strategies for promotion of energy efficient and cleaner technologies in the power sector

STRATEGIES FOR PROMOTION OF ENERGY STRATEGIES FOR PROMOTION OF ENERGY EFFICIENT AND CLEANER TECHNOLOGIES IN EFFICIENT AND CLEANER TECHNOLOGIES IN

THE POWER SECTOR THE POWER SECTOR

Synthesis ReportSynthesis Report

Issue 1:Issue 1: Implications of Carbon & Energy Taxes as Implications of Carbon & Energy Taxes as Instruments for GHG Reduction in the Power SectorInstruments for GHG Reduction in the Power Sector

Issue 2:Issue 2: Identification of Barriers and Policy and Identification of Barriers and Policy and Measures (PAMs) for the Adoption of Clean and Measures (PAMs) for the Adoption of Clean and Energy Efficient Technologies (CEETs)Energy Efficient Technologies (CEETs)

The Case of VietnamThe Case of Vietnam

Institute of EnergyJuly 2005

Issue 1

Issue 1:Issue 1:

Implications of Carbon & Energy Taxes Implications of Carbon & Energy Taxes as Instruments for GHG Reduction in the Power Sectoras Instruments for GHG Reduction in the Power Sector

Overview of the Power Sector of Vietnam Overview of the Power Sector of Vietnam

Capacity and Generation Mixes

Total Installed power

generation capacity (MW)

(2003)

Total Electricity generation (GWh)

(2003)

Weighted Av. efficiency of

thermal generation (%)

(2000)

Average annual growth rate (%)

Total electricity generation

(1986-2002)

Thermal electricity generation

(1986-2002)

9,146 40,924 36.0 12.34 9.50

Table 1a: Overview of the power sector in Vietnam.

The power sectors in Vietnam demonstrated diverse characteristicsin terms of electricity generation technologies, fuel use, total electricitygeneration capacity, load growth & load characteristics of power system.

Table 2a: Generation and capacity mix of selected countries in 2003, (%). Installed Capacity Generation

Hydro Coal Oil Gas Other Hydro Coal Oil Gas Other

45 12 8 34 0 46 14 7 27 6

Source: Institute of Energy (2004)

Issue 1

Overview of the Power Sector of Vietnam Overview of the Power Sector of Vietnam

Environmental Emissions & Status of Renewable EnergyTechnologies for electricity generation in Power Sector

Table 3a: Overview of environmental emission in Vietnam.

+ Coal based electricity generation accounts for the highest shareof CO2 emission from the power sector in Vietnam.+ Vietnam has power generation potential from all RE sources. Successfulin promotion of small hydropower generation.


Country Total CO2 emission (Million tons) Share of power sector (%)

1990 2002 1990 2002 % increase during 1990-2000

Vietnam 17 57 27.5* 26.8* 10.3

Renewable options Potential (MW)Installed Capacity (MW)

grid Off-grid

BiomassWindSolar (kWh/m2/day)Small hydroGeothermalTotal

4,7509,000

51,400-1,800

400

5000

1300

3942

00.2

000

57

Table 4a: Status of Renewable Energy Technology in electricity generation in Vietnam.

Issue 1

Implications of Carbon & Energy TaxesImplications of Carbon & Energy Taxes

Candidate Supply Side Options


+ Candidate supply side options:+ Candidate supply side options:1. Hydro plants1. Hydro plants 2. Coal & Oil fired power plants2. Coal & Oil fired power plants3. High efficient technologies: 3. High efficient technologies: - Gas turbine combined cycle plants- Gas turbine combined cycle plants- Pressurized fluidized-bed combustion plants (PFBC)- Pressurized fluidized-bed combustion plants (PFBC)- Integrated gasification combined cycle plants (IGCC)- Integrated gasification combined cycle plants (IGCC)- Supercritical plants - Supercritical plants 4. Renewable technologies:4. Renewable technologies:

- Geothermal, Small and mini hydro,- Geothermal, Small and mini hydro,- Wind & Solar- Wind & Solar- Biomass (wood residue, rice husk, bagasse)- Biomass (wood residue, rice husk, bagasse)

