Clean Energy Finance and Investment Roadmap of Thailand

Annex B. Case Studies

The OECD and the Creagy developed a series of five case studies on financing mechanisms for small-scale renewable power and energy efficiency projects in Thailand (Table A B.1 below). The choice of the case studies was based on consultations and interviews with a wide range of stakeholders on challenges and barriers for attracting financing in the two sectors in Thailand.

Table A B.1. Overview of case studies

Financing instrument	Countries	Focus area	Source(s) of finance
Risk guarantee	Malaysia	Small-scale clean energy	Government funding and commercial finance
Pay-as-you-go (PAYG)	Thailand	Off-grid small-scale renewable power	Government funding, development finance and private impact investment
Energy savings insurance (ESI)	Colombia, El Salvador, Mongolia	Energy efficiency	International development partners (e.g. multilateral development banks), local financial institutions, government funding
On-bill financing	United States	Energy efficiency	Private investors, utilities and ESCOs
Bulk procurement and demand aggregation	India	Small-scale renewables and energy efficiency	Government funding, international development partners, commercial actors

Source: Authors

Each case study includes:

• an overview of the financing model

• examples from other countries (including key stakeholders, outcomes and lessons learnt)

• an explanation of how the financing mechanism could address specific challenges and barriers in Thailand

• a recommended roadmap and timeline for implementation of the financing mechanism in Thailand.

The case studies pertain to emerging and developing countries wherever possible, to show how the specific challenges in these countries can be overcome. Some examples may refer to developed economies, where the key learnings provide insights to replicate a similar scheme in Thailand. One case study presents a financing model (PAYG) that has already been tested in Thailand and could be further expanded. Desk research and interviews were the main sources of information for the development of the case studies.

Case study 1: Credit risk guarantee: Malaysia’s Green Technology Financing Scheme (GTFS)

Credit guarantee schemes can help MSMEs access finance by transferring all of part of the borrower’s credit and default risk, thus alleviating factors such as limited collateral and track record. Thanks to guarantees, in case of a borrower default, a lender can resort to a full or partial repayment from a third-party guarantor. Guarantees can cover either individual loans of individual borrowers, or a portfolio of loans, for example made by commercial banks to intermediary financial institutions (Alliance for Financial Inclusion, 2022[1]).

Governments and public financial institutions can play a key role in de-risking small‑scale renewable projects through funding or supporting guarantee schemes. For example, in 2010 the Government of Malaysia established the Green Technology Financing Scheme (GTFS), with initial funding of RM 1.5 billion (USD 470 million). The scheme offers guarantees to participating financial institutions, with the aim of easing green companies’ access to private commercial finance. Malaysia’s Green Technology Financing Scheme (GTFS) is a government support programme offering a 2% interest subsidy and a government guarantee covering up to 60% of loans for green projects (Malaysian Sustainable Finance Initiative, 2023[2]). The sections below explore Malaysia’s GTFS in greater detail and provide a roadmap on how a similar scheme could be implemented in Thailand.

Financing model

Malaysia’s GTFS scheme offers a 2% interest subsidy and a government guarantee covering up to 60% of green loan portfolios of participating financial institutions. It targets Malaysian‑registered companies with a minimum of 60% Malaysian ownership, focusing on both producers and users of green technologies, including ESCOs.

The Government of Malaysia allocated an initial funding of RM 1.5 billion (USD 470 million) in 2010 and received an additional RM 2 billion (USD 630 million) in 2013 and extended the funding period until 2017. The GTFS 2.0 was earmarked with RM 5.0 billion in 2018, and later the allocation was reduced to RM 3.0 billion in 2019, with the funding period extending until 2020. In 2023, the government continued to support the development of green businesses with the reinstatement of the GTFS 4.0 up to RM 1.0 billion (USD 208.4 million) for the period until 31 December 2025.

In 2023, GTFS’ financed activities include: producers of green technologies, users of green technologies, Energy Services Companies (ESCOs), housing developers and low carbon mobility infrastructure. Targeted sectors include: energy, manufacturing, transport, building, waste and water.

Key stakeholders

Key stakeholders of the GTFS include (Figure A B.1 below):

• The Government of Malaysia is the main driver of the scheme, responsible for allocating funds and formulating policies for the scheme.

• The Malaysian Green Technology and Climate Change Corporation is the key implementer of GTFS and it is responsible for the promotion, assessment, certification and monitoring of participants.

• The Credit Guarantee Corporation Malaysia Berhad is responsible for offering a 60 to 80% financing guarantee to project companies and charges a 0.5% per annum guarantee fee to the government.

• Local banks: commercial and Islamic banks and Development Finance Institutions (DFIs) that provide the financing to the project company and receive a 2% interest subsidy from the government.

Figure A B.1. Key players of Malaysia’s GTFS

Source: Ministry of Natural Resources and Environment of Malaysia (2014[3]), Green Technology Financing Scheme (GTFS), untitled (unfccc.int).

Outcomes

As of 2018, the GTFS resulted in the participation of 28 financial institutions in loans for 319 projects worth approximately United States Dollars (USD) 875 million (World Bank, 2020[4]). Most of the funding was allocated to solar power projects (Tu, Fan, 2016[5]). A recent study analysing the impact of the GTFS on the business performance of renewable energy producers shows that the scheme improves the financial and non-financial performance of participating companies, such as such as profitability, cash flow, product quality, customer satisfaction and environmental sustainability (Adebiyi et al., 2020[6]).

Lessons learnt

The GTFS is an effective way to support green technology development in Malaysia by providing risk guarantees, interest subsidies and tax incentives to eligible companies. It helps to reduce the financial barriers and risks for green technology producers and users and encourages innovation and competitiveness in the green economy.

The case study reveals that the Green Technology Financing Scheme (GTFS) in Malaysia is driven by the collaborative efforts of diverse stakeholders, each contributing significantly to the success of the initiative. Funding agencies provide the necessary capital, technical support agencies validate the feasibility and sustainability of projects, financial institutions offer the needed liquidity with reduced risk thanks to the credit guarantee corporations, and project developers bring innovative green technologies to fruition. The interplay between these key players ensures that the GTFS can operate effectively.

The GTFS also faces some challenges and limitations, such as the complexity and bureaucracy of the application and approval process, the lack of awareness and promotion of the scheme, the limited scope and duration of the scheme and the need for more co-ordination and collaboration among the stakeholders.

The GTFS can be enhanced and improved by increasing the financing guarantee and expanding the scope of financing, especially to the electric vehicles and waste management sectors, providing more technical assistance and capacity building for the recipient companies, and strengthening the monitoring and evaluation of the scheme's impact and outcomes.

Opportunities and challenges for the implementation of a risk guarantee in Thailand

Thailand’s ESCO Revolving Fund once considered implementing a credit guarantee facility. The facility would have been part of the six financing tools under the fund, namely equity investment, equipment leasing, venture capital, GHG project facility and technical assistance. However, the ESCO fund decided to focus only on equity investment and equipment leasing due to their attractiveness and ease of implementation. Moreover, interviews with Thai stakeholders indicated that the government had previously launched a credit guarantee facility concurrently with other subsidy programs for green projects. However, most private sector entities opted to join the subsidy program rather than the credit guarantee one. Interview insights indicate that implementing a credit guarantee facility in itself would be the most effective way forward.

