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How Thailand Washed Away Wasteful Lighting

Article 2: Asian Development Bank Lights the Way in Efficiency
Photo essay: Fuel-Based Lighting in the Workplace

In the early 1990s, Thailand was faced with rapidly growing electricity demand, and the government had to do something. By forging a national agreement with the lighting industry in 1993, the government was able to ÒwashÓ fat T12 tubes out of the Thai market in favor of efficient T8 lamps within just two years.

In the early 1990s, lighting accounted for 25% of national electricity use in Thailand. Having identified energy efficiency as the least-cost power supply option, the Thai cabinet in November 1991 gave the Electric Generating Authority of Thailand (EGAT, a state-owned generation and transmission utility that provides power for the electricity needs of ThailandÕs 60 million inhabitants) the legal mandate and authority to pursue a National DSM (Demand Side Management) Master Plan. DSM activities seek to meet energy needs by influencing customer demand rather than by building new supply.

In its exploration of ThailandÕs energy efficiency potential, EGAT came upon an exceptional opportunity. The light output of Òthin tubeÓ 36W or 18W T8 lamps is equivalent to that of Òfat tubeÓ 40W or 20W T12 lamps, yet the T12s dominated the market (70% market share). However, the T8s can directly replace T12 lamps without requiring a change in ballast or fixture, and because they use fewer raw materials, the Òthin tubeÓ lamps cost the same, or less, than the T12s. The only factor preventing their widespread acceptance in the Thai market was the (incorrect) consumer perception that T8s give off less light, donÕt fit in T12 fixtures, fail prematurely, break more easily, or are more prone to burn-out at their extremities.

When, in addition, EGAT considered that most of the fluorescent tubes were produced domestically and that lighting accounted for 25% of national electricity use, EGAT decided to design a program to implement a complete national switch from T12s to T8s. The principle behind the program can be described by a Thai phrase that translates into English as Òmarket-washing.Ó

When the market-washing program was being developed, Philips Lighting, which controlled roughly 30% of the Thai market, had recently switched its Thai production facilities over to T8 lamps. Philips demonstrated that the technology worked, easily saving four watts per lamp with a minimal negative impact on ballast losses. However, in spite of the companyÕs reputation as one of the leading suppliers, Philips was losing market shares because of poor public perception of the lamps. This was also likely to be a barrier in convincing other companies to convert their production lines from T12 to T8.

SUBSIDIES WERE AVOIDED

In 1993, EGAT officially launched its national DSM program, with the following objectives:

(a) to build institutional capability in the Thai electric power sector and the energy-related private sector to deliver cost-effective energy services in a sustainable manner;

(b) to pursue policies and actions that would lead to the development, manufacture, and adoption of energy-efficient equipment and processes.

The bulk of the programÕs budget came from EGAT itself, through a fuel cost adjustment mechanism incorporated into its electricity tariffs. The remainder of the funds came from a Global Environment Facility (GEF) grant and bilateral donors from Australia and Japan.

EGAT was keen to avoid subsidy programs and instead sought to rely on voluntary agreements, market mechanisms, and intensive advertising and public education campaigns. EGAT concluded that the best course of action was to convince all five local manufacturers (Philips, Toshiba, Asia Lamp, Saffi, and Daichi) and the one importer (Osram) to switch their production from T12 to T8 lamps. In exchange, EGAT would draw on its financial resources and corporate strength to change the publicÕs perception of T8s. In September 1993, a Memorandum of Understanding (MoU) was signed between the Thai Prime Minister, the Chairman of EGAT, and the presidents of each of the five manufacturers, in which the manufacturers committed to retool their production from T12s to T8s within two years.

MASSIVE PR CAMPAIGN

In return, EGAT promised to support the manufacturers through a US$8 million public awareness campaign. This support took the form of a massive and comprehensive educational outreach. Each day, major television networks aired six spots featuring the Prime Minister or celebrities. When measured in terms of airtime and number of spots, the combined DSM television ad campaigns (for lighting as well as other programs) were larger than Thai campaigns for any other consumer product. Radio and newspaper ads also ran regularly. To give consumers a chance to see the new lamps, demonstrations took place around the country, including retrofits in city halls and schools. Lectures, seminars, and schoolchildren marches drew the publicÕs attention to the retrofits.

