Policies and regulatory framework promoting the application of biomass and biogas for power generation in Vietnam. 27 June 2013

Transcription

1 Policies and regulatory framework promoting the application of biomass and biogas for power generation in Vietnam 27 June 2013

2 Contents 1. Biomass and biogas resources and development in Vietnam 2. Law and regulatory framework 3. Institutions and stakeholders 4. Economic regulations and Financial incentives 5. RE Standards 6. Procedures for application for power generation 7. Future prospects

3 Biomass and biogas development in Vietnam Biomass and biogas consumption : 14,710 ktoe (2010) for heat, cooking, lighting, account for 21.1% of total energy consumption in Vietnam For power generation : 150 MW from Biomass; and < 1 MW from Biogas (21,500 MW total installed capacity in 2010 in Vietnam). The GOV target: 2020 : 500 MW from biomass; no specific target for biogas generation 2030 : 2000 MW from biomass; no specific target for biogas generation Most suitable biomass for power generation are: Bagasse; Rice husk; Wood; Rice straw Solid biomass Rice husk & rice straw Corn cob& maize streak Coffee husk& fiber and Bagasse, sugar cane Peanut and bean shells Elephant grass Cassava Energy crops Wood and wood products Liquid biomass Biogas

4 Biomass and biogas resources summaries in Vietnam (source: NL agency) Type #Ha Yield/ha % of resource is residue or waste Bamboo 800,000 plus 600,000 mixed forest Cassava t/ha Coconut t/ha Theoretical Availability (ton) t/ha 50-70% Around 7 million ton/year Stem is 30% of the cassava harvest The peel: 3% The cassava root: 40%(moisture 50%) Waste water: 31% 305 weight is husk, plus leaves and bark it is 6.5 tons/ha of fuel wood 3 million tons of cassava stem 975 tons only husk+ 1.6 million tons fuel wood+ 1 million tons pith Coffee 500, ton/ha 15% of the dried cherry weight 135,000 tons Corn Cobb 1,125,000 ha 4.0 t/ha 20-50% 1,066,500 tons Corn Stob 1,125,000 ha 4.0 t/ha 200% 9 million tons Jatropha > 2,000 ha 1-5 t/ha Seed 30% oil; 70% cake Manure - ±30,000 million heads; manure 2kg/head n.a Seed: 780t-1,200t oil: 1,820t-2,800t cake Almost 1 million ton Rice husk 7,500,000 ha 5.32 t/ha 20% 8 million ton Rice straw Sugar Cane Wood 7,500,000 ha 5.32 t/ha 85% (on average) 23 million ton 266,000ha 13 million ha 51.7 ton/ha Top:30%, Leaves: 10%, Bagasse: 9%, Fructose: 1.8%, Others: 1.2% Top: 4,110,150 ton; Leaves: 1,370,050 ton; Fructose: 246,609 ton; Others: 164,406 ton residues: 5 million 40% Logging, Saw-milling 11 million ton residues;

5 Price of some biomass products Type VND/kg $/t Rice husk Bagasse (sugar cane) Wood and its residues Rice straw Corn cob and stob These prices are at local prices

6 Law and regulatory framework for RE power generation Electricity Law was passed in 2005 and amended in Promote the exploitation and use of new and renewable energy sources to generate electricity : Invest in power plants using new and renewable energy sources ; Encourage organizations and individuals to invest in grid or building power stations using on-site energy, new and renewable energy to provide electricity to rural, mountainous and island areas; Investment in power development in rural, mountainous and island areas The support of the State policy include: + Support on investment; + Support for investment loan interest rates; National Energy Development Strategies for Vietnam up to 2020 and outlook to 2050: The share of renewable energy was set at 3% of total primary energy supply by 2010, 5% by 2020, and 11% by National Power Development Master Plan ( ) with outlook to 2030, highlighted needs for development of RE, particularly biomass. Green growth (9/2012): Reduce intensity of GHG emissions per unit of GDP by 8-10% in 2020, then 1.5-2%/y up to 2030