Case study 2: Pay-as-you-go (PAYG) models in Thailand

Pay-as-you-go (PAYG) models can ease access to clean energy to off-grid communities, using mobile payment technologies to facilitate payment by instalments. PAYG models usually involve home solar systems that customers pay for using mobile payment technologies and mobile phone credit (IRENA, 2020[7]). PAYG models can be implemented at both household and community level. PAYG systems can also be implemented as a micro-grid solution, where a solar PV system with battery storage is used to provide electricity services to a community (IRENA, 2020[7]). PAYG schemes are often implemented in the context of community-ownership models, which refer to the collective ownership and management of energy-related assets. Through cost-sharing, community-ownership models enable individual participants to own assets with lower levels of investment requirements (IRENA, 2020[8]).

In Thailand, a pilot community-owned PAYG model was launched in 2017 through a collaborative effort between the Ministry of Energy, GIZ Thailand, and the social enterprise ReCharge Energy, aiming to develop sustainable electrification using solar home systems. The targeted areas include two off-grid islands in the Gulf of Thailand and the Andaman Sea, which currently rely on electricity generated by diesel engines: Bulon Don Island and Jik Island.

On Bulon Don Island, the PAYG model involves five key players: a funding agency, a technical support team, solar PV suppliers, a community enterprise and end-users. Meanwhile, on Jik Island, an additional player is involved, namely investors. Each player has a unique role to play, as illustrated in Figure A B.2 below.

Figure A B.2. PAYG key actors

Source: Authors

Bulon Don Island

Financing model

The implementation of Pay-as-you-go (PAYG) Solar Home Systems (SHS) on Bulon Don Island marked a departure from the traditional "Grant and Forget" model, which faced challenges due to inadequate user feedback, technical knowledge and self-management. With financial support and technical assistance from development co-operation agencies, the new approach focused on a "Financed and Sustained" strategy. The new programme provided three different packages of solar home systems, operationalised and maintained by a local community enterprise through a revolving fund. A PAYG model was set up as a digital pre-payment scheme consisting of monthly instalments. The community enterprise was established to foster self-management, provide local technical support and establish an effective feedback mechanism. By adopting plug-and-play SHS, local technicians could easily troubleshoot and replace malfunctioning equipment. Ownership of the SHS assets was vested in the community, which leased them to end-users over a four-year period, collecting payments through a monthly PAYG scheme, thus ensuring sustainability and long-term viability of the project.

Key stakeholders

Key stakeholders of the PAYG on Bulon Don Island include:

• the Ministry of Energy, GIZ Thailand and the social enterprise ReCharge Energy, who provided technical assistance to the community

• several development co-operation agencies which provided grants and technical assistance

• Fosera, a German based manufacturer of High-Quality Solar Home Systems, who is a supplier of solar PV panels and batteries

• the Koh Bulon Don renewable energy Community Enterprise, who is responsible for providing rental services of solar PV systems to villagers on the island, collecting prepaid fees, and managing a revolving fund for operating and maintaining the systems

• 79 households in Bulon Don Island that are the end-users who pay fees prior to employing the solar PV systems.

Outcomes

The PAYG model implemented on Bulon Don Island resulted in significant positive environmental outcomes. These include a considerable reduction in diesel consumption by 2 994 litres annually, avoidance of approximately 8 tonnes of CO₂ emissions per year and a notable decrease in monthly energy expenses by Thai Baht (THB) 300 (USD 8.6) per household. Moreover, the model has substantially increased electricity access from 5 hours to 18-24 hours per day, significantly improving the community's quality of life and economic resilience.

Lessons learnt

Key lessons learned from the implementation of the PAYG model on Bulon Don Island include the necessity of designing user-friendly systems that meet community energy demands, selecting communities with financial capability to sustain the project and ensuring that appropriate capacity building support is provided. Technical capacity-building within the community is crucial for the successful operation and maintenance of the system, reducing dependency on external support. Equally important is the development of financial management skills within the community to ensure transparent and sustainable fund management.

Jik Island

Financing model

Before 2004, Jik Island relied on individually-owned diesel generators for electricity. From 2004 to 2014, the government funded the island's electrification, allocating approximately USD 286 000 from the Energy Conservation Promotion Fund to establish a microgrid system managed by the community-owned company Koh Jik. However, due to limitations of the solar PV and wind turbine components, the ESCO incurred high expenses from diesel generator usage, resulting in minimal profitability. In 2014, a government-sponsored a USD 198 000 investment in a 40 kilowatt peak (kWp) solar PV system and lead-acid batteries significantly reduced ESCO's expenses in supplying electricity to the microgrid. As a result, the ESCO managed to start generating monthly profits.

In 2018, as critical components of the electricity generation system, such as batteries, reached the end of their lifespan, the community started to encounter challenges in securing funds for replacements. In response, GIZ Thailand, the Ministry of Energy, and ReCharge Energy collaborated to enhance the community's management and technical skills, preparing them to independently own, operate and maintain the system, thereby attracting private investors.

A joint venture between companies Blue Solar and Symbior Solar provided a 100% equity investment amounting to USD 172 000 for the installation of a 72-kWp solar PV system, LFP batteries with total capacity of 266 kWh, and a 60 kW backup diesel generator. A development co-operation agency provided a grant for the installation of 100 smart prepaid meters. Sales of Renewable Energy Certificates (RECs) facilitated by Allotrope Partners and its network of investors in renewable energy enabled the enterprise to lower electricity fees for end-users.

The Koh Jik renewable energy Community Enterprise manages operations and maintenance of the systems, supplies electricity to the community and handles the collection of prepaid fees at a rate of 13 THB/kWh, which are then remitted to the joint venture. Additionally, the enterprise serves as the fund manager for the Koh Jik Clean Energy for Environment Fund, which receives revenue from the sale of the RECs.

Key stakeholders

Key stakeholders of the PAYG on Jik Island include:

• the Ministry of Energy, GIZ Thailand, and the ReCharge Energy, who all provided technical assistance to the community

• the joint venture between Blue Solar and Symbior Solar, who provided a 100% equity investment for the upgraded system

• A development co-operation agency, who provided a grant for the installation of 100 smart prepaid meters

• Allotrope Partners, which has a network of investors in renewable energy, and who entered into a 20-year agreement to purchase RECs from the Koh Jik renewable electricity project

• the Koh Jik renewable energy Community Enterprise, who is responsible for operating and maintaining the systems, providing electricity to the community, collecting prepaid fees, and managing the Koh Jik Clean Energy for Environment Fund, which receives revenues from the sale of RECs

• about 150 households on Jik Island, as the end-users who pay fees prior to consuming electricity from the microgrid system.

