eceee 2009 summer study y C Current state of ESCO activities in Asia: t t t f ESCO ti iti i A i ESCO industry development programs and future tasks in Asian countries f t t k i A i t i June 2009 Chiharu Murakoshi Ph D Chiharu Murakoshi Ph.D. Hidetoshi Nakagami Ph.D. Jyukankyo Research Institute Japan Association of Energy Service Companies (JAESCO) J A i ti f E S i C i (JAESCO) JAESCO 1
Overview of Presentation Overview of Presentation � Definition of ESCO in this paper � Market size of ESCO industry in Asia � Promotion program of ESCO industry in Asia � Conclusion � Conclusion 2
3 � Definition of ESCO in this � Definition of ESCO in this paper p p
Definition of ESCO � The definition of ESCO in this paper is simple. � The definition of ESCO in this paper is simple � ESCOs provide energy efficient retrofit projects with performance contracts that guarantee energy savings. � Introduction of ESCOs to Asia took place in the 1990s. � Almost all countries learned the ESCO concept from � Almost all countries learned the ESCO concept from USA. � The definition of an ESCO in Asian countries is similar � Th d fi i i f ESCO i A i i i i il to the traditional ESCO concept in USA （ before utility restructuring) restructuring). 4
� Market size of ESCO industry in Asia 5
Market size of ESCO I ndustry in Asia A i (M i l l i on U S D ) 700 700 3, 3 700 700 3, 630 630 3, 600 600 3, 500 500 400 353 300 237 200 112 87 100 0 0 Japan S outh C hi na T hai l and U . S . A K orea (2007) (2008) (2006) (2006) (2006) � Japan, South Korea, China and Thailand is limited performance contract based, and 69% is performance contract projects in USA. � � A Annual growth is around 20% in China, Thailand and USA, increase l th i d 20% i Chi Th il d d USA i in Japan and decrease in South Korea recently. 6
Market size of ESCO industry in Japan C om m erci al S ector w i th P C C om m erci al S ector ES P Annual investment I ndustri al S ector w i th P C I ndustri al S ector ES P Ave size of C om m erci al S ector w i th P C & ES P I ndustri al S ector w i th P C & ES P project (M i (M i l l l l i i on U SD ) on U SD ) (M i (M i l l l l i i on U SD /proj on U SD /proj ect) ect) 400 3. 0 353 350 321 2. 5 ct ec nvestm ent 300 ze of P roj 253 2. 0 250 231 200 200 1. 1 5 5 i i z A verage si A nnual 143 150 117 1. 0 100 62 62 A 0. 5 32 50 18 8 0 0. 0 1998 1998 1999 1999 2000 2000 2001 2001 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 PC:Performance Contract / ESP:Energy Service Provider 7 Data source:JAESCO survey,2008
Chinese EE I nvestment (100 Million RMB) 70 Investment amount 2 500 2,500 350 350 Number of projects 2,216 2005 Year Energy efficiency investment (Million RMB) 60 300 294 2,000 EPC investment 50 ojects 250 Number of pro vestment amount( 40 1,500 200 189 30 150 1,000 668 20 100 Inv 500 10 50 19 15 0 0 0 ( year) 2003 2004 2005 2006 Commercial Sector Industrial Sector Transportation Data ： Zhao Ming: EMCA and ESCO development in China, Data ： EMCA survey ,2006 Sector Proceedings of 2nd Asia ESCO Conference, Beijing, September 2007 � Investment for EE projects with PC in 2006: 237 Million UDS � Energy savings in 2006:overall investment in EE as 4.16 Mtce/year, investment in EE with PC as 2.69 Mtce/year � � Industrial sector is major (76%) Industrial sector is major (76%). � Investment per project: 1.43 Million USD for Industrial sector/ 280 8 thousand USD for Commercial sector.
