Energy Efficiency:

A Sign of Personal Virtue or an

Untapped Business Opportunity?

Peter du Pont, Ph.D.

Vice-President, Government & Clean Energy Consulting

Nexant, Inc.

Presented at Net Impact Luncheon

Sasin Centre for Sustainability Management

Bangkok, 20 June 2013

Personal Virtue?

Conservation may be a sign of

personal virtue but it is not a

sufficient basis for a sound,

comprehensive energy policy.

-- Vice-President Dick Cheney

May 2001

2

Topics Covered

The Funnies

Introduction

Background and Drivers for Clean Energy

Finance

Energy Efficiency: The First Fuel

Thailand’s 5 Conservation Power Plants

How Can We Seize the Energy Efficiency

Investment Potential?

3

The Funnies

4

Fresh from the Laboratory

5

Technological Overkill?

6

The Concept of Multiple Benefits

7

Introduction

8

Profile of Nexant

• Global company

• consulting services and

solutions across the

entire energy sector

• 700 employees,

• 3,000+ energy industry

assignments in 100+

countries

San

Francisco

New York

Houston

Washington D.C.

Nexant Consulting Offices

Project Offices

Representative Office

London

Abuja

Cairo

Shanghai

Bahrain

Bangkok

Tokyo

Beijing

Kuala

Lumpur

Seoul

Cape

Town

Buenos

Aires

Energy and Chemical Consulting Capability

New Delhi

Software and data

solutions

– iEnergy and Grid360 for

utilities

– Chem Systems Online

Consulting services

– Electric power

– Oil and gas

– Energy technology

– Energy Efficiency and Carbon mgt

– Chemicals 9

The Challenge

Why is that $20 bill still lying there?

10

Background and Drivers for Clean

Energy Finance

11

Population, GDP and Energy Trends:

New Locus of Energy Demand in Asia

Source: BP Energy Outlook (2010) 12

GDP per Capita Drives Energy

Demand BUT … large differences at any income level

Source: IEA (2006) 13

Primary Energy Demand Per Capita,

by Country: 2008

Source: International Energy Agency 14

Is This Energy Security?

Source: USAID, Energy Trends in Developing Asia (2011) 15

In 2030, 38% of Global Energy

Demand Will Be in Developing Asia

Source: USAID, Energy Trends in Developing Asia (2011)

16

Overwhelming Momentum toward

Fossil Fuels: New Demand in Developing Asia for 2008-2030 Will Come from

Coal and Oil

Source: USAID, Energy Trends in Developing Asia (2011) 17

What Nuclear Renaissance?

Source: World Nuclear Energy Status Report, 2012 18

Renewable is Getting More and

More Attention, and $$$

New Capacity Added Worldwide (2008-2009)

World Generating Capacity (2009)

World Electricity

Production (2009)

Source: Global Renewable

Energy Status Report 2010

19

Financial New Investment in Renewables:

Developed vs. Developing Countries,

2004-2010 ($bn)

15

31

55

80 82

6770

4

12

21

32

5155

72

2004 2005 2006 2007 2008 2009 2010

Developed Developing

3

1510 4

14 46 2

101

18 162

61 223

VC CorpRD&D

Totalinvestment

SDC*Assetfinance

GovR&D

Publicmarkets

new equity

M&A/B-O etc.

Total transactions

Re-invested

Totalcompany

investment

PE

Technology development

Equipment manufacturing/scale-up

Projects

Asset and company mergers, acquisitions, ref inancing, buy-outs etc.

Global Trends

in Sustainable Energy

Investment

2010

Global Trends

in Renewable Energy

Investment

2011

Source: Bloomberg New Energy Finance/UNEP 20

New Investment in RE by Technology,

2010 ($bn)

0.1

2

3

6

11

86

95

-44%

44%

-22%

-20%

-5%

52%

30%

Marine

Geothermal

Small hydro

Biofuels

Biomass & w-t-e

Solar

Wind

Growth:

*Small Distributed Capacity

3

1510 4

14 46 2

101

18 162

61 223

VC CorpRD&D

Totalinvestment

SDC*Assetfinance

GovR&D

Publicmarkets

new equity

M&A/B-O etc.