Outcomes

The implementation of the upgraded energy system on Jik Island has yielded significant and multi-faceted benefits. The scheme resulted in annual savings of 31 500 litres of diesel, a substantial reduction representing 95% of the previous consumption. This not only signifies a significant decrease in reliance on fossil fuels but also translates to considerable cost savings and environmental benefits. The avoidance of approximately 1 725 tonnes of CO2 emissions over the project's lifetime underscores the project's positive environmental impact, contributing to mitigating climate change. Moreover, the upgraded system dramatically improved electricity access on the island, increasing from a mere 4 hours per day with personal generators to a consistent 24 hours per day, significantly enhancing the quality of life and economic opportunities for the community. Furthermore, the reduction in the cost of electricity from 30 THB/kWh to 13 THB/kWh demonstrates the improved affordability and financial sustainability of the energy supply, further enhancing the socio-economic well-being of the community.

Lessons learnt

The electrification on Koh Jik Island provides several valuable lessons for sustainable energy projects:

• Initial government investment in renewable energy infrastructure: The government's initial investment in renewable energy infrastructure laid the foundation for electrification on the island. However, it is crucial to ensure that the installed systems have sufficient capacity to meet the community's energy needs effectively.

• Financial sustainability through improved technology: Upgrading the solar PV system in 2014 significantly reduced operational expenses and generated profits for the ESCO. This highlights the importance of regularly assessing and upgrading technology to enhance financial sustainability.

• Community empowerment and capacity building: Enhancing the community's management and technical skills was crucial to enable community members to independently own, operate, and maintain the energy system. This underscores the importance of community empowerment and capacity building for the long-term success of sustainable energy projects.

• Public-private partnerships for investment: Securing investment from private companies like Blue Solar Co., Ltd., and Symbior Solar Co., Ltd., demonstrates the added value of public-private partnerships in financing and implementing renewable energy projects.

• Diversification and financial modelling: Diversifying energy sources, such as blending solar and diesel, can provide more stability to the energy supply. Additionally, developing clear and transparent financial models, including strategies for revenue generation and cost reduction, is essential for attracting investors and ensuring the project's financial viability.

Opportunities and challenges for the implementation of pay-as-you-go (PAYG) models in Thailand

The two case studies identified several potential challenges and potential solutions for the implementation of PAYG for renewable energy electrification on other off-grid islands in Thailand:

• Technical durability: The coastal environment can hasten the degradation of solar equipment. Frequent maintenance or replacement, particularly of sensitive components like batteries and inverters, is necessary.

• Financial feasibility: The substantial upfront investment and ongoing maintenance costs of the microgrid require financial support, often from government or donor sources, to be viable.

• Consumption management: Controlling the community's electricity usage is a complex task. As electricity becomes more available, consumption typically rises, potentially overwhelming the supply. A prepaid electricity model has been introduced to help manage this.

• Supply reliability: Solar energy's intermittent nature poses a challenge for consistent power delivery, especially during periods of reduced sunlight, necessitating backup solutions.

• Affordability: The cost of solar systems, both initial and recurring, may be prohibitive for some households, particularly where income is inconsistent due to reliance on seasonal revenues.

• Service and repairs: Remote island settings often lack access to skilled maintenance personnel, complicating the prompt repair and servicing of solar systems.

• Community engagement: Effective implementation depends on the community's understanding and engagement with the solar systems. This requires comprehensive and continuous education and training programs.

The primary targets for replicating both models include off-grid communities within national reserve parks, where constructing distribution systems is prohibited, and over 100 islands in the Gulf of Thailand and the Andaman Sea, where extending the grid is not economically viable.

Though initially developed for electrification in off-grid areas, the models are also applicable to on-grid communities seeking low-carbon solutions. By incorporating the PAYG model, on‑grid communities can move towards greater energy independence, making them more resilient to grid outages and fluctuations in energy prices and allowing communities to transition towards greener, low‑carbon energy sources, thus reducing their environmental impact.

To address the challenges associated with PAYG models and pave the way for successful renewable energy electrification projects in off-grid island communities in Thailand, the selection of high-quality systems, financial support from the government, the careful selection of the targeted community, and technical support on community empowerment and capacity building are the most crucial factors. To foster this initiative, providing a blend of technical expertise and financial backing is essential. Table A B.2 below outlines potential actors involved in the PAYG implementation in Thailand and the challenges they may encounter while Table A B.3 illustrates the roadmap for the implementation of Pay-As-You-Go (PAYG) model in Thailand.

Table A B.2. Key players and potential challenges of implementation of PAYG in Thailand

Key players	Potential Thai actors	Challenges
Funding agencies	Domestic public fund: Energy Conservation Promotion Fund (ENCON Fund) & Power Development Fund	Eligibility criteria of the fund Political priorities
International agencies or funds, e.g. GIZ, UNDP, ADB, GEF and bilateral development co-operation agencies	Stringent eligibility criteria Complex application process Funding cycles and availability
Technical support agencies	Ministry of Energy (MOEN) and ReCharge Energy	Limited financial and human resources Regulatory and policy constraints
Investors	Technology suppliers Existing power producers	Infrastructure constraints Market and demand uncertainty Very small size of project
Community enterprise & end users	Off-grid communities selected by project team with the key criteria including agreement on off-grid rules, affordability and willingness to pay	Lack of management and technical skills Limited financial resources for upfront investment and limited access to financing
On-grid communities seeking low-carbon solutions	Lack of incentives Lack of technical capacity

Table A B.3. Roadmap for PAYG implementation in Thailand

Key areas	Activities	Responsible agency	Year 1: Preparation	Year 2-3: Pilot expansion	Year 4 onwards: Scale-up
Stakeholder engagement and policy support	1.1 Establish a task force with representatives from the Ministry of Energy, private investors, international aid organisations, and community leaders.	MOEN & ReCharge Energy	X
1.2 Advocate for policy reforms that support microgrid developments in off-grid and on-grid areas.	MOEN & ReCharge Energy	X
1.3 Engage local communities throughout the project development process	Task Force		X	X
1.4 Foster public-private partnerships to enhance investment and technology innovation.	Task Force		X	X
Technical and need assessment	2.1 Identify potential off-grid and on-grid communities that can benefit from PAYG.	MOEN & ReCharge Energy	X
2.2 Evaluate current technologies and identify the need for technical upgrades or adaptations to suit local conditions.	MOEN & ReCharge Energy	X
Financing	3.1 Create a financial strategy suitable for scaling, including identifying sources for funding and investment.	MOEN & ReCharge Energy	X
3.2 Secure financing sources for project investment	Investors, Banks		X	X
Expansion	4.1 Deploy PAYG systems in selected off-grid / on-grid communities.	MOEN & ReCharge Energy		X	X
Capacity building and training	5.1 Develop local capacity in technical, managerial, and financial aspects of PAYG systems.	MOEN & ReCharge Energy		X	X
5.2 Implement comprehensive education programs for end-users to ensure proper use and maintenance.			X	X
Monitoring and evaluation	6.1 Set up systems to monitor usage, payments, and operational metrics.		X
6.2 Regularly monitor and evaluate projects			X	X

Source: Authors

Case study 3: Energy savings insurance (ESI)

The ESI model was first developed by the Inter-American Development Bank (IDB) in Colombia in 2014, with the support of the Basel Agency for Sustainable Energy (BASE), as a mechanism to build investor confidence and improve access to low-cost finance for energy efficiency projects. Since its conceptualisation, the ESI model has been replicated in many other countries worldwide, usually in co-operation with multilateral or national development banks. See OECD report Energy Savings Insurance: International Focus Group Discussion for an overview of previous and ongoing ESI programmes (OECD, 2023[9]).

