The Energy Ministry has set up a fund worth initially Bt500 million for SMEs to invest in energy conservation and renewable energy projects.

The Energy Service Companies Fund would target those SMEs facing difficulties securing a bank loan for such projects, Energy Minister Wannarat Charnnukul said yesterday.

The Department of Alternative Energy Development and Efficiency provided the capital for the fund, which is co-managed by the Energy Conservation Foundation of Thailand and Energy for Environment Foundation.

The fund will start operating next year and the department plans to inject Bt1 billion per year into the fund from 2010-2012 if it succeeds in attracting many SMEs.

The fund will join with the SMEs to invest in promising projects via several channels. One is the equity method, which features an investment period of three-seven years before the fund sells back the acquired shares to the project developers or other interested parties. The fund could also provide loans to SMEs to buy the energy-saving equipment and the SMEs would repay the loans over the agreed-upon periods.

The initiative should support projects worth over Bt1.25 billion next year and save at least 10 kilotons of energy or about Bt250 million per year. At least 20 projects are expected to apply for the fund, Wannarat added.