e-06 vietnam renewable energy in...

RENEWABLE ENERGY DEVELOPMENT RENEWABLE ENERGY DEVELOPMENT RENEWABLE ENERGY DEVELOPMENT RENEWABLE ENERGY DEVELOPMENT AND BUSINESS OPPORTUNITIES AND BUSINESS OPPORTUNITIES AND BUSINESS OPPORTUNITIES AND BUSINESS OPPORTUNITIES

IN VIETNAMIN VIETNAMIN VIETNAMIN VIETNAM

M.Eng. Nguyen Dang Anh ThiDeputy Director, Energy Conservation Center of Ho Chi Minh City, Vietnam

M: +84 918393767 | E: [email protected] | W: www.ecc-hcm.gov.vn

BITEC, BangkokFriday 3rd June 2011

CONTENTS

1. INDUSTRY SNAPSHOT2. LEGAL FRAMEWORK3. BUSINESS OPPORTUNITIES

INDUSTRY SNAPSHOTINDUSTRY SNAPSHOTINDUSTRY SNAPSHOTINDUSTRY SNAPSHOT

Vietnam is well endowed with renewable energy (RE) resources which are distributed through-out the country. These resources can be exploited to meet Vietnam’s rapidly increasing energy demand as well as environmental protection. The majority of Vietnam’s existing RE resources are small hydro power, biomass energy, wind energy, solar energy and geothermal energy. Despite the high potential, RE electricity production in Vietnam is still negligible. The Government of Vietnam has recognized the important role of RE in supplying sustainable energy and recently in tackling climatechange. The Ministry of Industry and Trade (MOIT) is preparing the Master Plan on RE development for the period up to 2030 with outlook to 2050 to submit to the Prime Minister for approval.

[Source: Institute of Energy, 2008]

INDUSTRY SNAPSHOTINDUSTRY SNAPSHOTINDUSTRY SNAPSHOTINDUSTRY SNAPSHOTShare of RE electricity in total power generation in Vietnam


INDUSTRY SNAPSHOTINDUSTRY SNAPSHOTINDUSTRY SNAPSHOTINDUSTRY SNAPSHOT

Up to 2010, the RE electricity production in Vietnam has only reached 550 MW, mainly from small hydro power and biomass while wind and solar power have total installed capacity of 10 MW.In beginning 2011, the first ever biggest wind power plant in Vietnam with 30 MW has been finished installing in Binh Thuan Province, Central of Vietnam, by the investor Vietnam Renewable Energy Joint Stock Company (REVN).

No. Project name Year Implementer Notes

1 Building Vietnam Renewable energy development master plan

Completed in 2010

Ministry of Industry and Trade – Energy Institute

2 Wind energy project in Bạch Long Vĩ island - Hải Phòng province

2000 - 2004 Bạch Long Vĩ island Youth Union – Central Committee of Youth union

0,8MW capacityCombining 2 Diesels of 414 kVA

3 Wind energy project 1, Tuy Phong, Bình Thuận

Phase 1: 2009 – 2011Phase 2, 3: 2011 - 2015

VN Renewable energy (REVN) JSC.

Phase 1: 30MW

Phase 2: 33MW

Phase 3: 57MW

Some implemented RE projects in Vietnam

No.No.No.No. Project nameProject nameProject nameProject name YearYearYearYear Implementer Implementer Implementer Implementer NotesNotesNotesNotes4 “Biogas Programme for the

Animal Husbandry sector of Viet Nam 2003-2011”

2003-2011 Ministry of Agriculture and Rural development and SNV

Implementing in 38 provinces

5 Vietnam renewable energy development project (REDP)

From 2008 Energy Department, Ministry of Industry and Trade

Renewable energy projects, soft loan from WB

6 Assessing processing technology and on site trial of biodiesel processed from fish fat to establish Vietnam Standard for Biodiesel

2007-2009 Vietnam Industrial Chemical Institute

7 Biodiesel production from catfish’s fat plant

2007-2009 Minh Tú Co. Ltd. Private investor

8 Đình Hải rice husk thermal-power co-generation plant

2009-2015 Đình Hải JSC. Private investor

Some implemented RE projects in Vietnam

Small hydropower energy:Small hydropower energy:Small hydropower energy:Small hydropower energy:

� Technical potential > 4000 MW

INDUSTRY SNAPSHOT: INDUSTRY SNAPSHOT: INDUSTRY SNAPSHOT: INDUSTRY SNAPSHOT: RE POTENTIALRE POTENTIALRE POTENTIALRE POTENTIAL


Solar EnergySolar EnergySolar EnergySolar Energy:� Over 100 solar measurement stations

throughout the country� Average solar radiation is 5 kWh/m2

per day� Average number of sunny hours is

about 2000 ÷ 2500 hours/year.



