*Date of submission: 17 August 2007 Date of Resubmission:

PART I: PROJECT IDENTIFICATION

GEFSEC PROJECT ID: 3359GEF AGENCY PROJECT ID: 3908COUNTRY(IES): ThailandPROJECT TITLE: Promoting Renewable Energy in Mae Hong Son ProvinceGEF AGENCY(IES): UNDPOTHER EXECUTING PARTNERS: THAILAND ENVIRONMENT INSTITUTE (TEI)GEF FOCAL AREAS:      Climate Change GEF-4 STRATEGIC PROGRAM(S): CC-SP3, CC-SP4

A. PROJECT FRAMEWORK (EXPAND TABLE AS NECESSARY)Project Objective: To overcome barriers to the provision of Renewable Energy (RE) services in an integrated provincial renewable energy programme

Project Components

TA/ STA Expected

OutcomesExpected Outputs

Indicative GEF

Financing*

Indicative Co-financing* Total ($)

($) % ($) %1. Institutional . Capacity Development

TA Institutional/ Organizational/ Social Capacity strengthened to plan, manage and implement an integrated RE programme

1.1 Integrated provincial RE planning 1.2 Strengthened mobilization and co-ordination mechanisms1.3 Local champions promote plan implementation

600,000 20 700,000 30 1,300,000

2.Installation of on-grid RE (microhydro, biomass) systems

TA RE systems installed and surplus sold to the grid using economic instruments

2.1Rehabilitationof existing RE systems2.2 RE systems installed in communities in Mae Hong Son2.3 Cost/ benefit’ analyses for end-users2.4 Smart subsidies / tax incentives promoting willingness to pay2.5 Feasibility studies for RE investment options

1,200,000 40 1,300,000 20 2,500,000

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PROJECT IDENTIFICATION FORM (PIF)PROJECT TYPE: FULL SIZE PROJECT THE GEF TRUST FUND

INDICATIVE CALENDARMilestones Expected Dates

Work Program (for FSP) Nov. 2007CEO Endorsement/Approval Dec. 2007GEF Agency Approval Jan. 2008Implementation Start Mar. 2008Mid-term Review Oct. 2010Implementation Completion Feb. 2013

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3. Technical support to RE systems

TA Technical support provided to manage and maintain RE applications

3.1 RE curricula for vocational training institutes3.2 Trained local government technicians3.3 Private service providers with capacity to maintain equipment3.4 Communities with capacity for basic maintenance3.5 Technology information and guidance on SPP/ VSPP and other schemes disseminated among communities/ investors

480,000 16 1,000,000 25 1,480,000

4. Policy change to promote RE

TA Policies in place that facilitate spreading and replication of RE systems in rural Thailand

4.1 Existing government energy programmes incorporate RE applications4.2 Policy recommendations from international best practice implemented4.3 Improved system of government accountability in RE sector4.4 Policy makers aware of benefits of RE applications

450,000 15 600,000 15 1,050,000

5. Project management

263,000 9 400,000 10 663,000

Total project costs

2,993,000 100 4,000,000 100 6,993,000

* List the dollar amount by project components.

B. INDICATIVE Financing Plan For The Project ($)Project Preparation Project Agency Fee Total

GEF Grant 90,000 2,993,000 308,300 3,391,300Co-financing 110,000 4,000,000 4,110,000Total 200,000 6,993,000 308,300 7,501,300

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C. INDICATIVE CO-FINANCING FOR THE PROJECT BY SOURCE ($), If AvailableCo-financing Source Cash In-kind TotalProject Government Contribution 800,000 500,000 1,300,000GEF Agency(ies) 100,000 100,000Bilateral Aid Agency(ies) 1,500,000 1,500,000Private Sector 500,000 500,000NGO 100,000 300,000 400,000Others 200,000 200,000Total co-financing 3,000,000 1,000,000 4,000,000

D. GEF RESOURCES REQUESTED BY FOCAL AREA(S), AGENCY (IES) SHARE AND COUNTRY(IES)* Does not apply

PART II: PROJECT JUSTIFICATIONA. STATE THE ISSUE, HOW THE PROJECT SEEKS TO SOLVE IT, AND THE EXPECTED GLOBAL

ENVIRONMENTAL BENEFITS TO BE DELIVERED: Despite the government’s commitment to RE, there have been constraints to the wider and more sustained application of Renewable Energy Technologies (RETs) in Thailand. For example, the Department of Alternative Energy Development and Efficiency (DEDE) established 59 micro-hydro projects with a total capacity of 2 MW in Northern Thailand since 1979, but by the end of 2003, only 25 sites are operational. The failures are due to the lack of involvement of the communities, and improper maintenance of the systems. Another example out of around 300,000 solar home systems for rural electrification which have been installed, approximately only 20% are operating. This project will overcome barriers that currently prevent widespread and sustainable utilization of renewable energy technologies for the provision of rural energy services in rural areas of Thailand. The project will work initially in Mae Hong Son province, which the Ministry of Energy has identified as its target to be the first energy self-sufficient province in Thailand, in conformity with the king’s sufficiency economy concept. Provisionally identified market barriers include those that are related to institutional and technical capacity, policy, and economic incentives.

In the alternate/GEF scenario, the Royal Government of Thailand (RTG) will be supported in delivering a rural electrification program to all villages in Mae Hong Son province with cost-effective electricity generated from renewable sources (mainly micro-hydro, and sustainably managed biomass generation), and this experience will be replicated in other similar provinces. The project will create conditions for investments in RETs that benefit local communities by taking advantage of and reshaping (if necessary) government/ utility programmes. Moreover, the local governments in Mae Hong Son and other similar provinces, following the lead of the national government, will also enhance its support to the provision of rural energy services using feasible and available RE resources in the province. Approximately 65,000 tonnes of CO2 emissions will be avoided in Mae Hong Son alone, and the total for Thailand is expected to be at least three times this figure (to be established during the preparatory process).

