Insight of policy support for energy efficiency investment : case study of hotel sector in Thailand

Abstract

This study used the cost curve of energy efficiency measures to find the level of the cost of energy efficiency measures comparing with the energy price and the opportunities for policy change for enhancing energy efficiency implementation for the Thai hotel sector. The study was conducted in two parts. First, energy efficiency measures, investment costs, energy savings and related information were derived from three Department of Alternative Energy Development and Efficiency’s projects, which are (1) Energy Efficiency Revolving Fund, (2) Energy Service Company Revolving Fund, (3) DEDE Demand Side Management Bidding. The cost curve of energy efficiency measures indicates that 12 energy efficiency measures are cost-effective, with the cost range of 1.07 to 3.50 THB/kWh, and 3 measures are not cost-effective, with the cost range of 4.46 to 5.47 THB/kWh. The average cost of the SME hotel sector is higher than the large hotel sector, which is 2.68 and 2.44 THB/kWh respectively. The moderate government aspect scenario (10 years lifetime and 7% real discount rate) results in a 26% decrease in average costs and the high conservative government aspect scenario (20 years lifetime and 7% real discount rate) decreases by almost half the cost (46%) comparing the private sector aspect base case (10 years lifetime and 15% real discount rate). Second, policy suggestions were drawn from the result of the cost curve of energy efficiency measures and the discussion around the current situation, the challenge and opportunity of three programs and concluded from the suggestions from the interviewees. Three cost-inefficiency measures, including heat pump that substitute existing electric hot water equipment, variable speed drive in kitchen application and high-efficiency air conditioning (split type), still need the supporting program to enhance their technical confidential and to decrease their cost. The sensitivity analysis shows that the energy efficiency investment costs when seeing from the private point of view are still high. Many interviewees from various sectors suggest that the financial policy support should be designed tailor to market segments in both financing capacity and maturity of technology dimensions to enhance successful energy efficiency supporting program implementation.