Market trends of ESCO industry in Thailand in Thailand （ （ M i M i l l l l i i on U S D ） U S D ） 100 86. 9 90 80 69. 7 70 56. 9 60 50 36. 2 40 30 30 20 13. 2 8. 8 6. 5 10 0 2000 2001 2002 2003 2004 2005 2006 （ Y ear） Investment for EE projects with Performance Contract 9
ESCO market trend in South Korea (M i ( l l i on U D S ) ) (N o, ( of P roj ects) ) 200 600 183 548 180 519 500 500 491 160 140 133 136 140 400 112 112 328 328 120 120 100 100 300 86 83 244 75 80 202 65 65 200 156 60 139 167 106 40 30 100 20 100 8 5. 5 5. 7 5 3. 9 2. 0. 25 24 3 3 3 0 0 ' 93 ' 94 ' 95 ' 96 ' 97 ' 98 ' 99 ' 00 ' 01 ' 02 ' 03 ' 04 ' 05 ' 06 ' 07 ' 08 Dada: Korean Association for Energy Service Companies (2008) 10
� Promotion program of o o o p og o ESCO industry in Asia 11
The step of market development The step of market development of ESCO industry in Japan of ESCO industry in Japan of ESCO industry in Japan of ESCO industry in Japan 2005 2002/ 2005 2008 Kyoto Strengthen EC Law EE policy Protocol Protocol 1996/ 2001 1996/ 2001 1998 1998 revised Target of Subsidy effected EE policy Program Market Market development New entry Market Market promotion Finance Commendation 1997 P Program (2005-) FS 1998 Asia ESCO Conference Pilot (2005/2007) (2005/2007) 1999 1999 projects 1996 JAESCO Market database (2001-) What is ESCO? established ESCO introduction ESCO introduction M&V M&V guide-line (1999-2002) id li manual (2004) Standard contract (1998) 12 Case study (2000-) Potential market scale (1997)
Programs which had not adopted i in Japan J � Tax incentive � Low interest loan � Low interest loan � Loan guarantee program � Reform of the procurement system in the national government 13
Brief trends of ESCO industry in China China 1992-1994:Survey by WB/GEF ： China Issues and Option in 1992 1994:Survey by WB/GEF ： China Issues and Option in � � GHG Emissions Control � 1998: Enforced Energy Conservation Law gy � 1998:WB/ GEF “ The China Energy Efficiency Project (CEEP) ” started � 1998-2003:First phase � Established 3 pilot ESCOs(1996) and NECIDC � 2003-2008:Second phase � Loan Guarantee Program, EMCA(ESCO association) � 2006:11th Five-year Development Guidelines, 20 % reduce energy consumption per GDP until 2010 � 2007: Strengthened Energy Conservation Law 14
I nternational Financial Support on First phase on First phase Funding Type of Allocation to each Amount Organization g support pp EMC WB/IBRD Loan 63 Million UDS 21 Million UDS GEF Subsidy 22 Million USD 5 Million UDS 1 Milli 1 Million Euro E EU Subsidy S 4 Million Euro 1.91 Million England Subsidy － Pound Total 89.4 Million USD 26.8 Millon UDS Note:Using 1996 exchange rates: 1.269 USD/Euro, 1.578 USD/Pound 15
Support on Second phase uppo o eco d p ase � Set up ESCO association(EMCA) � Become independent until 2008 � Implemented “ loan guarantee program ” . Managed by p g p g g y CNI&G � let financial organizations avoid 90% credit risk GEF subsidy The rest the fund is used for (22 Million USD) other energy efficiency projects EMC loan guarantee special fund (CNI&G) Financing to EMC from banks Increase to 5 to 10 times of resource Increase to 5 to 10 times of resource fund by loan guarantee program 16
Brief trends of ESCO I ndustry in Thailand Th il d � E Energy audit carried out to 4 site in 1996 supported by GEF (6 di i d 4 i i 1996 d b GEF (6 Million Thai Bath ） � � Only one factory carried out ESCO project(190 Million Thai Bath Only one factory carried out ESCO project(190 Million Thai Bath, SPP= 4.9 year). Subsidized 30% by ENCON Fund. � EGAT had supported to promote ESCO. And EGAT tried to establish pp p ESCO company, but it had stopped. FTI （ The Federation of Thai Industries ） support to promote ESCO � as ESCO association, now. � 56 ESCOs registered to ESCO Fund. 17
Activities of Thai ESCOs Activities of Thai ESCOs � 56 ESCOs in Thailand � Active Science Co.,Ltd, B.T.M.Engineering Co.,Ltd, Best Energy Service Co.,Ltd, Compress Air Management Co.,Ltd, Elyo-H Facilities Management Ltd., Energica Co.,Ltd, Energy Conservation System Co Ltd Energy Design Concept Co Ltd Conservation System Co.,Ltd, Energy Design Concept Co.,Ltd, Energy Solution System Co.,Ltd, Excellent Energy International Co.,Ltd, Goldmark Technical Supply Co.,Ltd, Johnson Controls International Co.,Ltd, Schneider Ltd., Solecell Intertrader , , , Co.,Ltd, Thai Agency Engineering Co.,Ltd, Thai Energy Conservation Co.,Ltd, Vesta PMS Co.,Ltd � Hitach, Ltd. from Japan , p � Market scale of EPC is 3.2 Billion Thai Bath (86.9 Million USD) in 2006 � � FTI(Th FTI(The Federation of Thai Industries) F d ti f Th i I d t i ) � FTI support to promote ESCO industry as ESCO association � � ESCO Fund ESCO Fund � Low interest loan provided by ENCON Fund 18
Promotion program of ESCO Promotion program of ESCO industry (1) industry (1) industry (1) industry (1) � Market development programs carried out can be � Market development programs carried out can be categorized � (1) baseline surveys/feasibility studies � (1) baseline surveys/feasibility studies � (2) skill development � (3) public awareness campaigns � (3) public awareness campaigns � (4) founding of core businesses and support for operations � (5) � (5) project development j t d l t � (6) financial support � (7) strengthening of policies and systemic reforms � In general, through providing such programs, it is possible to initiate an ESCO industry. 19
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