B. DESCRIBE THE CONSISTENCY OF THE PROJECT WITH NATIONAL PRIORITIES/PLANS Thailand’s INC states that the energy sector has become the largest source of CO2 emissions in Thailand, accounting for more than half of the country’s total CO2 emissions in recent years. Although the national target of application of RE is 8% by 2011, the current achievement is only about 4%, and the government has experienced various constraints in the wider and more sustained application of Renewable Energy Technologies (RETs) in Thailand. Therefore, this project will help the government to achieve its RE target as stated in the Government’s Strategic Plan for Renewable Energy (RE) Development. Also, the government is preparing a “Green Energy Market”, through which consumers can elect to pay a small premium for their electrical power, the funds being used to support RE development. This is projected to generate about $3,000,000 per year by the fifth year of operation.

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C. DESCRIBE THE CONSISTENCY OF THE PROJECT WITH GEF STRATEGIES AND FIT WITH STRATEGIC PROGRAMS:

The project is consistent with CC-SP3, as it will increase the quantity of electricity generated from economically viable renewable sources and promote the adoption of policies promoting on-grid RE. It is also consistent with SP4, as it will introduce sustainable practices in biomass use as energy.

D. OUTLINE THE COORDINATION WITH OTHER RELATED INITIATIVES In terms of promoting renewable energy in Thailand, the project will benefit from lessons learned from the existing UNDP/GEF project “Removal of Barriers to Biomass Co-Generation from Wood Residues in Thailand”. For example, a key lesson learned from this project to be applied in the new project is: “Smaller scale renewable energy projects have better prospect than medium and large ones. The potential uses of other types of renewable energy such as wind, solar and biogas are quite promising especially in terms of public support. The public has very little awareness of the risks or benefits of these kinds of renewable energy so public education or public relations campaign are required”. Furthermore, this project will be closely coordinated with RE initiatives undertaken by the Agence Française de Développement (AFD).

E. DESCRIBE THE INCREMENTAL REASONING OF THE PROJECTIn the absence of the project, the government’s commitment to RE would continue to go unimplemented due to barriers related to institutional and technical capacity, economic instruments, and policies and awareness. Economic development in rural parts of Thailand would continue to be based on fossil fuel energy sources, and emissions would accelerate in line with the level of development. GEF funding will overcome barriers to more widespread use of RE, simultaneously establishing a source of sustainable community income in some of the poorest communities in the country through the sale of surplus electricity to the grid.

F. INDICATE RISKS, INCLUDING CLIMATE CHANGE RISKS, THAT MIGHT PREVENT THE PROJECT OBJECTIVE(S) FROM BEING ACHIEVED. OUTLINE THE RISK MANAGEMENT MEASURES, INCLUDING IMPROVING RESILIENCE TO CLIMATE CHANGE, THAT THE PROJECT PROPOSES TO UNDERTAKE.

Political instability and institutional uncertainty poses a moderate risk. This risk is associated with the recent creation of new government agencies, the possibility of future re-structuring, and the conflicting and overlapping mandates of government agencies that can result from such a process. This might create a situation in which government agencies do not work effectively together when such cooperation is needed in order to attain the project objective. The project design process will explicitly address this risk by building a multi-sector consortium of project partners, including NGOs and CBOs to help avoid any likelihood of direct government agency non-cooperation. Specifically, the main project partner, TEI, is a long-established and well-respected national NGO which has a history of building effective cooperation among diverse agencies and thereby influencing policy decisions.

G. DESCRIBE, IF POSSIBLE, THE EXPECTED COST-EFFECTIVENESS OF THE PROJECT (e.g. $/tons of CO2 abated). IF COST EFFECTIVENESS IS NOT PRESENTED, OUTLINE THE STEPS THAT PROJECT PREPARATION WOULD UNDERTAKE TO PRESENT COST-EFFECTIVENESS AT CEO ENDORSEMENT:

Approximately 65,000 tonnes of CO2 emissions will be avoided in Mae Hong Son alone, and the total for Thailand is expected to be at least three times this figure (to be established during the preparatory process), giving a cost of about $18 of GEF resources/tonne of CO2 emissions avoided.

H. JUSTIFY THE COMPARATIVE ADVANTAGE OF GEF AGENCY (leave blank if GEF Agency is within the comparative advantage matrix)

PART III: APPROVAL/ENDORSEMENT BY GEF OPERATIONAL FOCAL POINTS AND GEF AGENCIES

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A. RECORD OF ENDORSEMENT OF GEF OPERATIONAL FOCAL POINT (S) ON BEHALF OF THE GOVERNMENT(S): (Please attach the endorsement letter(s) with this template).

Mr. Petipong Na AyudhyaPermanent Secretary, Ministry of Natural Resources and Environment

Date:3 April, 2007

B. GEF AGENCY(IES) CERTIFICATION

This request has been prepared in accordance with GEF policies and procedures and meets the GEF criteria for project identification and preparation.

John HoughDeputy Executive Coordinator a.i.UNDP/GEF

Project Contract Person:Martin KrauseRegional Technical Advisor, GEF Regional Coordination Unit, Bangkok, Thailand

Date: 17 August, 2007 Tel. and Email: +66 22882722; martin.krause@undp.org

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Annex: Government Endorsement Letters

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