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  • ABLE CONSULTANT CO,. LTD.

    24 May 2016

    Assessing the way forward and framing

    the roadmap for ESCO Facilitation Approach in Thailand

  • I. The Assignment: Objectives, Scope of Work & methodology

    II. ESCO Facilitation Approach (ESCO FA)

    III. International & Thai Experiences on FA & the Lessons Learned

    IV. Assessment of ESCO FA development in Thailand

    V. Draft Thailand ESCO FA Roadmap

    Contents

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  • I. The Assignment

    Objectives

    To assess and review ESCO facilitation approach establishment from international and Thailand experiences.

    To analyze and identify the possible and suitable options of further development of ESCO facilitation approach in Thailand.

    To develop the roadmap framed as a guideline for policy makers and relevant government agencies/stakeholders.

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  • I. The Assignment

    Scope of Works

    Task 1 Prepare detailed work plan and methodology

    Task 2 Review papers and collect information from current situation

    Task 3 Analyze and verify the findings

    Task 4 Prepare framework of the roadmap for ESCO FA Development

    in Thailand

    Task 5 Support and contribute to a one-day workshop

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  • I. The Assignment

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    Methodology

  • Analysis structure

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  • II. ESCO Facilitation Approach (ESCO FA)

    What and Why ESCO FA?

    ESCO projects are complex in many aspects, therefore, the ESCO EPC facilitator can provide necessary know-how and experience to support the client in all the necessary steps to develop and implement an EPC project successfully. Founding idea of facilitator is;

    To create a demand-pull for EE projects by scaling-up and streamlining project development activities. To stimulate client and investor confidence To act as a catalyzer for project implementation and funding decisions. For Thai ESCO market,ESCO FA can possibly stimulate shared saving

    contract.Two levels of facilitation:

    Market facilitation: Project facilitation:

    (This assignment only concerns project facilitation.)

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  • II. ESCO Facilitation Approach (ESCO FA)Roles of ESCO FA and qualification

    The typical facilitation activities;1. Financial and technical preliminary analysis 2. Supporting the client in his make or buy decisions 3. Workshops with clients and their stakeholders 4. Project pre-structuring and selection of ESCO business model5. Financial pre-structuring 6. Feasibility studies that lead to the decision on continuation of an

    ESCO project.Investor and client confidence is the key

    Probably, most important function of a facilitator is to create mutual understanding and trust between all involved persons and contractual parties

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  • II. ESCO Facilitation Approach (ESCO FA)ESCO FA QualificationThe facilitator and the team must have expertise in several areas, such as

    Technical know-how (buildings, energy systems, energy efficiency) Economic know-how (calculation of savings potential, net present

    value of future savings, opportunity costs calculations) Financing know-how (financing models, equity, third-party financing,

    subsidies) Legal know-how (ESCO contract design and finalization)

    Even if it is not expected that the facilitator combines all these qualifications in one person, he should have a good level of understanding of all the tasks mentioned.

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  • II. ESCO Facilitation Approach (ESCO FA)

    Partial Facilitation ModelScope of work for ESCO facilitator in partial facilitation model;

    The facilitator collects data and prepares the project baseline. These data are provided to ESCOs together with a request for

    expressions of interest (EoI). A small number (usually three) ESCOs are pre-selected based on their EoIs.

    They undertake preliminary assessments, propose energy saving measures (ESM) and present them to the client and the facilitator.

    The client and the facilitator evaluate the preliminary assessments and select one ESCO.

    The client signs an agreement to undertake an investment grade audit (IGA), which will be paid by the client.

    Based on the results of the IGA, the client, supported by the facilitator, can decide whether to sign an EPC with the selected ESCO.

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  • II. ESCO Facilitation Approach (ESCO FA)

    Customer

    ESCO Energy Saving Project =

    Walk-through Audit Proposal IGA

    Investment decision

    EPC contract

    EPC contract

    IGAProposal Presentation

    Investment decision

    Walk-through Audit

    CURRENT

    OPTION 1

    Customer

    Facilitator

    Option + Facilitator

    ESCOESCO ESCO

    Partial Facilitation Model

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  • II. ESCO Facilitation Approach (ESCO FA)

    Full Facilitation Model

    Scopes of work for ESCO Facilitator in full facilitation are as follows;