ESI is a de-risking package which combines four financial and non-financial elements to support the identification and structuring of technically robust and bankable projects: a standard performance contract, a technical validation, an energy savings insurance product and concessional financing. Table A B.4 below summarises the main functions and benefits of each of these four products.

Table A B.4. Financial and non-financial elements of ESI: functions and benefits

Element	Functions	Benefits
Standard performance contract	Establishing the responsibilities of the supplier in terms of supply and installation of equipment, corresponding guarantees and the promised energy savings relative to a benchmark; Committing the customer to timely payments, access to facilities, and adequate maintenance of the equipment.	Boost the confidence of the firms, insurance providers, and financial institutions in the technology provider’s products Lower transaction costs
Technical validation	Evaluating the project’s technical potential to achieve the promised savings; Verifying that the project has been built according to agreed specifications; Determining which party is entitled to compensation in case of disagreements.	Boost the confidence of the firms, insurance providers, and financial institutions in the technology provider’s products Lower transaction costs
Energy savings insurance	Partially covering the energy savings commitment made by the technology supplier under the performance contract for a specific period of time.	Allow technology providers to back the performance of their products and distinguish themselves from lower-quality providers; Improve firms’ trust and boosts their sales.
Concessional financing	Financing insured projects with funding from international donor agencies and/or multilateral development banks (MDBs), with concessional elements such as such as longer loan terms or grace periods.	Reduce the cost of capital Improve access to finance

Source: OECD (2023[9]), Energy Savings Insurance: International Focus Group Discussion, https://www.oecd.org/environment/cc/cefim/cross-cutting-analysis/Discussion-paper-first-energy-savings-insurance-international-focus-group-discussion.pdf.

ESI schemes typically involve nine key players: Donors and/or multilateral development banks, a national development bank, local financial institutions, a local insurance company, a re‑insurance agency, a technology provider, a technical validation agency and clients. A conceptual visualisation of the ESI model is shown in Figure A B.3 below.

Figure A B.3. Key players of ESI

Source: Authors based on OECD (2023[9]), Energy Savings Insurance: International Focus Group Discussion, https://www.oecd.org/environment/cc/cefim/cross-cutting-analysis/Discussion-paper-first-energy-savings-insurance-international-focus-group-discussion.pdf.

Financing model, key stakeholders, outcomes and lessons learnt on ESI in Colombia, El Salvador and Mongolia

Three cases in Colombia, El Salvador and Mongolia were reviewed, as illustrated in Table A B.5, A B.6 and A B.7.

Table A B.5. ESI in Colombia

Implementation dates	2016 – 2022
Implementation status	Pilot complete
Lead implementer	Bancóldex with the support from Inter-American Development Bank (IDB)
Funder	DEA, CTF, and IDB
Total project value	DEA provided initial technical support for ESI development with a budget of USD 300,000. CTF and IDB providing an additional USD 48 million in the form of loans to Bancoldex to fund energy efficiency projects (both with and without the inclusion of ESI Financing model)
Financed activities	Twelve energy-efficient and renewable energy technologies with high potential in those sectors were eligible to be covered in the programme, namely light-emitting diode (LED) bulbs, heating, ventilation, and air conditioning (HVAC) systems, boilers, cogeneration units, solar thermal, motors, ovens, air compressors, cooling systems, motorcycle and cab fleets, biogas, and solar PV.
Targeted sectors	The ESI pilot programme initially covered MSMEs in the hospitality and healthcare sectors where significant market potential was identified. Eventually it was expanded to cover firms in the manufacturing, commercial, and other services sectors
EE landscape before implementation	In Colombia, there were no specific schemes to promote the adoption of energy-efficient technologies, leading to low trust and experience among firms regarding their benefits. The ESI pilot programme, launched in 2014 by IDB and the Colombian national development bank, Bancóldex, aimed to overcome these barriers and enhance the energy efficiency market. Bancóldex's goal is to foster sustainable growth in Colombian businesses, especially MSMEs, making the promotion of energy efficiency aligned with its mandate.
Financing model	Under the ESI pilot programme, Bancóldex offered three credit lines totaling USD 48 million for energy efficiency projects to MSMEs via 8 intermediary banks. This funding blended equal resources from CTF and IDB, complemented by a USD 1 million grant from CTF for market development. This grant allowed for benefits like free project validation, technical advice, subsidized insurance, expedited credit processes, and specialized training. Blended international finance enabled Bancóldex to offer concessional credit terms and additional incentives to boost participation in the ESI programme.
Key Stakeholders	Validation and verification services: Colombian Institute of Technical Standards and Certification Local insurance company: Salvadoran insurance company Aseguradora Suiza Salvadoreña Disbursement of energy efficiency credit lines: 11 local financial institutions
Outcomes	262 energy savings insurance policies issued Investments worth USD 29.8 million mobilised Approximately 6,273 tonne/year of CO2 emissions avoided
Challenges	Regulatory complications: There was a need to avoid potential regulatory hurdles; therefore, adapting an existing insurance policy was time and resource efficient. Standardisation Needs: IDB and Bancóldex faced the challenge of creating standardized energy performance contracts and certification processes. These standardized products had to be flexible enough to cater to specific technology or sector need
Lessons learnt	After December 2022, the ESI programme in Colombia progressed with IDB's concessional credit lines still accessible for MSME energy efficiency projects. There was no longer a need to subsidize insurance costs since energy savings insurance policies became competitively priced in the market during the pilot. Only 5% of the 262 policies sold by SURA were linked to the IDB-Bancóldex credit line. The low default ratio led SURA to transition the policy from a surety bond to insurance, removing the obligation for technology suppliers to contribute to insurance claims in case of non-compliance. A vital takeaway from the Colombian experience is the significance of forming robust, strategic partnerships informed by market understanding. Bancóldex successfully harnessed these partnerships to create demand and address market gaps.

Source: OECD (2023[9]), Energy Savings Insurance: International Focus Group Discussion, https://www.oecd.org/environment/cc/cefim/cross-cutting-analysis/Discussion-paper-first-energy-savings-insurance-international-focus-group-discussion.pdf.