Issue 1

+ No DSM + No DSM + Carbon tax rates: (5$tC,10$tC, 25$tC,50$tC,100$tC and 200$tC)+ Carbon tax rates: (5$tC,10$tC, 25$tC,50$tC,100$tC and 200$tC)+ Energy tax rates: (0.5$Mbtu, 1$Mbtu,2$Mbtu,5$Mbtu and 10$Mbtu)+ Energy tax rates: (0.5$Mbtu, 1$Mbtu,2$Mbtu,5$Mbtu and 10$Mbtu)+ Planning horizon: 2006-2025+ Planning horizon: 2006-2025+ All prices in the study are based on price of 2000.+ All prices in the study are based on price of 2000.+ Price Elasticity of demand estimated with - 0.3+ Price Elasticity of demand estimated with - 0.3

Key Findings Utility & Environmental ImplicationsUtility & Environmental Implications

Power Generation Capacity Mix at year 2025 (MW)

Carbon tax rate ($/tC) 0 5 10 25 50 100 200

Hydro 17640 17770 18020 18432 18432 18432 18432

Coal 21400 19300 18700 13600 11500 9200 7600

FO+DO 725 725 725 3560 4285 3125 3995

Gas 9490 11230 11230 12670 12670 12670 12670

Import 3000 3000 3000 3000 3000 3000 3000

RETs 20 151 373 611 1976 9800 10800

Total capacity 53000 52901 52773 52598 52588 56952 57222

Shares in Power Generation Capacity at year 2025 (%)

Carbon tax rate ($/tC) 0 5 10 25 50 100 200

Hydro 33.28 33.59 34.15 35.04 35.05 32.36 32.21

Coal 40.38 36.48 35.43 25.86 21.87 16.15 13.28

FO+DO 1.37 1.37 1.37 6.77 8.15 5.49 6.98

Gas 17.91 21.23 21.28 24.09 24.09 22.25 22.14

Import 5.66 5.67 5.68 5.70 5.70 5.27 5.24

RETs 0.04 0.29 0.71 1.16 3.76 17.21 18.87

Table 5a: Generation capacity mix at selected carbon tax rates in year 2025

Issue 1 Carbon TaxCarbon Tax

Key Findings Utility & Environmental ImplicationsUtility & Environmental Implications

Table 6a: Electricity generation mix at selected carbon tax rates during 2006-2025


Electricity Generation (GWh)

Carbon tax rate 0 5 10 25 50 100 200

Hydro 1218881 1230726 1235176 1254692 1263158 1293814 1296382

Coal 1052220 923436 850862 702984 605781 259464 173251

FO+DO 26941 26941 26941 32635 33472 31540 49285

Gas 748413 852041 908236 1018695 1065026 1216614 1219042

Import 333450 333450 333450 333450 333450 333450 333450

RETs 1872 7377 11875 16322 48584 181917 228516

Total generation 3410219 3403940 3394346 3392968 3377903 3344384 3327511

Shares in Electricity Generation (%)

Carbon tax rate 0 5 10 25 50 100 200

Hydro 35.74 36.16 36.39 36.98 37.39 38.69 38.96

Coal 30.85 27.13 25.07 20.72 17.93 7.76 5.21

FO+DO 0.79 0.79 0.79 0.96 0.99 0.94 1.48

Gas 21.95 25.03 26.76 30.02 31.53 36.38 36.64

Import 9.78 9.80 9.82 9.83 9.87 9.97 10.02

RETs 0.05 0.22 0.35 0.48 1.44 5.44 6.87

Key Findings

Utility & Environmental ImplicationsUtility & Environmental Implications

0

5000

10000

15000

20000

25000

0 5 10 25 50 100 200

Cap

acity

(MW

)

Hydro

Coal

Gas

Import

FO & DO

RETs

Fig1a: Installed generation capacity by fuel types at selected carbon tax rates in 2025

0

200000

400000

600000

800000

1000000

1200000

1400000

0 5 10 25 50 100 200

Elec

trici

ty g

ener

atio

n (G

Wh)