    Prepare preliminary energy audit (including baseline energy cost calculation) Define the qualification and criteria for choosing ESCO Prepare tender documents and cost estimation Consider the bidding result and provide suggestion for choosing ESCO Prepare Energy Performance Contract (EPC) Supervise the installation work Supervise Measurement and Verification (M&V)

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  • II. ESCO Facilitation Approach (ESCO FA)

    ESCO Energy Saving Project =

    Walk-through Audit Proposal IGA

    Investment decision

    Procurement Process

    EPC

    EPCBaselines

    Verification or IGA

    Preliminary Technical and

    Economic Assessment

    CURRENT

    OPTION 3

    Customer

    Option + Facilitator

    ESCO

    ESCO

    ESCO

    Full Facilitation Model

    Customer

    Facilitator

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  • III. International & Thai Experiences on FA & the Lessons Learned

    Country Key activities on ESCO FA

    Successful cases

    USA (and Canada)

    In 2007, passing legislation to promote EPC in federal agency buildings.

    FEMP streamlined the Super ESCO model using IDIQ contract (Indefinite Delivery, Indefinite Quantity) with pre-selected ESCOs.

    FEMP requires the use of a project facilitator in all project awarded under IDIQ ESPCs (EPCs).

    Canadas Federal Buildings Initiative (FBI) has used a model contract and maintains a list of prequalified ESCOs and also identifies and provides project facilitators.

    In 2009, BOMA and CCI (The U.S. Building owners and managers association: BOMA and the Clinton Climate Initiative: CCI) released an EPC toolkit that included a model project development standard. The model successfully unlocked the EPC projects in building sector.

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  • Country Key activities on ESCO FA

    Successful cases

    The Czech Republic

    In 1995, the Act on tenders has been passed, presented the possibility to include evaluation criteria and other requirements into tender documentation

    In 1999, there were promotion of EPC projects in form of subsidies and grants.

    In 2010, the association of energy service providers (APES) established. Remaining barriers were complexity of tender process and budgetary restriction.

    EPC project facilitators took their roles to guide them through the three phases: the preparatory phase, the pre-tender phase, and the selection phase.

    Ministry of Industry and Trade financially supports the preparation of tender documentation for public sector organizations by supporting 80% of the costs up to a total of 4,000 EUR.

    APES with Ministrys support, developed numbers of documents assisting EPC procedures: EPC model contract, EPC tender procedure guidelines, ESCO ethical codex.

    Since 2010 / 2011 there have been significant increases in EPC projects and role of facilitator is growing and increases the trust in EPC projects among public organizations.

    III. International & Thai Experiences on FA & the Lessons Learned

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  • Country Key activities on ESCO FA

    Successful cases

    Germany

    BEA In 1996, the Energy Savings Partnerships (ESP) for

    improving EE in public buildings was established by Federal State of Berlin and BEA.

    BEA acts as project marketer, aggregator and facilitator, as well as financial advisor for the federal and local authorities.

    1,400 buildings have been upgraded or retrofitted, delivering CO2 reductions of more than 70,000 tons per year.

    The program is based on EPC with guaranteed savings. Property owners paid ESCO for the investment cost by this guaranteed savings with no additional cost.

    III. International & Thai Experiences on FA & the Lessons Learned

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  • Country Key activities on ESCO FA

    Successful cases

    Germany

    KEAIn 1998, KEA adopted the Berlin EPC business model for Baden-Wrttemberg (1110 municipal administrations, 36,000 km).KEA conducted more than 150 presentations for mayors, civil engineers, energy managers, facility managers, municipal councils and public bodies associations and collected their thoughts and recommendations KEA advanced and reshaped the Berlin EPC business model in several ways- Integration of renewables in EPC projects because many municipalities own forest, produce woodchips of waste wood.- Strong emphasis on the measures by emphasizing lists of measure in procurement- Integration of non-energy benefits.In the following years, KEA acted as a facilitator, supporting the public bodies in all stages of an EPC project.During the past 12 years KEA has initiated more than 30 energy supply contracting projects and 20 EPC projects.

    III. International & Thai Experiences on FA & the Lessons Learned

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  • Country Key activities on ESCO FA

    Moderate to Beginner Cases

    Austria

    There are probably about less than 10 project facilitators in Austria

    There are competent in-house Facilitators in public institutions on the national, regional and local level.

    Numerous barriers : - Split incentive still exists for rental residential buildings. - For community owner buildings, majority approval (50%) is

    needed that requires long period of communication to convince the community members.

    - A large share of the public buildings was largely off the market because of other Federal campaign.