Total transactions

Re-invested

Totalcompany

investment

PE

Technology development

Equipment manufacturing/scale-up

Projects

Asset and company mergers, acquisitions, ref inancing, buy-outs etc.

Global Trends

in Sustainable Energy

Investment

2010

Global Trends

in Renewable Energy

Investment

2011

Source: Bloomberg New Energy Finance/UNEP 21

Energy Efficiency: The First Fuel

22

And NOW … Let’s Take a Look at the

dreaded Energy Efficiency Gap !!!

Efficiency measures account for two-thirds of the 3.8 Gt of abatement in

2020, needed to meet the 450 ppm trajectory

Currently Efficiency is only capturing a small percentage of reductions –

in the range of <1% to 10%

26

28

30

32

34

36

38

40

42

2007 2015 2020 2025 2030

Gt

2010

Efficiency 65 57

End-use 59 52

Power plants 6 5

Renewables 18 20

Biofuels 1 3

Nuclear 13 10

CCS 3 10

Share of abatement %

2020 2030

3.8 Gt 13.8 Gt

Reference Scenario

450 Scenario

23

Can Development Assistance Fill

the Gap?

Bilateral and Multilateral Support for Energy Sector Assistance, by Sector

Area: Comparison of Two Three-Year Periods (1997-1999 vs. 2003-2005)

24

US Experience : Policy Action on EE

Can Clearly Make a Difference

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

KW

h

12,000

8,000

7,000

California

U.S.

kWh

Total Electricity Use, per capita, 1960 – 2001 25

Australia Example: Domestic Refrigerators, 1980 - 2006

0

200

400

600

800

1000

1200

1400

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

MEPS

2005 full

impact

Initial MEPS

introduced in 1999

Labelling

introduced in 1986

kW

h/y

ear

Source: Australian Greenhouse Office

Refrigerator use has fallen by more than 60%

26

U.S. Refrigerator Energy Use vs. Time, with Real Price Changes.

U.S. Example:

Domestic Refrigerators, 1947 - 2004

Source: Goldstein, NRDC 2005

Refrigerator use has fallen by more than 2/3 since 1973,

while volume has increased and price has decreased

27

South Korea Example: Appliance

Standards and Labeling

28

Thailand’s 5 Conservation Power

Plants

29

Famous stars for The public campaigns

Achievement

• Successfully removed low efficient “fat tubes” from the market.

Manufacturers stopped producing the fat tube in September 1995

• Create massive popularity for thin tubes among consumers all over the country.

• Energy savings of 1,958 GWh/yr and peak demand reduction of 402 MW and

1.47 million ton of CO2 reduction.

Market Transformation Programs

Switching from FAT to THIN Tubes

Source: Phumaraphand, EGAT (2011)

30

Thailand’s Famous #5 Label:

Focusing on the Residential Sector

31

32

Refrigerator (1994)

Air conditioner (1995)

Compact Fluorescent Lamp (1996)

Electromagnetic Ballast (1998)

Electric Fan (2001)

Automatic Rice Cooker (2003)

Lighting Luminare (2003)

T5 (2009)

Electronic Ballast (2009)

Double-oscillating Fan (2009)

T5 Luminare (2010)

Exhaust Fan (2010)

Standby 1 Watt – Television (2010)

Energy Labeling Programs by

EGAT

Source: Phumaraphand, EGAT (2011)

Energy Conservation Fund

Revolving Fund

ESCO Fund

Utility Fund

Established in 1992 under Energy Conservation Act

Collecting a small levy (~1 US cent/litre) from the sell of gasoline, diesel, fuel oil and kerosene

Supporting EE/RE promotion activities

Soft loan program

Co-investment program

Demand Side Management programs in residential, commercial and industrial sector

Focusing Standard & Labeling for electrical equipments

MEA PEA

EGAT

Limited activities in energy efficiency

Public Fund

Financing of Energy Efficiency

Programs in Thailand

33

Demand-Side

Management (DSM)

results:

– 2,600 peak MW peak

demand reduction

– 15,700 GWh of energy

savings

– About 5% of current

electricity is supplied by

Negawatts

Thailand has Avoided Construction

of five (5) Power Plants

34

Cost Comparison of Energy Options

in Thailand

$0

$50,000

$100,000

$150,000

$200,000

$250,000

The 30

% S

ubsidy

Progra

m

EE R

evolv

ing

Fund

DSM

Bio

gas E

lect

ricity

Gen

erat

ion

Mix

ed Conve

ntional

Ene

rgy (7

0% N

G)

Min

i-hyd

ro, 2

00 k

W-6

MW

Bio

mas

s Cond

ensi

ng, 20

MW

Win

d Far

m, 2

0,00

0 kW

MSW

Inci

nerat

ion,

3,0

00 k

W

Solar PV, l

arge

scal

e, 4

60 k

W

Cap

ital

Co

st

(Bah

t/kW

)

฿0

฿2

฿4

฿6

฿8

฿10

฿12

฿14

Gen

era

tin

g C

ost

(Bah

t/kW

h)

Cost of

Delivered

Electricity

Capital Cost

Demand

Side

Measures

Supply Side

Measures

35

How Can We Seize the Energy

Efficiency Investment Potential?

36

Most Countries in the Region Have

Set Energy Savings Targets

Country Energy Efficiency Strategy/Action Plan Required

Investment ($m)

Brunei Darussalam Attain 25% reduction of energy intensity from 2005 level by 2030 48

Cambodia Reduce final energy consumption by 10% in all sectors 126

Indonesia Decrease energy intensity by 1% annually and decrease energy-GDP elasticity to

below 1% by 2025 6,019

Lao PDR Reduce final energy consumption by 10% in all sectors 29

Malaysia Reduce final energy consumption in industrial, commercial, and residential

sectors by 10% from 2011 to 2030, and reduce final energy consumption of the

transportation sector by 1.39 ktoe in 2030 901

Myanmar Reduce primary energy consumption by 5% in 2020 and 8% by 2030 compared

to BAU, and improve EE in all end-use by 16% by 2030 165

Philippines Reduce final energy consumption by 10% in all sectors from 2007 to 2014 601

Singapore Reduce energy intensity by 20% by 2020 and by 35% by 2030 from 2005 level,

and cap CO2 emissions from fuel combustion at 63 Mt-CO2 in 2020 97

Thailand Reduce the energy intensity of GDP 25% by 2030 relative to BAU 2,006

Vietnam Reduce energy consumption by 3%-5% by 2010 and 5%-8% by 2010-2015 649

Source: 3rd ASEAN Energy Outlook, February 2011 and Nexant calculations 37

A Total of $944 billion is Needed to

Meet National Targets by 2020 ($2 billion for Thailand alone!)

Investment Required by 2020 to Reach EE Targets ($m)

92% of investment in China, 7% in India,

1% in Southeast Asia

Largest investment in Southeast Asia

countries required by - Indonesia (57%)

- Thailand (19%)

- Malaysia (8%) * Analysis covers SE Asia, China, and India

To meet government EE targets by 2020, need

- ~$11 billion in Southeast Asia

- ~$944 billion in China, India, and Southeast

Asia combined

To meet government EE targets by 2030, need

an additional $15 billion in Southeast Asia

38

How Will We Pick Up the $20 Bill? (or the $2 billion prize in the case of Thailand)

Drivers and Policies

– Cost of oil imports

– Competitiveness and ASEAN open

market

– Climate change

– Energy Efficiency as a Resource

– Feed-in Tariff for energy efficiency

Business Mechanisms

– Energy service companies (ESCOs)

– EE insurance products

– Performance guarantees

– Innovative financing mechanisms 39

Thank you!

Peter du Pont, Vice-President

Government & Clean Energy Consulting

Nexant, Inc.

Tel: +66 2 793 464

pdupont@nexant.com

40