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Vietnam Sustainable Energy Promising Sector
Vietnam Sustainable Energy Promising Sector
Vietnam Sustainable Energy Promising Sector
Introduction
The market for sustainable energy provision in Vietnam is rapidly expanding due to increasing costs and constraints in energy supply and as a result of stricter environmental regulations and new legislation which promotes energy conservation. Also new policies with regard to climate change adaptation and mitigation will generate incentives for the public and private sectors to invest in low carbon economic growth and this will trigger market opportunities in the fields of energy efficiency (EE), renewable energy (RE), cleaner production and environmental technology.
environmental safeguards. While in the past five years the Vietnamese government has basically neglected to ensure practical application of these legal tools, there is now a new momentum coming up for broader implementation and this is expected to generate better awareness amongst public sector investors as well as business managers about benefits and cost-effectiveness of investing in a sustainable energy supply chain. One of the instruments to be further developed for practical use amongst sectors is the energy audit.
Availability and potential of the main RE resources in Vietnam: o Solar. Most of Vietnam is situated in the tropical zone between 8 and 23 North latitude with up to 5,000 hours of sunshine per year. The average solar energy density ranges between 100 and 175 kcal/cm2/year. Generation of solar heat energy can total up to 1744.5 kWh/m2/year. The total potential is estimated at 43.9 billion TOE/year. Insulation increases from North to South: it is higher and more stable in the highlands, central coastal and southern provinces. The two main technologies used in Vietnam are the solar PV and the solar thermal applications. Clients using the solar PV application include families living on islands and in remote rural and mountainous areas which are out of reach from the electricity grid. Accumulative installed capacity up till now is around 1,5 MWp of which 30% used by rural families, 35% used for telecommunications and 35% for marine communication. Solar thermal collectors are mainly used for domestic water heating by city households. The two common types of solar water heaters are the flat plate collector and the evacuated glass tube collector. o Wind. Vietnam is located in the monsoon wind zone with two main wind directions: the cold East-North monsoon wind from Siberia and China during winter and the hot South-West and South-East monsoons from the equator during summer. Wind density varies from area to area: it is estimated at 800-1,400 kWh/m2/year on islands and at 500-1,000 kWh/m2/year in the Central Highlands, coastal areas of Central Vietnam and the Mekong Delta. In other areas the density distribution of wind energy is less than 500 kWh/m2 per year. Total potential of wind energy in Vietnam is estimated at 713,000 MW of which 510,000 MW on land and 200,000 MW on islands. o Small hydropower. Apart from the big two -Mekong and Red River- most of the Vietnamese river systems are composed of small river basins with short rivers, high river bed grades and relatively equal river densities. Average rainfall is high and the combination of high flow density, broadly distributed springs and cut-through relief provides suitable conditions for small hydropower development. About 1050 potential sites for small sized hydropower, ranging from 0.1 to less than 30 MW, have been identified with a total capacity of 4,044.5 MW, equivalent to 16.7 million GWh/year. More than 200 plants have been realized and 800 more are planned. Provinces with strong potential are Son La (95 projects), Kontum (80 projects) and Lao Cai (80 projects). At present hydropower is the main supply source for national power demand accounting for 40% of total capacity in Vietnam.
o Biomass. The biomass production in Vietnam is based on forestry and agricultural by-products
and solid waste. It mainly includes rice husk from paddy milling stations, bagasse from sugar factories, coffee husk from coffee processing plants in the Central Highlands and wood chip from wood processing industries. The biogas energy potential in Vietnam is estimated at 6.4 MTOE/year, 60% from agriculture-by-products and 30% from animal manure. Another biomass source is solid waste. The Go Cat power generation station operates on municipal solid waste treatment and has a 15,587,983 kWh electricity production rate.
o Geothermal. With more than 300 hot streams with temperatures ranging from 30 C to 148 C,
mainly situated in Northwest and Central Vietnam, there is an estimated geothermal power potential of 1,400 MW. While so far only limited data on geothermal reserves for power generation are available, rough estimates indicate that a capacity of 400 MW could be reached in 2020.