    Despite of the limitations/barriers, there is still a market for facilitators especially in regional public bodies, municipalities, communities, industry and medium-sized enterprises.

    III. International & Thai Experiences on FA & the Lessons Learned

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  • Country Key activities on ESCO FA

    Moderate to Beginner Cases

    Belgium

    Belgian EPC market was initiated in 2009. In Dec 2013-Jan 2014, several Belgian provinces and

    communities started EPC-initiatives in public buildings. As a consequence of financial crisis, Belgian local

    governments were required to decrease expenditures which adversely affected demand for EPC facilitators.

    EPC facilitation has a disadvantage because it can be easily perceived as a consultancy services with vague and unclear advantage.

    Local authorities believe that their staff can do the job. With budget restriction, local authorities have to reduce

    external costs, i.e. EPC facilitation costs. In 2012, the ESCoNetwerk as a Market Facilitator was

    grounded to overcome barriers and unfamiliarity. The structure is little related to the ESCO.

    III. International & Thai Experiences on FA & the Lessons Learned

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  • Country Key activities on ESCO FA

    Moderate to Beginner Cases

    The Netherlands

    The role of the Project Facilitator is indistinguishable in the Netherlands.

    There is strong need for more structure in the role of the Market Facilitator and more independent Project Facilitators.

    Sweden There is a need of stimulation action and support for Swedish market.

    Today, only 2-3 consultants are performing part-time work for EPC project facilitation activities.

    The Swedish Energy Agency has also granted funding to analyze the possibilities and create a plan to form an ESCO association.

    III. International & Thai Experiences on FA & the Lessons Learned

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  • Country Key activities on ESCO FA

    Moderate to Beginner Cases

    Switzerland

    The Swiss EPC market is still in its infancy stage. Switzerland has several years of experiences in ESC but only

    a few companies offer ESCO-Services with EPC and around a dozen EPC projects are running.

    Facilitator in the classical meaning of ESCO business was not known in the underdeveloped EPC market.

    EPC market is not further developed in Switzerland because of lack of knowledge to handle procurement process (public tender) of the public sector and lack of facilitators who could ease this work.

    III. International & Thai Experiences on FA & the Lessons Learned

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  • Country Key activities on ESCO FA

    Moderate to Beginner Cases

    India

    In 2011, India was defined by International Finance Corporation (IFC) as emerging ESCO market with best established, even though deficient in many aspects.

    Barriers: The absence of efficient big players, the limited financial ability and

    inadequate past experience cause ESCOs to seem untrustworthy to energy end-users as well as banks.

    Lack of information and attention in public and private sector Lack of standard M&V protocol Policy recommendation for EPC market in India (by IBPE) Establish a Policy Framework for EPCs and a Standard Design Build

    Procurement Process. Energy Efficiency Services limited (EESL) was served as a capacity-building resource center for EPCs and has taken the role of facilitators or consultant

    Provide Training and Assistance to Agencies/Building Owners Stimulate Third-Party Financing

    III. International & Thai Experiences on FA & the Lessons Learned

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  • Country Key activities on ESCO FA

    Moderate to Beginner Cases

    Korea

    In 1992, Korea started first ESCO project. From 1992 up to now, numerous supports to ESCO business

    by government have been launched. E.g. large loan amounts to public sector, soft loans to private sector, tax benefits.

    Energy Use Rationalization Act (EURA) has been enacted as specific legislation for Koreas ESCO policy which aims at supporting ESCO.

    Numbers of registered ESCOs in Korea have grown significantly from 4 in 1992 to 227 by the end of 2012.

    KEMCO has been acted as Market Facilitators. ESCO themselves are acting as project facilitators that

    facilitate as mediator between ESCO and client from project development phase through construction phase.

    Mostly, ESCO market depends on loans from government.

    III. International & Thai Experiences on FA & the Lessons Learned

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  • Country Key activities on ESCO FA

    Moderate to Beginner Cases

    South Africa

    Large share of ESCOs rather operated as energy auditors as a result of an IDM funding programs from the countrys state-owned electricity provider ESKOM. The programs targeted at the replacement of light bulbs with energy efficient lighting to reduce South Africas peak demand.

    As a result of 30% electricity tariff increase and IDM programs put on hold, this provided opportunity to ESCO EPC and ESC projects.