Wind energy:Wind energy:Wind energy:Wind energy:• Wind power density: 800 - 1400

kWh/m2 per year on islands.• 500 -1000 kWh/m2 per year in

coastal areas and highlands.• Other areas: less than 500

kWh/m2 per year.



Biogas:Biogas:Biogas:Biogas:� Biogas resources: landfills, animal waste, agricultural

residues.� 80,000 biogas plants have been constructed.� Biogas potential is about 10 billion m3/year.

Biomass:Biomass:Biomass:Biomass:� Agricultural residues is over 60 million tons

(equivalent more than 10 million tons of oil).� Types of biomass can be exploited at the industrial

scale: rice husks, leaves, baggage, coffee husks and wood residues.

� 2 national biggest rice fields: Mekong River Delta (52%) and Red River Delta (17.6%).



Potential locations for rice husk power plantPotential locations for rice husk power plantPotential locations for rice husk power plantPotential locations for rice husk power plant


BioBioBioBio----fuel production:fuel production:fuel production:fuel production:� Ethanol production from cassava, sugarcane, rice

straw and husks, coffee bean shells etc.� Ethanol production from algae: in cooperation with

KITECH-Korea� Bio-diesel production from fish fat (catfish), waste

cooking oil, Jatropha tree, other oil crops


INDUSTRY SNAPSHOT: INDUSTRY SNAPSHOT: INDUSTRY SNAPSHOT: INDUSTRY SNAPSHOT: Development ScenariosDevelopment ScenariosDevelopment ScenariosDevelopment Scenarios

Three scenarios for producing electricity from RE until 2025:

�Base case scenarios: 4051 MW

�High scenarios: 4790 MW

�Low scenarios: 2267 MW


Laws and guidance decrees sets out the RE policy and legal frameLaws and guidance decrees sets out the RE policy and legal frameLaws and guidance decrees sets out the RE policy and legal frameLaws and guidance decrees sets out the RE policy and legal framework:work:work:work:

• Law on Electricity 2004;• Law on Energy Efficiency and Conservation 2010;• Law on Environmental Protection 2005;

Various Decisions by the Prime Minister:Various Decisions by the Prime Minister:Various Decisions by the Prime Minister:Various Decisions by the Prime Minister:

• Decision No. 158/2008: National Target Program to respond to climate change;

• Decision No. 1855/2007: National Energy Development Strategy up to 2020, with outlook to 2050;

• Decision No. 177/2007: Scheme on Developments of Bio-fuels up to 2015, with outlook to 2025;

• Decision No.110/2007: Installing electricity generation plants from RE sources for grid connection;

• Decision No.153/2004: Promulgating the Orientation Strategy for sustainable development in Vietnam (Agenda 21 of Vietnam).

LEGAL FRAMEWORK ON RENEWABLE ENERGYLEGAL FRAMEWORK ON RENEWABLE ENERGYLEGAL FRAMEWORK ON RENEWABLE ENERGYLEGAL FRAMEWORK ON RENEWABLE ENERGY

LEGAL FRAMEWORK: Law on Electricity 2004LEGAL FRAMEWORK: Law on Electricity 2004LEGAL FRAMEWORK: Law on Electricity 2004LEGAL FRAMEWORK: Law on Electricity 2004

• The Electricity Law (effective on 1st July 2005) is the first law to govern activity in Vietnam’s electricity sector.

• Electricity Law and RE:• Article 4 – Electricity Development Policies, Clause 4.4: “To step up the

exploitation and use of sources of new energies, renewable energy for electricity generation”.

• Article 13 – Policies and measures to encourage and promote electricity saving (…), Clause 1: Investment projects for the development of electricity plants using renewable energy will enjoy preferential investment, electricity price and tariff according to the guidance of Ministry of Finance.

• Article 60 – Electricity in Service of Rural and Mountainous Areas, Islands,Clause 4: “To encourage organizations and individuals to invest in construction of electricity grids or electricity-generating stations using local energies, new energies, renewable energies to supply electricity to rural mountainous or island areas”.

• The Electricity Law also covers: Termed Contracts, Electricity Pricing, Electricity Activity Licenses. All of whichwill apply to the RE sector. [Source: DuaneMorris, 2009]

LEGAL FRAMEWORK: LEGAL FRAMEWORK: LEGAL FRAMEWORK: LEGAL FRAMEWORK: Law on Energy Efficiency and Conservation 2010

• The Law on Energy Efficiency and Conservation 2010 (EE&C Law, effective on 1st January 2011) is the law to provide policies and measures to promote Energy Efficiency and Conservation in Vietnam.