The ads and events highlighted the opportunity for saving 10% of the energy used for lighting while serving the nationÕs interest by minimizing the need to build additional generation capacity. The market-washing campaign also served to introduce the public to EGATÕs DSM activities.

The program has indeed resulted in a complete transformation of the fluorescent tube market in Thailand within two years (by September 1995). Local manufacturers have retooled their facilities to produce T8 lamps, and the one importer of these lamps has switched its orders from T12s to T8s.

As of June 2000, EGAT estimated cumulative annual savings of 2374 GWh/year and a 629-MW load reduction. From a consumer perspective, the programÕs benefits are positive and there are no costs, except for the (possibly) greater risk of lamp breakage during installation. From a manufacturer perspective, the program is profit-neutral. The cost to change production lines is being offset by a lower production cost for T8 lamps and unchanged wholesale prices.

EGAT has implemented a number of DSM programs in addition to the thin tube program. These include labeling for refrigerators and air conditioners, a motors program, and a commercial building efficiency program. The thin-tube program was by far the most successful of the programs and accounted for 66% of the total energy savings and 83% of the peak MW savings. Separate data on the cost of the thin-tube program are not available, but the $43 million spent on all the DSM programs works out to just below $60 per peak kW, far below the typical avoided costs for most DSM programs. Peter du Pont, the Asia Director for the International Institute for Energy Conservation (IIEC), points out that, like other market transformation programs undertaken in Sweden and the US, EGATÕs market-washing relies largely on a public-private partnership to develop win-win situations where it is in the interest of the manufacturers to produce and aggressively market high-efficiency equipment.

LESSONS LEARNED

The Thai market-washing program took advantage of a set of market characteristics that favored the changeover from 40W T12 lamps to 36W T8 lamps.

The cost of the energy-saving technology was equal to or less than the cost of the baseline technology.
The energy-saving technology could be used to retrofit the baseline technology without the need for changing ballasts or fixtures or for rewiring.
Only six manufacturers/importers were active in the fluorescent tube market, so EGAT had a small pool of companies with which to negotiate.
The main barrier was consumer perception, which was straightforward to address.
Switching production to the energy-saving technology had a zero net cost for the manufacturers.

Taking these special market conditions into account, one can still point to certain factors that ensured the programÕs success.

Close engagement with the private sector. The program could not have worked without a close working relationship between EGAT and the manufacturers of fluorescent tubes.
Support from top-level management. The program benefited from top-level political and corporate support, such as from the Prime Minister, the Governor of EGAT, and manufacturer presidents; this sped up program implementation.
A broad-based educational campaign, encompassing both national and local efforts. The market-washing campaign took out ads in national media, including television, radio and print media, but it also ran local demonstrations in city halls and schools and held local seminars and schoolchildren marches. The national and local elements of the campaign reinforced each other.
Public-private sector synergies. Before the EGAT campaign, consumers were not aware of energy-efficiency benefits, so manufacturers were hesitant to use energy efficiency in their marketing campaigns. The EGAT market washing advertisements built awareness of energy efficiency, which manufacturers subsequently used to their advantage by vaunting the energy efficiency of their products. These independent private-sector, energy-efficiency ads helped build and maintain public awareness of energy efficiency. This is an example of the synergies that are possible between the public and private sector.

Sabrina Birner

Sabrina Birner is a consultant in energy efficiency based in Paris.

For more information:
IIEC Asia Office, Racquet Club Bldg, 8 Sukhumvit Soi 49/9, Wattana, Bangkok 10110, Thailand
Tel: +66 2 381 0814, 712 6057-58
Fax: +66 2 381 0815
E-mail:iiecbangkok@iiec.cerf.org
www.cerf.org/iiec

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