVESTMENT (1) EFE s Board of Director days (2) DEDE Subcommittee Propose the Project (Every 3 Month) Submit an Application ESCO VENTURE CAPITAL EQUIPMENT LEASING CARBON CREDIT FACILITY days (3) Investment Committee Approval/ SHA preparation CREDIT GUARANTEE FACILITY TECHNICAL ASSISTANT Submit Shareholders Agreement/Contract Drawdown Process ESCO Fund Budgeting From ENCON Fund Signed contract ENTREPRENEURS / ESCO / INVESTOR Investment contribution 500 Million Baht Drawdown (45 60 days) Barrier : Approval process is not flexible and takes long time 15

16 Project as Approved by Investment Committee: Phase I Projects under ESCO Fund (I) approval 15 Projects Energy Efficiency 8 Projects Chiller Solar Thermal Voltage Regulator 2 Projects SHAW Method of Air Conditioning Process High Efficiency Motor Renewable Energy 7 Projects Biomass Power Plant Steam Turbine 7.5 MW (Wood Chip) Biomass Power Plant Co-generation 5.3 MW (Para Wood Chip) Solar Farm 6.1 MW x 3 Projects 0.9 WM x 1 Project Variable Speed Drives 2 Projects Biogas (30 kw) (Leasing Gas Engine) 16

17 Project as Approved by Investment Committee: Phase II Projects under ESCO Fund (II) approval 40 Projects (300 Million Baht) Energy Efficiency 32 Projects - Variable Speed Drives (5 Projects) - LED/VSD/T5/Evaporative Cooling System (1 Project) - LED/Heater/T5/Voltage Regulator/ Evaporative Cooling System (1 Project) - LED (7 Projects) - LED, Voltage Regulator (1 Project) - Demand management (Fluoresave) (2 Projects) - Voltage Regulator (6 Projects) - Chiller/Voltage Regulator/LED (1 Project) - Voltage Regulator/Variable Speed Drives (1 Project) - Chiller (2 Projects) - Chiller/LED (1 Project) - Chiller/High Efficiency Motor/Voltage Regulator/ Variable Speed Drives (2 Projects) - Voltage Regulator /High Efficiency Motor (2 Projects) - High Efficiency Motor (1 Project) Renewable Energy 8 Projects Biomass Power Plant Steam Turbine ( 1 Projects ) Biomass Power Plant Gasification ( 2 Projects ) Biogas ( 3 Projects) Micro Hydro Power ( 1 Projects) Biomass + Biogas (1 Projects) Note: Project Status at December

18 Guidelines for Energy Efficiency Improvement Energy Efficiency Improvement for Manufacturing Energy Efficiency Improvement for Building Minimize heat loss Fuel Switching Automated Building and HVAC Control Power Factor Correction High Efficiency Lighting (LEDs, T5 ) Upgrading to High Efficiency equipment Automated Process Control Combustion and Burner Upgrades/ Cogeneration Air to Air Heat Exchanger Heat Recovery Equipment Upgrading to High Efficiency equipment Using building material for energy conservation Reduction of solar heat gain through the Building Insulation of Pipes and Surfaces

19 Predominant Energy Efficiency Measures underesco Fund Lighting /LED ( 2 to 5 year simple payback) Life time for LED ~ 30,000 50,000 hrs. where as Fluorescent ~10,000 15,000 hrs., incandescent bulbs ~ 1,000 to 2,000 hrs. Payback depends on the operating hour of lighting system Operating hours > 12 hrs. fast payback Reduce maintenance/replacement costs (due to short life time of exiting lighting g system ) rather than energy savings. Reduce cooling load (low heat loss compare with halogen lamp) Target of this measures should be Hotel & factory with long operating hr. (>12 hrs.) Under ESCO mechanism, energy efficiency i, energy saving and quality of equipment can be ensured with Energy Performance Contract (EPC) LEDs are currently more expensive compare other lighting technology but the price is expected to decrease due to increasing of demand and some factories starts producing LEDin Thailand High Efficiency Motor (3 to 5 year simple payback) Usually payback when a motor is running for long period at high load or at the end of motor life Important to size motor to actual load profile, to improve efficiency Target of this measures should be Frozen food & ice factory ( assume that the exiting motor more than 10 years) Under ESCO mechanism, energy efficiency, energy saving and quality of equipment can be ensured with Energy Performance Contract (EPC) ** Simple paybacks = total implement cost / annual savings

20 Predominant Energy Efficiency Measures underesco Fund VSDs (2 to 5 year simple payback) Variable speed drives (VSDs) Applied to motors, pumps p and fans Can be control by 2 methods (1) reduce &fix frequency of motor (suitable for constant load) (2) use sensor monitoring system and controller to adjusts the frequency and speed of motor (suitable for unreliable load such as Shopping Mall & Hotel) Can save at least 40 % in power consumption, some project under ESCO Fund with share saving guarantee can be save up to 70% in power consumption Shopping Mall & Hotel should be the target of this measures Under ESCO mechanism, energy efficiency, energy saving and quality of equipment can be ensured with Energy Performance Contract (EPC) High Efficiency Chillers (5 to 10 year simple payback) Usually payback when the exiting chiller more than 15 years New chiller model are 30 40% more efficient than existing chiller Other system can be improve by install VSD on CDP, CHP & CT FAN Reduce maintenance cost Chiller Replacement may achieve both reducing CFC and energy efficiency objectives Old building & Shopping Mall & Hotel (> 15 yrs) should be target of this measures Under ESCO mechanism, energy efficiency, energy saving and quality of equipment can be ensured with Energy Performance Contract (EPC) ** Simple paybacks = total implement cost / annual savings

21 Predominant te Energy Efficiency i Measures under ESCO Fund Solar Collector Use solar energy for producing the hot water Possible to combine with waste heat from condensing unit of air conditioner/boiler. Customer can apply for the granting financial support from DEDE together with ESCO Fund Target customer can be hotel, hospital, or commercial building or factory with a use of hot water for production. Under ESCO mechanism energyefficiency energysaving and quality ofequipment Under ESCO mechanism, energy efficiency, energy saving and quality of equipment can be ensured with Energy Performance Contract (EPC)

22 Advantages and Lesson Learned from ESCO FUND Help our customers to prove technologies, ESCOs and Measurement & Verified plan(m&v) Estimate the real energy saving to perform requirement Negotiate the implement budget to be realistic Support the new ESCOs to the market Ensured Energy efficiency, energy saving and quality of equipment with Energy Performance Contract (EPC) If customers have a cash flow problem, ESCOs shall required insurance to cover any default. 22

23 Energy for Environment Foundation (E fore) 99/305 Thetsaban Songkhro Road, Lat Yao, Chatuchak, Bangkok Tel : Fax : efe@efe.or.th ; escofund@efe.or.th 23