Market development
The renewable energy (RE) sector is considered a high potential, but also highly under-explored and under-exploited sector. The Vietnamese government has started calling for investments in renewable energy projects in order to contribute to the national energy security and to cope with future electricity shortages by diminishing carbon fuel dependence. It is expected that the newly established legal and policy frameworks will provide a solid foundation and strong incentives for investments and project development in both the renewable energy and energy efficiency sector for the short, medium and long term. The Vietnamese market for energy savings and energy efficiency (EE) is still in a nascent state. However this may change rapidly and short term prospects are positive especially for those entrepreneurs who are looking for niche markets. Many private companies are already exploring market opportunities to practically engage in energy efficiency and renewable, including CDM or voluntary carbon market mechanisms, but remaining bottle necks are still blocking or delaying a quick kick start of initiatives. The major obstacles are heavy procedures, lack of finance and price distortions in the power sector. Change for the better is to be expected soon. Provisions in the new energy law will impose numerous measures across all sectors in society to rationalize energy consumption and invest in new technologies and power saving equipment, e.g. for insulation, heat recycling, speed adjusting equipment, warehouse and distribution facilities, pollution control, construction materials and so forth. With the new energy conservation law coming into force soon, forward looking entrepreneurs, traders and investors will trade off potential liabilities, like capital intensive start up costs, against medium term benefits. Fiscal incentives as well as domestic and external financial resources. Additional market incentives will come from climate mitigation measure and from the new environmental protection tax. The Vietnamese government has nominated five types of goods for this tax: oil and gas, coal, hydro-chloro-fluoro carbons (HCFCs), plastic bags and restricted pesticides. Initiatives to smoothen and accelerate application of CDM opportunities for Vietnam are also emerging. Strong need for advisory services and knowledge transfer. In summary: the key EE and RE demands are expected in the fields of transfer of knowledge and technologies. A considerable portion of the materials required in the energy efficiency and renewable energy sectors in Vietnam needs to be imported. Some parts of solar PV applications and thermal collectors are produced in Vietnam, but the main parts are imported from China, Japan, Australia, Italy, UK, Germany and France.
The Law on Energy Saving and Efficiency was adopted in the National Assembly on 17 June 2010 (see box below). This law provides many incentives for energy efficiency and conservation as well as cleaner production measures (see box 1 below). The new environmental tax measures, Ministry of Finance, promoting energy efficiency and renewable energy indirectly by putting taxes on oil, gas and coal and specific pollutants. The Action Plan in response to climate change of the Ministry of Industry and Trade (MoIT), September 2010. ENTECH 2011: Environment and Energy Technology Fair, Hanoi, 25-28 May 2011 (see box 2 below and web link to English brochure).
Solar energy: The Vietnamese Government has recently launched a five-year national program to call for public participation to utilize solar energy. It is estimated that the program will put 30,000 solar-powered water heaters each with a 180-liter capacity on the market by 2013. The program also aims to expose the benefits of solar energy amongst the public and adapt the technology for making solar-powered water heaters. At present Vietnam imports thousands of such units and accessories every year. The planned installation of solar heaters could help save 57 million kWh of electricity power and cut greenhouse gas emissions by 23,541 tons every year. Most PV panels are imported from Japan, Australia, Italy and the UK. The government has assigned the Energy Conservation Centre of Ho Chi Minh City to begin constructing the first solar panel manufacturing plant in Vietnam with a total investment of $10 million in mid 2008. In the first phase, the project will focus on building and assembling solar panels from solar cells imported mainly from Germany and France, with a capacity of 3 MWp per year. In the second phase, the factory will produce solar cells from silicon bars and raise its capacity of assembling panels to 5 MWp per year. Wind energy: A wind power generation project with a capacity of 27 MW is being developed by the Vietnam Renewable Energy Joint stock company (REVN). Several other medium-large (10-125 MW) wind projects are in the feasibility stage. Energy efficiency and conservation: the new Law adopted in June 2010.
BOX 1 Energy Efficiency and Conservation
According to the Law, objects under the bill belong to one of the two groups. The first group includes ones that use large amounts of energy, and is called intensive energy consumers, including industrial establishments, public constructions, and transportation establishments. This group must be controlled under clear regulations and specific award/punishment procedures. The other group using less energy consists of residents community, medium-sized and small-sized firms. This group is encouraged rather than forced to observe the law. The difference between the two groups is that the compulsory group has to conduct energy audit, make annual plans, and
prepare specific solutions to save energy. Also, this group has to file an energy report to higher authorities and assign energy management officers to be responsible for constructing and helping the management carry out the executing plans. The group that uses government funds, such as office buildings, road lighting, and public lighting, is also required to comply with regulations in this Law. The Law also clearly states the responsibility that the manager holds, and the specific procedures to be taken if it is ignored. For the residents community, primary solutions are encouraging families to take part in limiting power consumption in peak hours and purchasing electrical appliances that are energy efficiency.
The Law is not only necessary and suitable for the current condition but also of prime importance to the country in the future, said Mr. Dang Vu Minh, Chairman of the Congresss Committee for Science, Technology and the Environment.