    In 2012, GIZ decided to set up an ESCO Facilitator at one of its cooperation partners, the South African Energy Development Institute (SANEDI)

    As South Africas interest in cogeneration increased significantly, GIZ opted to combine both COGEN and ESCO into an ESCO/Cogen FA for SANEDI.

    The ESCO/Cogen Facilitator started its work at SANEDI in October 2013 and organized a number of workshops, supported feasibility studies and assisted in the promotion of cogeneration for various associations.

    III. International & Thai Experiences on FA & the Lessons Learned

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  • Lessons learned from international experiences

    Items International Practices

    1. FA in public sector plays a significant role in

    promotion of EE & EPC facilitator project.

    This has shown in all success cases of ESCO FA

    development, USA, Germany, and The Czech Republic.

    2. FA is still necessary, although there are

    policy and regulation supports because of the

    lack of knowledge and complexity of budget&

    procurement rules.

    In the Czech Republic where the Act on tenders

    (procurement) has been effective since 1995 and there

    were state promotions and supports in form of subsidies,

    yet the complexity of tender process and budgetary

    restriction impeded the diffusion of EPC. At that time,

    EPC project facilitators played their roles in guiding them

    through the three phases: the preparatory phase, the

    pre-tender phase, and the selection phase.

    3. Quasi-govt agency to be assigned for

    facilitation development tasks.

    YES. All success cases of EPC facilitator have been driven

    by quasi-govt agency e.g. BEA and KEA in Germany,

    FEMP in the US.

    4. Govt subsidy is necessary at least at initial

    period because added value from FA in view of

    customers is unclear.

    In Germany (BEA example), there were 50% financial

    support by government for cost of facilitator.

    III. International & Thai Experiences on FA & the Lessons Learned

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  • Lessons learned from international experiences

    Items International Practices

    5. Govt responses to FA accompanied by

    professional associations actions on FA

    development.

    In some countries (USA, The Czech Republic), not only

    government support but also actions taken by ESCO

    association in developing standard documents and related

    guidelines have leverage FA business.

    6. Implementing strategies that are

    replicable.

    Pooling or bundling public buildings which using energy in

    similar pattern before issuing tender documents as

    successfully practiced in BEA case.

    Shared saving model of ESCO EPC project with minimum

    guarantee of energy saving along project period is proven

    in BEA case that property owner could reimburse that

    saving to pay ESCO fee with no additional cost.

    Comprehensive guideline document on EPC procurement

    process prepared by professional ESCO association is useful

    for both ESCO and ESCO FA.

    7. Intensive seminars and training

    workshops to key stakeholders.

    As KEAs effort in organizing and presenting 150 seminars

    and workshops for local authorities to disseminate

    background knowledge in EPC and EPC FA.

    III. International & Thai Experiences on FA & the Lessons Learned

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  • Lessons learned from international experiences

    Items International Practices

    8. Uniform protocols of EPC processes,

    standardization of contractual documents, guidelines

    or toolkits are strongly required.

    YES.

    9. Modification of FA model is required to fit the

    local contexts.

    In Germany, success case of facilitation by BEA did

    not succeed in case of KEA in Baden. KEA,

    therefore took greater effort and include

    renewable and non-energy benefits as an

    advance facilitator role

    In South Africa, SANEDI also modifies its role to be

    ESCO/COGEN facilitator.

    10. Data on cost of ESCO FA. There is a rough study that typical facilitator cost is

    on average at 3 % of EE project investment cost.

    Cost for controlling of invoices, M&V or baseline

    adjustments during operation phase are agreed on

    demand in separate contracts.

    III. International & Thai Experiences on FA & the Lessons Learned

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  • ESCO FA Pilot Projects in Thailand Under a support from GIZ, TGP-EEDP program, currently there are 3 on-going ESCO projects with pilot facilitation. Updated information is summarized as follows;

    Customers ESCO facilitator

    Potential savings Estimated

    project

    investment

    cost (Baht)

    Current StatuskWh/yr. Baht/yr.

    1. Team Precision PCL. Bright

    Management

    Consultant (BMC)

    (full facilitation)

    443,160 2,148,330 7,539,810

    MOU will be signed soon

    and follow with EPC

    contract

    2. PEA (SCADA

    Building)

    PEA

    (full facilitation)

    152,740 610,960 5,000,000Energy audit report will be

    submitted on 23 May

    3. Nursing college in

    NonthaburiPEA

    (full facilitation)

    52,400 209,600 838,400 Energy audit starts on May

    11, 2016

    4. S&P Syndicate

    KMUTT

    (partial

    facilitation)

    NA NA NA NA

    III. International & Thai Experiences on FA & the Lessons Learned

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  • 1. Generally, ESCOs mostly prefer to propose guaranteed saving than shared saving projects.