Table A B.6. ESI in El Salvador

Implementation dates	2019 – 2022
Implementation status	Pilot complete
Lead implementer	National development bank Banco de Desarrollo de El Salvador (BANDESAL) in partnership with IDB
Funder	IDB & GCF
Total project value	USD 41.7 million
Financed activities	Replacement of energy-intensive motors, air conditioners (ACs), refrigerators, and boilers used by MSMEs
EE landscape before implementation	Energy efficiency investments in El Salvador were minimal because of low demand and unsatisfactory financing conditions. Especially among MSMEs, there was a significant lack of confidence in the returns on energy efficiency investments and skepticism regarding the reliability of technology or service providers. The absence of mandates for energy efficiency and the lack of Energy Service Companies (ESCOs) in the nation further stifled market demand. The availability of financing for energy efficiency, and for MSMEs in particular, was also sparse. The country's financial system suffered from limited liquidity and a focus on short-term assets, making long-term loans for productive endeavors, like equipment upgrades, a rarity.
Financing model	The program, valued at USD 41.7 million, consisted of both reimbursable and non-reimbursable components. The GCF extended a USD 20 million concessional loan to IDB, which was passed on to BANDESAL, backed by a sovereign guarantee from El Salvador. BANDESAL matched this with its own USD 20 million, establishing a concessional credit line for local institutions to offer favorable loans to MSME energy efficiency projects. Repayments from these loans fueled a dedicated revolving fund for more projects. The GCF loan aimed to offer MSMEs benefits like lower interest rates (3.17%) and extended maturity periods in line with eligible technologies. Some of the loan's benefits were also given as a "success fee", enabling MSMEs to access more affordable credit. Alongside the loan, GCF provided a USD 1.7 million non-reimbursable grant to create and implement non-financial tools and risk-sharing methods under the ESI model. This included strategies for financing, development of energy performance contracts, engagement with local financial institutions, and collaboration with tech providers for robust project development.
Stakeholders involved	Validation and verification services: ICONTEC, which had previously been involved in the ESI programme of Colombia and the Spanish Association for Standardisation (AENOR) Local insurance company: Seguros de Vida Suramericana (SURA), Colombia’s largest insurance company Disbursement of energy efficiency credit lines: Several private banks with some existing interest and technical capacity in energy efficiency lending and project evaluation, such as Bancolombia, Davivienda, BBVA, and Banco de Bogotá.
Outcomes	Insuring 100 firms, achieving 36.5 GWh of energy savings, and avoiding 562,037 tonnes of CO2 equivalent of emissions over a 15-year period
Challenges	Regulatory challenge: Regulations in the local insurance sector dictate the maximum coverage period and extent of energy savings insurance policies available to technology providers, based on their size and characteristics. This constrains their effectiveness as confidence-building tools. Market challenge: Due to an emphasis on capacity building over marketing, the ESI programme faced low demand, leading insurance companies to eventually exit the programme and independently offer the ESI insurance policy.
Lessons learnt	The ESI programme in El Salvador highlights the need to customize program components to fit the national context while integrating global best practices. Using existing templates from other countries can enhance efficiency, but it's essential to gather feedback from local stakeholders for a context-specific design. Regulatory differences, like those in the insurance sector, can influence the structuring of energy-saving insurance products, making early engagement with experts and regulators vital. Additionally, while designing tools and building capacity are crucial, continuous marketing and communication are needed to maintain demand. Effective demand generation requires thorough market research, awareness campaigns, and sharing success stories. The Salvadoran experience underscores the significance of a comprehensive demand creation strategy.

Source: OECD (2023[9]), Energy Savings Insurance: International Focus Group Discussion, https://www.oecd.org/environment/cc/cefim/cross-cutting-analysis/Discussion-paper-first-energy-savings-insurance-international-focus-group-discussion.pdf.

Table A B.7. ESI in Mongolia

Implementation dates	2020 - ongoing
Implementation status	Design started in 2020; Pilot launched in 2023
Lead implementer	XacBank, a Mongolian commercial bank, with support from BASE
Funder	GCF
Total project value	XacBank received a USD 296,300 grant from the GCF in 2020 to implement the program by tailoring and developing the ESI model elements for the Mongolian context. This will complement an existing USD 60 million credit line, operated by XacBank and co-funded by GCF, known as the “Micro, Small, and Medium Enterprises (MSME) Business Loan Programme for Greenhouse Gas (GHG) Emissions Reduction”
Financed activities	Use of energy efficient and renewable energy solutions in the Mongolian MSME market.
EE landscape before implementation	National energy consumption in Mongolia has been experiencing a rising trend over 2010-2018, and several energy efficiency and conservation policies have been enacted to mitigate this trend. A 2016 energy audit of 15 large energy users in Mongolia demonstrated that the country has high potential for energy efficiency – power saving measures alone can conserve 260 million kWh worth USD 10.3 million (MNT 35 billion) Despite the high potential for energy efficiency projects to decrease energy costs of businesses and increase production efficiency, there remain significant investment barriers such as limited awareness and priority, lack of trust in technology/providers, difficulty with access to finance.
Financing model	In June 2017, XacBank acquired a USD 20 million concessional loan from GCF to launch the MSME Business Loan Program for GHG Emissions Reduction in Mongolia, promoting energy efficiency and renewable energy solutions. Leveraging this, XacBank established a USD 60 million concessional credit line for MSMEs, which serves as the primary finance avenue for Mongolia's forthcoming ESI programme, setting a practical minimum project cost at USD 20,000. By 2020, XacBank received a USD 296,300 grant from GCF to develop the ESI model's non-financial components for the Mongolian market, encompassing the creation of standard contracts, insurance policies, systems, and training initiatives, along with enhancing outreach, especially in remote areas.
Key Stakeholders	Validation and verification services: Société Générale de Surveillance SA (SGS) and Bureau Veritas (BV), Local insurance company: Tenger Insurance one of the top 5 insurance companies in Mongolia Disbursement of energy efficiency credit lines: XacBank
Outcomes	Mobilising a total of USD 36 million in energy efficiency investments Contributing to energy savings of 39 GWh and GHG emissions reductions of 234,206 tonnes of CO2 equivalent within 5 years of its inception
Challenges	The need to adapt international templates and best practices to local contexts, considering Mongolian laws, regulations, and language. The involvement of multiple stakeholders, like BASE, to ensure quality outcomes and integration of tools with the risk coverage product. The recommendation to centralize paperwork, formalities, and information sharing through an online management information system (MIS). The need to design a risk coverage product, weighing options between a surety product and a bank guarantee, given local market experience and preferences. The inexperience of the local insurance industry in Mongolia with third-party surety policies, necessitating training.
Lessons learned	The ESI programme in Mongolia is in its early stages and is unique as it is implemented by a private bank instead of a national development bank. The program employs strategies like incorporating insurance products as prerequisites for accessing favorable credit rates and focuses on first-mover MSMEs.

Source: OECD (2023[9]), Energy Savings Insurance: International Focus Group Discussion, https://www.oecd.org/environment/cc/cefim/cross-cutting-analysis/Discussion-paper-first-energy-savings-insurance-international-focus-group-discussion.pdf.