According to a MOITs report, the national demand for energy in 2007 was 30.1 million TOE, given the average annual growth rate of energy demand of 12% during 1990-2006. On the other hand, energy is wasted on a large scale. The energy utility efficiency in coal and petrol-run power stations is as low as 28-32%, 10% lower than that of other developing countries. The efficiency rate of industrial boilers only reaches 60%, 20% lower than the worlds average. As a result, for the same product, we spend as much as 1.5-1.7 times the energy amount of other countries. Minh Nguyen - Source: VNEEP, MoIT, Vietnam ---------------------------Law on energy efficiency and conservation takes effect 2009 statistics from Ministry of Industry and Trade show that Vietnams rate of growth in electricity consumption was 2.45 times greater than GDP growth rate. Consumption in industry construction sector accounted for about 38%, civil 36.8%, transportation 20%, the rest in service and agriculture.
Mr. Dang Vu Minh, Chairman of Committee for Science, Technology and Environment of National Assembly: Law on energy efficiency is necessary and suitable both in the current circumstances and in the future.
Despite depletion of energy sources resulting in increasing power shortage, energy use in Vietnam is still inefficient and wasteful due to outdated technology and limited awareness of energy saving. Such scenario has made the issue of using energy efficiently become highly imperative.
To encourage energy saving, Ministry of Industry and Trade has spent the last two years drafting the Law on energy efficiency and conservation, which was approved by 12th National Assembly on June 17th 2010.
Shortage of initial capital, limited awareness among business managers and lack of reliable consultants are the biggest obstacles in implementing efficient energy usage and renovating technology. Most businesses know about long term benefit from energy efficiency, but the cost of investing on energy efficient technology is still too high, especially at the moment when financial supports from governments supporting programs are very limited. Using outdated equipments with low productivity and high energy consumption is the major cause of power waste. However, there are cases when enterprises determine to update their equipments to save energy and have enjoyed substantial economic benefit, protect the environment and improve communitys awareness. The goal of 8% energy saved proposed in Researching plan for using energy efficiently in Vietnam is not an easy one without a strict legal framework.
After a long and hard time researching and analyzing energy usage in Vietnam, consulting energy saving law of other countries, a framework for the Law of economical and efficient energy usage has been formed.
With 85.8% of agreed on the total number of MPs (98.37% of the total 430 present reps), on June 17th, Congress passed the Law.
The framework was then re-evaluated by experts, scientists, entrepreneurs and citizens in many workshops. Necessary modifications were added to form a Final Draft Law to present in the 6th meeting of 12th National Assembly. In the following meeting, the Law was approved with 12 Chapters, 48 Articles.
The Law requires labeling products using energy efficient technology to encourage production of these products and gradually eliminate outdated equipment, reducing energy consumption in production. Such requirement is mandatory in an energy efficiency program, a key to the programs success, improving performance of household electrical appliances up 2 3 times. Labels will not only make it easier for customers to choose electrical appliances but also form a technical barrier against obsolete equipment with low energy efficiency. Product labeling has been very successful in many countries and regions, especially in the U.S. with the famous energy star label.
Professionally implementing energy efficiency program, Hanosimex has save approximately 5 -7 billion dong a year.
Mr. Nguyen Dinh Hiep, Head of Energy Efficiency Office (Ministry of Industry and Trade) said, energy labeling will be made mandatory in the future for some facilities and equipment with high energy consumption, starting from civil appliances such as lighting, fans, air-cons, refrigerators, power engines. Also, Energy efficiency labeling in Vietnam was mentioned in the action plan of ASEAN energy cooperation and the cooperation plans in 1999-2004 and 2004-2009.
Voluntary labeling of electronic appliances should be made before July 1st 2011. From then on labeling on these products will be made mandatory. Industrial equipment (electric motors, small and medium-sized boilers, three-phase transformers, etc) should be labeled by January 1st, 2012; materials and accessories including insulation, glass, windows, roofing, sheet materials January 1st 2015.
The implementation of the law will face certain difficulties due to its complexity and high technical specialization. Complementing the law, Decree on requirement details and implementation guides, and Decree of administrative violation sanctions have been drafted.
Technicians instructs representative of Women Organization in Ninh Binh how to use Biogas.
More detailed documents such as the circular of standards and norms for energy use in different fields are still needed.