Hydro

Coal

Gas

Import

FO & DO

RETs

Fig2a:Electricity generation by fuel types during 2006- 2025 at selected carbon tax rates


Key Findings

Fig3a: Total electricity generation by hydro during 2006- 2025 at selected carbon tax rates

Fig4a:Electricity generation by coal during 2006- 2025 at selected carbon tax rates

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

100000

2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

Elec

tric

ity g

ener

atio

n (G

Wh)

Base case

0.5$/Mbtu case

1$/Mbtucase

2$/Mbtu case

5$/Mbtu case

10$/Mbtu case

0

20000

40000

60000

80000

100000

120000

140000

160000

180000

2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

Ele

ctric

ity g

ener

atio

n (G

Wh)

Base case

5$/tC case

10$/tC case

25$/tC case

50$/tC case

100$/tC case

200$/tC case


Key Findings

Fig5a: Total electricity generation by gas during 2006- 2025 at selected carbon tax rates

Fig6a: Change in consumption by fossil fuels during 2006- 2025 at selected carbon tax rates

0

20000

40000

60000

80000

100000

120000

2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

Elec

trici

ty g

ener

atio

n (G

Wh)

Base case

5$/tC case

10$/tC case

25$/tC case

50$/tC case

100$/tC case

200$/tC case

-82.66

63.5577.09

0 -11.70 -18.53-33.36

-42.75

-74.59

62.76

42.1935.84

20.98

0

13.59 15.4823.1519.89

0 0.00 0.00

-100

-80

-60

-40

-20

0

20

40

60

80

100

0 5 10 25 50 100 200

Fuel

con

sum

ptio

n (%

)

Coal

Gas

FO & DO


Key Findings

Fig7a: Effects of carbon tax on power generation technology mix during 2006-2025

Fig8a: Generation mix during the planning period at different carbon tax rates

Technology Mix: Vietnam

0

4000

8000

12000

16000

20000

0 5 10 25 50 100 200 Tax ($/tc)

capa

city

add

ed (M

W)

Conv. Coal GT Steam oil Import Hydro

NGCC Super critical Mini hydro Geothermal Wind

Generation Mix Vietnam

0

5

10

15

20

25

30

35

40

45

Base 5 10 25 50 100 200Tax ($/tc)

Gen

erat

ion

Mix

(%)

Coal Nat_gas Oil Hydro Import Renewable


Key FindingsReduction in Total Capacity Addition due to Carbon Tax (%)

-10

10

20

30

0 5 10 25 50 100 200

Tax ($/tc)

Reductions in Total Generation due to Carbon tax (%)

10

20

30

0 5 10 25 50 100 200

Fig9a: Reduction in total capacity addition due to Carbon tax

Fig10a: Reduction in total generation due to Carbon tax


Key FindingsTable 7a: Weighted average thermal generation efficiency during the planning horizonat selected carbon tax rates, %

Carbon tax rate(US$/tC)

Weighted average thermal generation efficiency (%)

0 37.23

5 38.36

10 38.05

25 40.27

50 41.05

100 44.32

200 44.88

Energy tax rate(US$/Mbtu)

Weighted averageLOLP (%)

EENS

GWh %#

0 0.00327 2588.7 0.07591

0.5 0.0032 2517.5 0.07545

1 0.00242 1947.6 0.06007

2 0.00183 1397.6 0.04459

5 0.000001 0.2 0.00001

10 1E-07 0.09 0.00000

Table 8a: Weighted average loss of load probability and cumulative expected energy not served during 2006-2025 at various energy tax rates


Key FindingsTable 9a: CO2 and local emissions mitigation potential at different carbon tax rates during the whole planning period

Carbon tax rates (US$/tC) 0 5 10 25 50 100 200

Total CO2 emitted (thousand tons) 1308344.1 1241880.4 1200266.1 1107042.8 1042070.4 784433.8 714997.1

Total CO2 reduction (thousand tons) 66463.7 108078 201301.3 266273.7 523910.3 593347