Opportunities and challenges for the implementation of ESI in Thailand

One of the barriers to implementing energy efficiency projects in Thailand is the uncertainty about their performance. ESI directly addresses this challenge by enabling ESCOs to confidently back their contractual guarantees while providing clients with assurance of compensation if expected energy savings are not met. In addition to addressing scepticism regarding technology providers' claims, ESI alleviates the challenge of accessing financing for energy projects. Implementation of the ESI model could significantly ease barriers to investment in energy efficiency for Thai firms. Table A B.8 below outlines potential actors involved in the ESI implementation in Thailand and the challenges they may encounter while Table A B.9 illustrates the roadmap for the implementation of ESI model in Thailand.

Table A B.8. Key players and potential challenges of implementation of an ESI in Thailand

Key players	Potential Thai actors	Challenges
Donor	Domestic public funding: Energy Conservation Promotion Fund (ENCON Fund)	• Eligibility criteria of the fund • Political priorities
Multilateral development Banks: World Bank, ADB, etc.	• Stringent eligibility criteria • Complex application process • Currency and repayment risks • Competitive funding environment
Financial institutions	Local commercial banks	• Limited technical capacity to offer energy efficiency financing • Lack of confidence in the new business model • Stringent eligibility criteria
Insurance regulator	Office of Insurance Commission	• Lack of understanding on EE
Insurance company	Local insurance companies
Re-insurance agency	e.g. Thai Reinsurance Public Co., Ltd.
Technology Provider	ESCOs RE & energy efficiency equipment supplier	• Difficult access to market
Technical validation Agency	DEDE	• Limited resources
Academic and research institutions, e.g. Joint Graduate School of Energy and Environment, Chulalongkorn University
International agencies, e.g. GIZ, UNDP

Source: Authors

Table A B.9. Roadmap for ESI implementation in Thailand

Key areas	Activities	Responsible agency	Year 1-2: Preparation	Year 3-5: Pilot	Year 6 onwards: Scale-up
Market assessment, and feasibility study		DEDE	X
Financing structure	1. Design financing model	DEDE , donors, FIs, insurance companies	X
2. Secure funding		X	X
Regulatory framework	3. Explore existing laws to provide a legal basis for ESI operations	DEDE, insurance regulator	X
Standard performance contract & Energy savings insurance	4. Create standardised energy performance contracts to be used by businesses, specifying (i) the basic responsibilities of all parties, (ii) monitoring and reporting procedures, (iii) dispute resolution mechanism, and (iv) internal risk mitigation structures	DEDE, technical validation agency, technology providers and insurance regulator	X
5. Determine the appropriate structure for an ESI product	X
6. Identify insurance and reinsurance companies willing to participate in the programme	X
7. Develop a risk coverage structure and pricing methodology	DEDE, insurance regulator, insurance and reinsurance companies	X
Validation & verification procedure	8. Define appropriate validation and verification procedures	All key stakeholders	X
Marketing and communication plan	9. Conduct market research and develop a targeted strategy to inform potential clients about the ESI pilot programme and build their confidence in its ability to deliver results	DEDE	X	X	X
Capacity building	10. Equip key stakeholders (technology providers, insurance providers, financial institutions) with the necessary tools and train to participate in the ESI programme	DEDE	X	X	X

Source: Authors

Case study 4: On-bill financing

On-bill financing (OBF) is a financing mechanism whereby utilities or private lenders provide customers with capital for energy-efficient, renewable, or other power-related projects, with repayment being made through the customer's regular utility bill payments. The typical on-bill financing or repayment structure comprises investors, utilities, contractors or ESCOs, and customers as shown in Figure A B.4 below.

Figure A B.4. On-bill financing structure

Source: US Department of Energy (2023[10]), On-Bill Financing / Repayment, https://betterbuildingssolutioncenter.energy.gov/financing-navigator/option/bill-financingrepayment#case-studies.

The OBF model has multiple advantages:

• Improved energy efficiency: OBF programs help customers invest in energy efficiency improvements, such as upgrading to a high-efficiency air conditioner or adding insulation, yielding mutual advantages like lowered energy bills and enhanced property values, amongst others.

• Convenient repayment: Regular monthly loan payments are collected by the utility on the utility bill until the loan is repaid. This makes it easier for customers to repay the loan and helps ensure that the loan is repaid on time.

• Reduced risk of loan default risk: OBF schemes authorise utilities to discontinue services for non-payment, thereby reducing the risk of loan defaults and assuring repayment.

• Bill neutrality: Energy efficiency improvements financed through OBF can be structured to match or exceed loan payments, confirmed by energy audits, ensuring that the customer's utility bill remains neutral or decreases post-upgrade.

• Wider adoption of energy efficiency measures: The unique characteristics of on-bill loans, particularly their tie to utility services and the assurance of bill neutrality, provide tangible benefits that can encourage more customers to invest in energy efficiency upgrades.

Financing model

The past decade saw the introduction of several on-bill programs, notably in the United States' residential sector and later in Europe. A notable OBF example is that of Southern California Edison (SCE), which offered qualified non-residential customers 0% financing from USD 5 000 to USD 1 000 000 for a wide variety of efficiency improvement projects. The monthly loan payments are added directly to the customer's bill over a period of up to five years. Monthly energy savings help to offset the monthly loan charges. The program was delivered by a dedicated third-party contractor, who provided energy audits, technical assistance and project implementation to customers.

After pilot tests in 2007 – 2008, the SCE on-bill financing program was launched in 2010, offering 0% interest loans to customers in government and institutional, multifamily and business sectors. Customers may participate by retrofitting buildings or installing energy-efficient equipment. The high demand and success of the programme prompted SCE to broaden it for non-residential customers and introduce a new Tariffed On-Bill (TOB) program for residential customers. The TOB would consist of a tariff charge, expected to be lower than the reduction in the customer’s energy bills, attached to the site meter, rather than a loan to individual customers (Southern California Edison, 2024[11]). Two advantages of this model are that it can be utilised by renters and is more easily accessible for customers with limited credit or low credit scores (Southeast Energy Efficiency Alliance, 2024[12]).

Key stakeholders

The key stakeholders of SCE’s OBF model include:

• Southern California Edison Company (SCE): SCE is the primary stakeholder and the proposer of the OBF program to the California Public Utilities Commission (CPUC).

• California Public Utilities Commission (CPUC): CPUC is the regulatory agency that oversees the OBF program and approves the program design, funding, and implementation.

• Non-residential customers: Non-residential customers are eligible to participate in SCE’s OBF program and can use it to finance energy efficiency and renewable energy projects.

• Residential customers: Residential customers are expected to be eligible for SCE’s OBF program once the program is developed and approved by the CPUC.

• Third-party lenders: Third-party lenders can partner with SCE to provide financing for the OBF program and receive a return on investment.

• Energy service companies (ESCOs): ESCOs can partner with SCE to provide energy efficiency and renewable energy services to customers and receive payments through the OBF program.

• Other investor-owned utilities in California: Under the CPUC’s leadership, SCE has partnered with other utilities to develop a statewide model for OBF in California.

Outcomes

Within SCE on-bill financing programme, over 2 400 loans were issued, worth USD 99 million, with a 99.3% collection rate (Southern California Edison, 2024[11]).