In the implementing of the Law, there should be close coordination between the related ministries such as Ministry of Industry and Trade, Ministry of Science and Technology, Ministry of Construction, Ministry of Transport, Ministry of Information Communication, deployment of all the energy saving scheme within the framework of the national objectives program. By Nguyen An Source: VNEEP, MoIT, Vietnam
BOX 2: Environment and Energy Efficiency Technology Fair, Hanoi, May 2011
Invitation to the fair 2011 - Expo "International Exhibition of energy efficiency - environment Hanoi 2011 (ENTECH HANOI 2011)" held in Hanoi
The organizers would like to invite enterprises to provide equipment and energy-saving technology, high performance products, cleaner production technologies and environmental technologies related to energy use economically efficiency to exhibiting at the fair: "International Exhibition on Energy Efficiency - Environmental Hanoi 2011 (ENTECH HANOI 2011)." Environmental Fair is exchanged between equipment suppliers, energy technology equipment - business environment for industrial production, management units and community buildings to use energy efficiency - the environment. Any information please contact: EnergyCconservation Center of Hanoi Address: 331 Cau Giay - Cau Giay district-Ha Noi. Tel: 04. 62692834; FAX: 04. 6269 1280 Email: entech.ecchanoi @ gmail.com. Ms Huynh Phuc 094.222.5599 - Mr Duc Huynh 098.760.3997 Information and English brochure (weblink: www.eccvn)
2. ADB: US$205 million loan project for Renewable energy development and electric grid upgrade
and expansion in remote communes" (PM approval on Feb 6, 2009). www.adb.org/vietnam
3. TA 7024-VIE: Supporting Implementation of the National Energy Efficiency Program Project, cofinanced by the Government of France and the Spanish Cooperation Trust Fund through the Asian Development Bank (ADB), providing Technical Assistance (TA) services to the Energy Efficiency and Conservation Office (EECO) under the Ministry of Industry and Trade to promote energy conservation in the industrial sector in Viet Nam. www.adb.org/vietnam
6. Vietnam National Energy Efficiency Programme (VNEEP) sponsored by the World Bank and
managed by the Ministry of Industry and Trade: Pilot Program on Solar Water Heaters (SWHs). www.vneep.vn
7. Project with UNDP on Improving the efficient use of energy in SMEs; www.un.org.vn 8. On-grid solar energy project supported by Spain for rural areas. www.aecid.org;
www.ruralelec.org; AS Solar Iberica www.schottsolar.com
9. Solar electricity for Mountainous areas project (cooperation between Committee on Mountainous
Minorities and Finland). Appraisal by www.ramboll.vn
10. Sustainable Biomass program/ Duurzame Biomassa Mondiaal (DBM) program Vietnam.
Supported by the Netherlands. www.senternovem.nl/duurzamebiomassamondiaal
11. Biogas Programme (DGIS funded via SNV) to build biogas plants in a large number of provinces.
www.snvworld.org
12. Mainstreaming Energy Efficiency through Business Innovation Support (MEET-BIS). Program
under SWITCH Asia - funded (80%) by the European Commission. Implementation by ETC Leusden. Focus on identification of relevant Product Market Combinations in the field of energy efficiency for small and medium enterprises in Vietnam. Sectors: 1. Hotels and buildings; 2. Textile, shoes, leather and apparel; 3. Food processing; 4. Restaurants. Includes exposure of energy audits and other mechanisms to assess and encourage energy efficiency. www.switchasia.eu
13. Climate Investment Fund, SREP-Scaling Up Renewable Energy in Low income countries.
(Vietnam no longer eligible as Middle Income Country). www.climateinvestmentfunds.org
14. Cleantech Finland: solutions in energy, water and environment sectors. Bioethanol concept.
www.cleantechfinland.fi
15. VNEEP Promotion of EE and RE through capacity building in Enregy Auditing (Vietaudit) with
Finnish support. www.vneep.vn
16. EU SWITCH Asia SPIN sustainable product and design innovation program with involvement
of RCEE and Delft University of Technology. www.switchasia.eu
17. IFC Vietnam Energy Efficiency and Cleaner Production Financing intended to stimulate access
to finance for EE and cleaner production. www.ifc.org; www.techcombank.vn
18. New Danish tender (deadline 15 October 2010: EEP Energy and Environment Project Mekong
region (Vietnam, Thailand Cambodia and Lao PDR), focusing on provision of RE, waste-toenergy and EE. Website: www.eepmekong.org/eep_projects/second_call.php
Network support:
Agentschap NL, The Hague: Instruments & information: visit the website of Agentschap NL www.evd.nl/vietnam > 'EVD-instrumentarium' en 'Overige subsidies en regelingen' www.nlenergieenklimaat.nl/ The Netherlands Embassy in Hanoi and the Consulate General in Ho Chi Minh City can play a supportive broker role for Dutch companies willing to invest in the emerging sector of sustainable energy. Contacts at Embassy and Consulate General of the Kingdom of the Netherlands in Viet Nam:
Embassy Hanoi: Ms. Annelies Donners, First Secretary Climate change, Environment, Sustainable Development; +84438315650, ext 233. Consulate General Ho Chi Minh City: Ms Le Giang, Economic Officer; +84838235932.
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