    2. Most ESCOs usually conduct preliminary assessment by themselves.

    3. The client in pilot project has expressed its concern over the standard EPC contract prepared by Thai ESCO Association (TEA) on the following issues; Ownership of the equipment under shared saving EPC Benefits sharing when actual savings exceed the amount declared in contract Shared saving standard contract by TEA not fully accepted by the client.

    4. Most Thai ESCOs have no expertise in energy conservation measures (ECM) for production process.

    Key Lessons Learned from ESCO FA Pilot Projects

    III. International & Thai Experiences on FA & the Lessons Learned

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  • IV. Assessment of ESCO FA development in Thailand

    1.International experiences ( previously described)

    2.ESCO FA Pilot Projects ( previously described)

    3.Results from Key stakeholder interviews

    Around 15 persons as representatives players of the five groups in the Thai ESCO business and have participated in ESCO FA activities. These selected key stakeholders were interviewed with guiding questions focused on their opinions concerning ESCO FA development in Thailand.

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    Input to the Assessment

  • IV. Assessment of ESCO FA development in ThailandKey results from the interviews can be summarized as follows

    No. Key Factors Issues Resulted from the Interviews

    1.Responsible agency (Who) Most of interviewees support public sector to play lead by

    example role by implementing ESCO and ESCO FA projects.

    2.

    Institutional setting up

    including networking and

    facilitator standard and/or

    quality of work (Who)

    Majority agreement from the interviewees on the need of a

    central institution establishment.

    3.

    Policy direction or vision

    (Which)

    One interviewee considers government subsidy programs as

    impediment of EE market to continue its business as usual as

    many consumers delay implementing their EE projects until

    Govt launches new campaigns. (Free-ridership problem)

    4.

    Law and regulation

    framework (What)

    Many administration rules in public sector are main barriers for

    ESCO business to penetrate this market.

    One utility suggests that difficulty and time-consuming in

    principal approval process can be reduced by regularly

    allocating annual budget for engineering business which can

    be used for ESCO and ESCO FA business.

    Another utility is a pioneer in adding LCCA into bid evaluation

    criteria.

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  • IV. Assessment of ESCO FA development in Thailand

    Key results from the interviews can be summarized as follows

    No. Key Factors Issues Resulted from the Interviews

    5.

    Strategy or designed

    process for

    promotion of ESCO

    FA (How)

    Almost all of the respondents agreed with developing standard

    qualification of ESCO facilitators to be an important driver for ESCO

    market in Thailand.

    6.

    Costs and project

    financing (How

    much)

    Majority of respondents accept facilitation fee that ranges from 3-10%

    of EE project investment cost.

    7.

    Level of

    understanding/knowl

    edge (How much)

    Selection of facilitator model, whether full or partial, will be mainly

    based on the potential clients need and understanding.

    A concern by ESCO firm that facilitation approach is adding more

    complexity to ESCO business rather than easing the process

    Independent and neutral role of facilitator is questionable.

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  • IV. Assessment of ESCO FA development in Thailand

    Key results from the interviews can be summarized as follows

    No. Key Factors Issues Resulted from the Interviews

    8.

    Human resource and

    competency (How many)

    There is a comment that ESCO facilitator is highly qualified with

    several areas of expertise which is scarcely found in one person.

    9.

    Business sector/segment

    e.g. industry,

    commercial or public

    buildings. (Where)

    Most Thai ESCOs are lack of expertise in energy efficiency for

    industrial process.

    Many vendor ESCOs dominate Thai ESCO market and focusing on

    sales of a single technology rather than a suite of energy saving

    measures.

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  • SWOT/PEST Analysis FA in Thai ESCO market

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    Strengths Weaknesses

    Opportunities Threats

    Controllable

    Uncontrollable

    Harmful(Unfavorable)

    Helpful(Favorable)

    Internal Factors

    External Factors

    SWOT Analysis:A Useful business technique that can be conducted for products, services, markets when deciding on the best way to achieve future growth. ;

    Understand strengths and weaknesses Identify the opportunities open to you and threats you face

  • SWOT/PEST Analysis FA in Thai ESCO market

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    SWOT/PEST Analysis

    FA in Thai ESCO marketStrength Weakness Opportunities Threats

    Policy, Legislations &

    Institutions

    ESCO FA could add net

    valuable benefits to clients

    and consequently drive ESCO

    business as a whole.