• EE&C Law and RE:

– Article 6. Energy use strategies, master plans and programs, ClaArticle 6. Energy use strategies, master plans and programs, ClaArticle 6. Energy use strategies, master plans and programs, ClaArticle 6. Energy use strategies, master plans and programs, Clause use use use 1c: 1c: 1c: 1c: “To promote Energy Efficiency and Conservation, prioritize reasonable development of clean energy technologies and raise renewable energy use proportion”.

– Article 42. Scientific and technological development for economiArticle 42. Scientific and technological development for economiArticle 42. Scientific and technological development for economiArticle 42. Scientific and technological development for economical cal cal cal and efficient use of energy, Clause 3f:and efficient use of energy, Clause 3f:and efficient use of energy, Clause 3f:and efficient use of energy, Clause 3f: “Research and development of new energy resources to substitute traditional fuels”.

• Ensuring sufficient supply of energy to meet the demands of socioeconomic development.

• Investigate and evaluate the potentiality of new and renewable energy; develop plans to use new energy resources.

• Achieving a share of new and renewable energy in the total commercial primary energy supply of 3% in 2010, 5% in 2020, and about 11% in 2050.

• Public units (hospitals, schools, state offices, restaurants...) that use hot water, should have 10% using solar water heater.

• The State encourages the exploitation and utilization of new and renewable energy: gives funding support for investigation, research, pilot manufacturing, develop typical point programs using renewable energy; free import duties, production taxes,equipment circulation, new and renewable energy technologies;

Energy Development Strategy and Renewable Energy(Prime Minister’s decision No. 1855/2007/QD-TTg)

BioBioBioBio----fuelfuelfuelfuel development development development development pppprogramrogramrogramrogram

Main objectiveMain objectiveMain objectiveMain objectivessss::::• By 2010, build up and develop various models of trial production

and use of bio-fuels with a total annual output of 100,000 tons E5 and 50,000 tons B5 = 0.4% of national gasoline and diesel demand.

• By 2015, the phase reach 5 million tons of E5, B5 = 1.0% national demand for gasoline and diesel.

Vision to 2025Vision to 2025Vision to 2025Vision to 2025::::• Technology for producing bio-fuel in Vietnam reach the world’s

advanced level. Production of ethanol and biodiesel reach 1.8 million tons, meet about 5% the need of the gasoline and diesel nationwide.

(Prime Minister’s decision No. 177/2007/QD-TTg)

Energy policEnergy policEnergy policEnergy policyyyy in responding to the climate changein responding to the climate changein responding to the climate changein responding to the climate change

� Using energy efficiency and conservation in the orientation adapted to climate change;

� Using effectively and appropriately the natural sources, developing and turning power, natural gas and hydropower into great advantage;

� Developing and exploiting new forms of energy: geothermal, wind,solar and nuclear energy;

� Researching and applying technologies to reduce emissions and saving energy (focus on the use of renewable energy);

� Proposing solutions to respond to climate change in commercial activities, implementing pilot projects.

(Prime Minister’s decision No. 158/2008/QD-TTg)

� Up to 2015, new 2,451 MW to be installed, 241MW/year on average;� From 2016 to 2025 new 1,600 MW to be installed, 160 MW/year on

average.

Installing electricity generation plants from RE sources for Installing electricity generation plants from RE sources for Installing electricity generation plants from RE sources for Installing electricity generation plants from RE sources for grid connection grid connection grid connection grid connection (Prime Minister’s Decision No.110/2007/QD-TTg)

RE support mechanism: Standpoint of Ministry of Industry and Trade

• Encouraging enterprises in setting up production, assembly line for new & RE equipments, such as: solar water heater, small hydropower, wind turbines, biogas plants at suitable locations.

• Co-operating with developed countries in technology transfer to assembly high technology equipments like solar cell, wind power …and step by step domestic assembling and production.

• Supporting financial investment for RE survey, research, trial production, demonstration utilization. Tax-favor for imported equipment, new technologies; copyright protection for valuable inventions, technique innovations.

• Allowing domestic and foreign individuals, organizations to coordinate investment, exploitation new and RE resources in the basic of “gaining profit for both partners”.