Lessons learnt

The On-Bill Financing (OBF) program by SCE, through its pilot and subsequent expansions, offers critical insights into fostering clean energy adoption with a blend of strategic financial mechanisms, program design and stakeholder engagement. Key to its initial and ongoing success is the bundling of loan payment obligations with utility bills. This method, coupled with targeted support to specific customer segments like grocery and convenience stores, and the provision of a holistic package comprising new equipment, financial incentives and a repayment structure tied to electricity bill savings, has proven pivotal.

The expansion of the OBF program to include non-residential customers and the development of a Tariffed On-Bill (TOB) program for residential customers reflect the program's adaptability and responsiveness to demand. Incorporating a wide range of eligible technologies and making the program cash positive, transparent and affordable, are essential elements for scaling up and achieving broader clean energy goals. Key improvements, such as reducing dependency on a limited number of third-party implementers and introducing standardised credit criteria, have further strengthened the program.

Opportunities and challenges for the implementation of an on-bill financing in Thailand

Interviews with key stakeholders, such as commercial banks, the ESCO association, ESCO companies, the Federation of Thai Industries, and the Ministry of Energy, reveal that while Thailand has made significant strides in the development of renewable energy and energy efficiency, progress remains concentrated at the large-scale level. Small-scale projects, in contrast, still encounter barriers, such as:

• Limited capital and access to finance: Large developers can get finance easily, but it is more challenging for small and medium firms. Issues such as collateral constraints and a lack of credit history limit their access to bank loans, often forcing them to rely on limited internal equity.

• Lack of expertise: Small and medium-sized enterprises often struggle with a shortage of technical expertise and skilled personnel needed to execute clean energy projects. Moreover, commercial banks exhibit hesitancy in engaging with renewable energy and energy efficiency initiatives, stemming from their own limited technical evaluation capabilities.

Likewise, the residential sector confronts financial and technical challenges, which are further exacerbated by a general lack of awareness regarding energy efficiency. Public buildings managed by local governments face similar issues, with funding constraints due to limited government budgets and regulatory barriers that inhibit their ability to obtain commercial bank loans or private ESCO investments. OBF serves as a solution that simultaneously addresses these financial and technical barriers across MSMEs, the residential sector and local government entities. For the implementation of OBF in Thailand, Table A B.10. below outlines potential actors and the challenges they may encounter and Table A B.11 illustrates the roadmap for the implementation of the OBF model in Thailand.

Table A B.10. Key players and potential challenges of implementation of an OBF in Thailand

Key players	Potential Thai actors	Challenges
Funding agencies, Investors	Domestic public fund: Energy Conservation Promotion Fund (ENCON Fund) & Power Development Fund	• Eligibility criteria of the fund • Competing political priorities
Utilities: Metropolitan Electricity Authority (MEA) & Provincial Electricity Authority (PEA)	• Budget constraint • Lack of incentives
International Development Banks: World Bank, ADB, etc.	• Stringent eligibility criteria • Complex application process • Currency and repayment risks • Competitive funding environment
Utilities	 MEA  PEA	• Regulatory constraints • Technical and logistical challenges to integrate with billing systems • Lack of expertise to assess credit risk • Limited resources for program administration
Contractor / ESCO	Local ESCO companies	• Lack of the necessary expertise and experience to deliver high-quality energy efficiency services
Customers	 MSMEs,  Residential sector, and  Local government entities	• Lack of awareness on clean energy investment

Source: Authors

Table A B.11. Roadmap for OBF implementation in Thailand

Key areas	Activities	Responsible agency	Year 1-2: Preparation	Year 3-5: Pilot	Year 6 onwards: Scale-up
1. Program feasibility	1.1 Market analysis and feasibility study	DEDE	X
1.2 Regulatory review and policy development	DEDE	X
1.3 Financial modelling and risk assessment	DEDE	X
2. Program design	2.1 Secure funding for the program	Utilities	X
2.2 Engage all key stakeholders	Utilities	X
2.3 Design of program structure and key elements	DEDE and utilities	X
2.4 Development of standardised contracts and agreement for customers, contractors, and utilities	DEDE and utilities	X
2.5 Readiness assessments of key stakeholders	DEDE and utilities	X
3. Pilot project	3.1 Marketing and outreach	Utilities		X
3.2 Training and capacity building	DEDE, Utilities, Think tanks		X
3.3 Financing setup	Utilities & Investors		X
3.4 Installation of clean energy technologies	ESCO		X
3.5 Monitoring and data collection	ESCO & Customers		X
3.6 Evaluation and adjustment	DEDE and utilities		X
4. Scale up	4.1 Program revision and finalisation	DEDE and utilities			X
4.2 Capacity building and marketing	DEDE and utilities			X
4.3 Continuous monitoring and evaluation	DEDE and utilities			X

Source: Authors

Case study 5: Bulk procurement and demand aggregation

Typically, energy efficiency projects struggle to obtain access to financing due to their small size, high upfront cost, the lack of awareness and trust among consumers, and the absence of a supportive policy environment. Bulk procurement is a strategic approach to improving energy efficiency and stimulating the market for energy-efficient technologies. The primary aim of bulk procurement is to harness economies of scale, lower costs, enhance the availability of energy-efficient technologies and catalyse a transformation in the market. It benefits large organisations through cost savings and operational efficiency while encouraging manufacturers to innovate and produce more competitive and efficient products. In a bulk procurement mechanism, the key players include the following (see Figure A B.5):

• The aggregator: an entity responsible for aggregating demand and coordinating the procurement process (e.g. a government agency or an ESCO).

• Suppliers: manufacturers or distributors of energy-efficient technologies and equipment.

• End-users: businesses, government entities, households, or other entities looking to improve energy efficiency.

• Financial institutions: banks or lending institutions that provide financing options (loans, grants, etc) or incentives to help end users acquire energy-efficient products.

Figure A B.5. Bulk procurement structure

Source: Authors

A notable example of a bulk procurement model that delivered significant efficiency improvements in an emerging economy is India’s UJALA programme. The Government of India launched the UJALA light-emitting diode (LED) scheme in 2015 to help households to save money on their electricity bills through efficient lighting (OECD, 2022[13]).

Financing model

The UJALA programme aimed to decrease national energy consumption by enhancing the market acceptance of energy-efficient Light Emitting Diode (LED) bulbs. It was established as a joint project between the Government of India’s Public Sector Undertakings, the Union Ministry of Power’s Energy Efficiency Services Limited (EESL) - a super Energy Service Company (ESCO) - and India’s power distribution companies.

EESL uses concessional financing to cover all initial costs for the bulk procurement of LED bulbs. This strategy enables EESL to avail volume discounts, manage sales and consumer repayment risks and subsequently lower the retail price of LED bulbs for consumers, thereby passing on the cost savings. Figure A.B.6 illustrates the operating model of UJALA.

EESL received a USD 220 million programme-for-results loan from the International Bank for Reconstruction and Development (IBRD), with a 5-year grace period and a maturity of 19 years, as well as an USD 80 million IBRD guarantee, to partially cover re-payment risks to commercial lenders or investors and to enable EESL to raise additional funds (World Bank, 2018[14]).