% reduction 5.08 8.26 15.39 20.35 40.04 45.35

Total SO2 emitted (tons) 2606680.5 2513494.5 2436769.3 2177869.7 2089010.9 1160019.4 982602.6

Total SO2 reduction (tons) 93186 169911.2 428810.8 517669.6 1446661.1 1624077.9

% reduction 3.57 6.52 16.45 19.86 55.50 62.30

Total NOx emitted (tons) 2998296.6 2964040.6 2920676.8 2641429.3 2523744.9 2314792.6 2256457.5

Total NOx reduction (tons) 34256 77619.8 356867.3 474551.7 683504 741839.1

% reduction 1.14 2.62 12.22 17.97 27.08 32.05

Fig10a: Cumulative CO2 emission reduction (%) during the planning horizon at

different selected carbon tax rates

40.04

45.35

20.3515.39

5.088.26

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

45.00

50.00

5 10 25 50 100 200

Cum

ulat

ive

CO

2 em

issi

on re

duct

ion

(%)


Key Findings

Fig11a: Cumulative SO2 emission emitted during the planning horizon at different selected carbon tax rates

0

50000

100000

150000

200000

250000

2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

Tota

l SO

2 em

issi

on (t

on)

Base case

5$/tC case

10$/tC case

25$/tC case

50$/tC case

100$/tC case

200$/tC case

Fig12a: Cumulative NOx emission emitted during the planning horizon at different selected carbon tax rates

0

50000

100000

150000

200000

250000

300000

350000

400000

2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

Tota

l NO

x em

issi

on (t

on)

Base case

5$/tC case

10$/tC case

25$/tC case

50$/tC case

100$/tC case

200$/tC case


Key Findings

Fig13a: CO2 emission intensity in term of per unit of electricity generation at different selected carbon tax rates

214.874234.553

308.496326.276

353.607364.836383.654

0.000

50.000

100.000

150.000

200.000

250.000

300.000

350.000

400.000

450.000

0 5 10 25 50 100 200

ton

CO

2/G

Wh

62.30

55.50

19.86

16.45

6.52

3.571.14

2.59

11.90

15.8322.80 24.74

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

5 10 25 50 100 200

Cum

ulat

ive

emis

sion

redu

ctio

n (%

)

SO2

NOx

CO2

Fig14a: Cumulative CO2 emission reduction (%) during the planning horizon tax at various selected carbon tax rates


Key Findings

Table 11a: The share of supply side effect and demand side effect to the total CO2 mitigation during the planning horizon at selected carbon tax rates, %

Carbon tax (US$/tC) Vietnam

SSE DSE

5 91.47 8.53

10 91.70 8.30

25 94.02 5.98

50 96.37 3.63

100 96.86 3.14

200 95.93 4.07

Note: SSE = CO2 mitigation due to supply side effect DSE = CO2 mitigation due to demand side effect

Carbon tax range (US$/tC) Carbon elasticity (%)

0 - 5 -0.026

5 - 10 -0.051

10 - 25 -0.094

25 – 50 -0.091

50 - 100 -0.423

100 - 200 -0.139

Table 10a: Carbon tax elasticity of CO2 emission at selected carbon tax rates, %


Key FindingsCost ImplicationCost Implication

Table 12a: Average incremental cost (AIC) during 2006-2025 at carbon tax rates (US¢/kWh)


Carbon tax(US$/tC)

Vietnam

0 2.70

5 2.73

10 2.78

25 2.89

50 3.05

100 3.22

200 3.62

120.02

11.57

22.58

42.20

74.20

-4.27-4.44 -3.14

23.0714.54

-2.88

-1.78

-3.16-4.59 -3.14

2.287.10

6.43 11.67

24.98

44.08

67.67

4.532.31

-20.00

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

5 10 25 50 100 200

Per

cent

age

of c

hang

es in

cos

t com

pone

nts

(%)

Capital costFixed O&M costFuel & Variable costTotal cost

Fig15a: Change in discounted expansion cost components for electricity generation expansion during 2006- 2025 at different selected carbon tax rates, (%)

strategies for promotion of energy efficient and cleaner technologies in the power sector

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