    FA introduces a credible and

    independent third party (a

    facilitator) to act as an

    intermediary and work

    according to transparent

    guidelines and quality

    standards which will enhance

    EE business in Thailand.

    The FA has been proven to be

    successful in many countries

    e.g. German, USA, and The

    Czech republic.

    MEA has developed

    procurement analysis tool on

    Life Cycle Cost Analysis to

    be used in bidding evaluation

    process which usually using

    lowest price decision criteria.

    This development could

    possibly enhance ESCO

    business and ESCO FAs roles.

    Policy makers acceptance on

    ESCO FA initiative is unclear.

    Networking and/or

    institutionalization of ESCO FA

    is not yet well accepted by high

    ranking decision makers in

    public agency.

    There is no ambitious action to

    standardize protocol,

    associated documents,

    guidelines, fee, and facilitator

    qualifications.

    Large potential of EPC projects in

    public bldgs. & facilities are key

    enabling factor to stimulate ESCO

    mkt and project facilitator

    development.

    Govt procurement and budgeting

    rules are under amendment

    process to enhance EPC projects in

    public sector.

    It is possible to utilize ENCON Fund

    availability to support FA initiative.

    New phase of EERF and ESCO Fund

    in operation.

    FTI currently acts as market

    facilitator, could possibly enhance

    EPC facilitators roles.

    DEDE could be a key player for FA

    development in both public &

    private sector.

    A public utility is forming its FA

    business for local authorities. This

    forming can be useful model for

    others to follow.

    Large and well-known private

    companies e.g. SCG, PTT, Tesco

    Lotus could initiate their in-house

    facilitators and possibly be able to

    start new business.

    Pilot FA project under GIZ support

    on government facilities (i.e. one

    nursing college in Nonthaburi)

    would be a good start (or show

    case) of public building project.

    New phase of EERF &

    ESCO fund is also a threat

    for FA development since

    it doesnt include any

    preference for FA.

    No specific regulations

    and programs to drive or

    promote EPC and FA in

    public sector.

    There will be questions on

    neutral or independent

    position of ESCO project

    facilitators.

    ESCO EPC market is

    delayed to be business as

    usual due to the players

    suspending projects until

    new subsidy program

    from government is

    launched.

  • SWOT/PEST Analysis

    FA in Thai ESCO marketStrength Weakness Opportunities Threats

    Economic Conditions

    FA can raise interest

    of financial

    institutions because

    facilitator may assist

    in technical part of

    the project.

    Facilitator acts as mediator among all involved parties, especially between client and ESCO to decrease ESCOs cost & time.

    Currently, there is a

    question on the

    availability of competent

    experts for ESCO FA.

    When employing facilitator service, higher cost is a threat for FA business as viewed by a client.

    Higher transaction costs due to hiring facilitator pose a burden for smaller EPC projects.

    Thai ESCO market has been

    better developed

    compared with other

    ASEAN countries.

    GIZ initiative on ESCO

    NAMA will provide support

    and continue momentum

    for FA business

    development.

    ESCO FA is another

    business in ESCO supply

    chain that could add value

    to engineering consulting

    services and create more

    employments.

    Increasing of EE lending

    products by commercial

    banks is driving EE market

    and independent

    facilitators would be the

    missing link between

    clients, ESCOs and banks.

    Kasikorn Bank supports the idea of ESCO-NAMA proposal which will overcome barriers on access to loan guarantee by ESCOs and their clients. This effort will hopefully, stimulate SME EPC market.

    Economic turmoil effect for customer to delay decision to go on project with medium to high investment cost measures.

    It is difficult to penetrate ESCO market with new idea on FA when economy is in stagnant period.

    The customer/ESCO with limited budget/financing, usually reserve it for core business activities.

    Limited access to loan guarantees for ESCOs and their clients is one of the main barriers to ESCO business and also FA development.

    Relatively low electricity tariff (average 4 baht/kWh vs. 6-9 Baht/kWh of FIT) is a disadvantage to ESCO business and ESCO FA.

    SWOT/PEST Analysis FA in Thai ESCO market

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  • SWOT/PEST Analysis

    FA in Thai ESCO market Strength Weakness Opportunities Threats

    Social & Environments

    Accolades or awards to

    success case(s) of facilitator

    project could be a plus factor

    to drive EPC facilitator

    service.

