DSM Bidding Mechanism
Policy measure

The Energy Conservation Promotion Fund (ENCON) programme formulated a demand side management (DSM) initiative in 2008 which is performed by a bidding mechanism and monitored by the Energy Policy and Planning Office (EPPO). The main purpose of the initiative is to provide financial support to encourage business operators to invest in higher energy efficiency machines and equipment. In addition, the DSM Bidding Mechanism offers financial support to private sector operators to encourage investment in improving the energy efficiency of their companies by replacing or retrofitting existing machines or equipment, thus reducing energy consumption (APERC, 2010).

Implementation

Lefevre (2009) describes the procedure of the bidding mechanism: “subsidies are granted based on actual energy saving achieved in a year resulting from such investment. The subsidy is defined as ‘annual energy saving x subsidy rate (as bid by each company)’. With this bidding mechanism, proposals with lower weighted subsidy rate will be subsidized first. The types of DSM projects implemented includes (in descending order): motors, HVAC, other elec saving projects, thermal, lighting and ballast, compressor and split type.”

Challenges
No identified challenges.
Outcomes

The following outcomes of six of the bidding mechanism’s initial phases have been identified by Lefevre (2009):

  • Phase 1: 8 approved proposals with total investments of THB 122,491,153 and total subsidies of THB 25,139,102 from the DSM bidding mechanism. These projects are expected to lead to heating savings of 662,750 MMBTU/year and electricity savings of 5,379,969 kWh/year, corresponding to energy savings of 117,300,363 baht/year.

  • Phase 2: 8 approved proposals with total investments of THB 352,207,380 and total subsidies of THB 33,760,535 from the DSM bidding mechanism. These projects are expected to lead to heating savings of 174,453 MMBTU/year and electricity savings of 26,870,431 kWh/year, corresponding to energy savings of 92,710,083 baht/year.

  • Phase 3: 35 approved proposals with total investments of THB 479,061,452 and total subsidies of THB 71,911,298 from the DSM bidding mechanism. These projects are expected to lead to heating savings of 197,242 MMBTU/year and electricity savings of 70,320,389 kWh/year, corresponding to energy savings of 207,895,218 baht/year.

  • Phase 4: an unknown number of approved proposals with total investments of THB 136,187,864 and total subsidies of THB 27,616,845 from the DSM bidding mechanism. These projects are expected to lead to heating savings of 128,911 MMBTU/year and electricity savings of 20,786,065 kWh/year, corresponding to energy savings of 93,616,885 baht/year.

  • Phase 5: 15 approved proposals with an unknown investment amount and total subsidies of THB 33,552,058 from the DSM bidding mechanism. These projects are expected to lead to heating savings of 422,564 MMBTU/year and electricity savings of 27,499,011 kWh/year, corresponding to energy savings of 128,975,869 baht/year.

  • Phase 6: 80 approved proposals with an unknown investment amount and total subsidies of THB 186,555,520 from the DSM bidding mechanism. These projects are expected to lead to heating savings of 1.478,938 MMBTU/year and electricity savings of 95,574,344 kWh/year, corresponding to energy savings of 733,889,447 baht/year.

In total, the six phases are expected to lead to savings of 1,389,639,450 baht/year divided over 170 projects with a total investment value of 3,036,680,845 baht of which 12.5 percent or 378.535.358 Baht are subsidies from the DSM bidding mechanism.


According to APERC (2010), the bidding mechanism is expected to reduce energy consumption by 149 ktoe in 2011, covering the industrial and commercial sectors.

References

APERC (Asian Pacific Energy Research Center), 2010. Compendium of Energy Efficiency Policies of APEC Economies – Thailand. Tokyo. Available at: www.ieej.or.jp/aperc/CEEP/Thailand.pdf.


Lefevre, T., 2009. Opportunities for Sustainable Energy Technology and CDM Development in Thailand. Sustainable Energy Technology at Work – SETatWork. Bright Green, Copenhagen 12-13 December 2009.