The UJALA scheme provides consumers with two payment options for purchasing LED bulbs. The first option allows full payment upfront at 40% of market price, while the second is a pay‑as‑you‑go scheme. This scheme requires an initial payment of USD 0.15 (INR 10) per bulb, with the remaining amount recuperated in monthly instalments of USD 0.15 (Rs. 10) added to the electricity bill. Customers can purchase a maximum of eight LED bulbs per electricity bill under this programme.

Under the UJALA scheme, 20W LED tube lights offer a 50% energy efficiency improvement over traditional 40W tube lights and are priced at Rs. 220 each, compared to their market price range of Rs. 400-600 (USD 6-9). Additionally, the scheme provides energy-efficient ceiling fans with a BEE 5 Star rating, denoting a 30% increase in energy efficiency relative to standard fans, and these are available at Rs. 1200 (USD 18) per fan.

Key stakeholders

As illustrated in Figure A B.6, the key actors of UJALA bulk procurement programme are:

• Ministry of Power is the nodal government body that plans and coordinates India’s energy efficiency efforts through the National Mission for Enhanced Energy Efficiency (NMEEE).

• Bureau of Energy Efficiency (BEE) is the nodal agency for implementing the NMEEE.

• EESL is the implementer of the UJALA program with a target to distribute 770 million LEDs.

• The World Bank provided a concessional loan to EESL under the India Energy Efficiency Scale‑up Program.

• State Electricity Distribution Companies (DISCOMS) are the partners of EESL for implementing UJALA in each state.

Figure A B.6. Operating Model of UJALA

Source: EESL (2023[15]), Market Transformation through Domestic Efficient Lighting Program (UJALA) in India, https://sacreee.org/sites/default/files/2023-11/S%20P%20Garnaik_EESL%20India.pdf.

Outcomes

As of 31 March 2022, EESL cumulatively distributed 368 million LED light bulbs, 7.2 million LED tube lights, and 2.4 million energy-efficient fans across India, leading to a total energy savings of 48.3 billion kWh per year with avoided peak demand of 9 770 MW. The annual energy savings are estimated at USD 2 700 million and the annual CO₂ emissions reductions at 35.5 million tonnes.

Lessons learnt

The success of Energy Efficiency Services Limited's (EESL) UJALA program underscores several key lessons in promoting energy efficiency at scale. Firstly, its robust business model, which involved EESL taking on the upfront investment risk for bulk procurement of energy‑efficient appliances, was instrumental in creating a conducive environment for market growth. By demonstrating tangible benefits and significantly lowering retail prices through volume discounts, EESL effectively stimulated demand and fostered widespread adoption of energy-efficient technologies among consumers. Moreover, the program's comprehensive support from the Indian government and prominent public energy sector entities lent credibility and legitimacy, crucial for securing buy-in from various stakeholders and ensuring sustained momentum.

Secondly, the UJALA program's emphasis on building awareness and trust in energy‑efficient products played a pivotal role in its success. Through transparent reporting mechanisms such as the UJALA Dashboard and regular stakeholder engagements, EESL effectively communicated the program's impact and built confidence in its efficacy. Additionally, stringent quality specifications and robust after-sales services bolstered consumer trust in the reliability and durability of energy-efficient appliances, further enhancing adoption rates. Overall, the UJALA program serves as a compelling example of how strategic partnerships, innovative financing mechanisms, and concerted efforts to raise awareness can drive transformative change in promoting energy efficiency on a national scale.

Opportunities and challenges for the implementation of a bulk procurement in Thailand

The implementation of bulk procurement in Thailand presents a significant opportunity to streamline energy efficiency across various sectors, leveraging the collective power of bulk procurement and economies of scale. For the implementation of a bulk procurement in Thailand, Table A B.12 below outlines potential actors and the challenges they may encounter and Table A B.13 illustrates the roadmap for the implementation of OBF model in Thailand.

Table A B.12. Key players and potential challenges of implementation of a bulk procurement in Thailand

Key players	Potential Thai actors	Challenges
Aggregator	• ESCOs	• Limited capacity of existing ESCOs to become super ESCOs
• Large corporate: Retail	• Lack of government incentives
• Bangkok Metropolitan Administration (BMA) or other provincial administration	• Lack of technical expertise • Limited own budget • Regulatory barriers in access to financing • Bureaucratic barriers
Financial Institutions	• Commercial banks in Thailand	• Limited technical capacity to offer energy efficiency financing • Lack of confidence in the new business model • Stringent eligibility criteria
• Multilateral development banks: World Bank, ADB, etc.	• Stringent eligibility criteria • Complex application process • Currency and repayment risks • Competitive funding environment
EE technology manufacturers	• Local manufacturers	• Difficult access to market
End users who adopt the technology	• Residential sector, • Hospitality and retail • Municipalities and local governments.	• Difficult access to finance • Limited awareness

Source: Authors

Table A B.13. Roadmap for bulk procurement implementation in Thailand

Key areas	Activities	Responsible agency	Year 1-2: Preparation	Year 3-5: Pilot	Year 6 onwards: Scale-up
1. Idea generation	1.1 Prioritisation of energy efficiency actions as per national or provincial plan	DEDE and provincial authorities as an aggregator	X
1.2 Provide guidance on best practices	DEDE, academic institutions, research institutes, or international agencies like USAID and GIZ
1.3 Connect to partners, networks, sources	Provincial authorities as an aggregator	X
1.4 Assess in ideas scoping		X
2. Technical and financial evaluation	2.1 Prepare standard template for project ideas	DEDE, provincial authorities as an aggregator with technical support	X
2.2 Conduct the feasibility assessment	X
3. Business modelling and financing	3.1 Select the most suitable business model and financing scheme for the energy efficiency project bundle, based on the technical and economic assessment and the local context	Provincial authorities as an aggregator with technical support	X
3.2 Design the right financing solution for each municipal energy efficiency project bundle, based on a decision tree and a checklist tool	X
3.3 Develop project proposal in a standardized format	X
4. Strategic procurement	4.1 Develop a procurement strategy	Provincial authorities as an aggregator with technical support		X
4.2 Prepare the tender process including process of identifying and selecting contractors		X
4.3 Organize the tender process		X
5. Investing in infrastructure	5.1 Oversee the installation process, ensuring adherence to performance standards	Provincial authorities as an aggregator with technical support		X
5.2 Facilitate the disbursement of funds to the individual projects within the aggregation		X
5.3 Maintain customer satisfaction through the project lifecycle		X
6. Performance and impact assessment	6.1 Establish a system for measuring, reporting, and verifying (MRV) the effectiveness and benefits of the energy efficiency project aggregation	Provincial authorities as an aggregator with technical support		X
6.2 Track performance metrics and evaluate the overall impact of the aggregation initiative		X
7. Scale-up	7.1 Programme revision and finalisation	DEDE and provincial authorities as an aggregator			X
7.2 Capacity building and marketing			X
7.3 Continuous monitoring and evaluation			X

Source: Authors

References

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