BUSINESS OPPORTUNITIES IN RE IN VIETNAMBUSINESS OPPORTUNITIES IN RE IN VIETNAMBUSINESS OPPORTUNITIES IN RE IN VIETNAMBUSINESS OPPORTUNITIES IN RE IN VIETNAM

Legal framework on investmentLegal framework on investmentLegal framework on investmentLegal framework on investment• Law on Investment 2005;• Law on Enterprise 2005;• Decree No. 108/2009/ND-CP of the Government on investment in the

form of BOT, BTO or BT contract:• Decision 71/2010/QD-TTg regulating pilot investment using PPP form of

investment:– From January 1st 2011, Việt Nam will pilot the public-private partnership (PPP) form

of investment in nine sectors, includes (1) roads, highway bridges, tunnels and ferries for road traffic; (2) railway, railway bridges and tunnels; (3) urban transportation; (4) airports, sea and river ports; (5) clean water supply systems; (6) electrical plants; (7) healthcare (hospitals); (8) environment (waste treatment plants); and (9) other projects for infrastructure development and/or the provision of public services as decided by the PM.

– The Decision requested that the pilot model would attract private and foreign investment for infrastructure development and the provision of public services. It is expected to lay a foundation for further improvement of policies and laws on PPP.

BUSINESS OPPORTUNITIES IN RE IN VIETNAMBUSINESS OPPORTUNITIES IN RE IN VIETNAMBUSINESS OPPORTUNITIES IN RE IN VIETNAMBUSINESS OPPORTUNITIES IN RE IN VIETNAM

Until now, direct investment incentive policies for RE projects have not been issued, but RE investment can be applied related policies:•Prime Minister ‘s Decision No. 129/2009/QĐ-TTg approving the scheme on “Investment incentive policy mechanism in natural resources and environment protection sector”. •Prime Minister‘s Decision No. 130/2007/QĐ-TTg issuing some mechanisms, financial policies applying for the clean development mechanism (CDM) projects.•Prime Minister‘s Decision No. 55/2007/QĐ-TTg approving a list of prioritized industrial sectors, key industrial sectors for the period 2007-2010, with the vision to 2020 and some encouraging development policies.•Government's Decree No. 61/2010/NĐ-CP approving the incentive policies for business investment in agriculture and rural development. •Government's Decree No. 80/2010/NĐ-CP specified regulations on international cooperation, investment in science and technology sector. •Government's Decree No. 04/2009/NĐ-CP providing incentives and supports for environmental protection activities. In May 2011, Deputy Prime Minister Hoang Trung Hai has requested the MOIT to prepare the decree on incentive and supporting mechanisms for wind energy development to attract more investment.

Investment incentive policies on renewable energyInvestment incentive policies on renewable energyInvestment incentive policies on renewable energyInvestment incentive policies on renewable energyBUSINESS OPPORTUNITIES IN RE IN VIETNAMBUSINESS OPPORTUNITIES IN RE IN VIETNAMBUSINESS OPPORTUNITIES IN RE IN VIETNAMBUSINESS OPPORTUNITIES IN RE IN VIETNAM

Following the Government's Decree No. 04/2009/NĐ-CP, the production of clean energy, exploitation of renewable energy resources or waste-to-energy projects can be considered as environmental protection activities, therefore some incentives and supports are as following:- Support in land clearance and land lease fee- Corporate income tax (CIT): 10% in the whole project lifetime. The project located in poor socio-economic condition areas could also enjoy tax exemption in the first 4 years from taxable year and reduction of 50% CIT in the next 5 years.- Import tax: Free for importing of production line or equipment using in the project.- Rapid depreciation etc.

However, above policies are indirectly applied. It is expected that the Master plan on RE development until 2030 with the outlook to 2050 will be approved soon this year by the Prime Minister. With the issuance of such master plan, the investment incentive policies on RE development will be also introduced and applied, and that will be the real business opportunities in RE in Vietnam.

Investment incentive policies on renewable energyInvestment incentive policies on renewable energyInvestment incentive policies on renewable energyInvestment incentive policies on renewable energyBUSINESS OPPORTUNITIES IN RE IN VIETNAMBUSINESS OPPORTUNITIES IN RE IN VIETNAMBUSINESS OPPORTUNITIES IN RE IN VIETNAMBUSINESS OPPORTUNITIES IN RE IN VIETNAM

Thank you for your attention!Thank you for your attention!Thank you for your attention!Thank you for your attention!

M.Eng. Nguyen Dang Anh ThiDeputy Director, Energy Conservation Center of Ho Chi Minh City, Vietnam

M: +84 918393767 | E: [email protected] | W: www.ecc-hcm.gov.vn

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