    Thais norm in

    networking and

    business connection

    could possibly be a

    barrier to FA

    development e.g.

    independent position

    of facilitator in

    procurement of ESCO

    might be jeopardized

    by high level decision

    making.

    Technology

    ESCO facilitator requires

    considerable fields of

    expertise with equal

    importance in order to

    deal with load and

    complication of task.

    Otherwise, any FA may not

    efficiently handle the job.

    ESCOs and FA for specific

    sector could play important

    roles in industrial sector e.g.

    currently, ISIT has developed

    6 main processes in the steel

    production sector which

    could be a ground for further

    benefits on ESCO and FA

    business .

    There is a good opportunity to exchange/ transfer know how from various area of expertise through training programs.

    There is also opportunity for existing engineering consulting firms to enter into newly created business of ESCO FA.

    Lack of ESCO technical know-how on production process results in ESCOs focus on EE measures for utility areas only.

    Many vendor ESCOs dominate the ESCO Thai market which focus on sales of a single technology rather than a suite of energy conservation measures.

    SWOT/PEST Analysis FA in Thai ESCO market

    37 ABLE CONSULTANT CO,. LTD.

  • ItemsInternational Practices

    (success cases)Thailand Initiation

    1. FA in public sector plays a significant

    role in promotion of EE & EPC facilitator

    project.

    YES NO EXISTENCE (NE)

    2. FA is still necessary, although there are

    policy and regulation supports because of

    the lack of knowledge and complexity of

    budget& procurement rules.

    YES

    YES to lack of knowledge and

    complexity of admin rules but

    FA recognition by public

    authority is not confirmed.

    3. Quasi-govt agency to be assigned for

    facilitation tasks.

    YES. All success cases of EPC

    facilitator have been driven by

    quasi-govt agency.

    NE.

    4. Govt subsidy is necessary at least at

    initial period.YES

    It is possible to use ENCON

    FUND for subsidy to FA.

    5. Govt responses to FA accompanied by

    professional associations actions on FA

    development.

    YES Not accomplished yet

    Comparison of Lessons Learned from International Practices and Thailand Initiation

    38 ABLE CONSULTANT CO,. LTD.

  • ItemsInternational Practices

    (success cases)Thailand Initiation

    6. Implementing strategies that are

    replicable.YES NE

    7. Intensive seminars and training

    workshops to key stakeholders. YES

    YES, at certain degree,

    mostly in recent years by

    GIZ.

    8. Uniform protocols of EPC processes,

    standardization of contractual documents,

    guidelines or toolkits are strongly

    required.

    YES

    YES, at least, there is an

    effort on developing

    standard contract by TEA,

    FTI, and DEDE.

    9. Modification of FA model is required to

    fit the local contexts e.g. to include RE and

    COGEN as in KEA and SA case.

    YES. Probably YES.

    10. Data on cost of ESCO FA. YES.

    There is a rough study as concluded in

    chapter 2, (2.3.5). Typical facilitator

    cost is on average at 3 % of EE project

    investment cost.

    Cost for controlling of invoices, M&V

    or baseline adjustments during

    operation phase are agreed on

    demand in separate contracts.

    NE.

    Majority of

    interviewees agreed

    with facilitators fee at

    3% of project

    investment cost.

    Comparison of Lessons Learned from International Practices and Thailand Initiation

    39 ABLE CONSULTANT CO, . LTD .

  • Draft Roadmap for Thai FA Development

    Yr.1 Yr.2 Yr.3 Yr.4 Yr.5 Yr.6 Yr.7IssuesActivities

    GIZ/EP DEDE & Established responsible agency

    DEDE

    DEDE/MOF

    RA/ENCON Fund +ESCO NAMA

    RA

    RA

    RA/FA

    1. Capacity Buildings/Source of Fund Assessment Publiticity

    2.Responsible Agency Establishment

    3.Change of associated public administration rules

    4.Pilot Project Initiation

    * Proposal /source of fund

    * Select FA

    * Proposal /source of fund

    * Operation

    * Select Projects

    * Monitoring

    5.Final Assessment/ Proposed Market Mechanism

    6.Promotion Campaigns for Deployment

  • Expected outcome from group work

    Comments and suggestion for further analysis on risk assessment/identification of key stakeholders.

    41 ABLE CONSULTANT CO,. LTD.