7 Biomass and biogas Stakeholders in Vietnam Institutional agencies + MOIT + MONRE + MOC + MARD.. Stakeholders State owned companies + CASUCO + EVN; + PVN; + PV Oil + URENCO + VINACAFE, VINAFOOD R&D and consultants + Bioseed Vietnam + Hanoi University of Agriculture + Agro-Forestry University + Institute of Agricultural science of South Vietnam + IPP, IPSARD, ISPONRE, IEVN, RCEE. Developers and suppliers + Delta Energy Corp + Dinh Hai Cogen JSC + Hung Viet composite + Kim Nghia + Bourbon Tay Ninh JSC + Bien Hoa JSC Others (Donors and Financial Inst.) + UNIDO + GIZ + USAID + WB + ADB + International & Local Banks, VDB

8 Institutional agencies MPI - Responsible for developing policy and regulations : sectors are entitled to incentives MARD Policy & National plan on Agriculture and rural dev. Department of Crop Production Livestock production Department Vietnam Administration of Forestry MONRE - Policy & National plan on Environment Vietnam Environment Administration Vietnam Environment Protection Fund MOIT - Policy & National plan on Trade and Industry (power sector) General Directorate of Energy Electricity Regulatory Authority of Vietnam (ERAV) EVN (Single buyer of power) MOST Policy & National plan on Science and Technology, intellectual property, standards MOC - Policy & National plan on Construction Department of Technical Infrastructure Local Authorities (provinces, district and communes)

9 Economic regulations Contracts are individually negotiated with each project developer, with a major determinant of price level negotiate with EVN (single buyer) being project specific Benefit/Cost ratio (B/C) Economic Internal Rate of Return (EIRR, %) Net Present Value (NPV) Payback period on investment (B/I) Indicative price: Some Cogen. bagasse power plants sell electricity to EVN at price 4UScents/kWh EIRR on project : usually 12%-14%

10 FISCAL AND FINANCIAL INCENTIVES Corporate income tax incentive rate: 10% for a period of 15 years to newly-established enterprises investing in power plant projects. Possibility of 10% tax rate being extended up to 30 years: if the projects are classified as large scale projects, using high or new technology and in special need of investment. Tax exemption for the first 4 years; 50% tax reduction for the next 9 years Exemption of import duties: for equipment and machinery imported to create fixed assets of the RE projects. Special encouraged projects: exemption/reduction of land use fee/rental (depending also on the location of the projects) Capital incentives: Access to low-interest loan from VDB : can obtain loans of up to 70% of the investment cost, with the maximum term of 12 years at an interest rate equivalent to government bond interest rates with a term of 5 years plus 1%

11 RE - related Vietnam standards (TCVN) Energy-related TCVNs are grouped in two subjects as section 27 - Energy and heat transfer engineering and section 29 - Electrical engineering Electrical TCVN sub-system consists of 474 TCVNs (81 % harmonized with ISs). Number of current (pure) energy TCVNs including energy efficiency is more than 30 TCVNs covering: Energy systems (Terms and definitions) 01 TCVN; Electricity supply systems 9 TCVNs; Solar energy engineering 01 TCVN; Energy efficiency > 20 TCVNs (+ 09 TCVNs planned to be developed in 2012). National technical standards on emissions from Thermal power plant (QCVN 22/2009)

12 PROCEDURES FOR PROPOSING AND IMPLEMENTING A PROJECT Main conditions for the Investor: Good experience in project implementation; Obtain written agreement on the purchase of electricity by the Electricity of Vietnam or electricity wholesale or retail units; (see next slide) Prove sources of capital to be mobilized and loan commitments of credit institutions or banks for the project implementation; and Have owner s capital accounting for least 30% of the total investment capital (but could be lowered up to 20% in special cases). Required forms for power projects: must be in the form of a BOT/BOO project or other forms as provided for by law (e.g.: PPP). Recommendations for investors: Supply chain of biomass is of primary importance. Thorough investigation and control of biomass supply in long term is important. Thorough due diligence must be conducted.

13 Approval process for RE generation projects (<30 MW) Provincial Peoples Committee(PPC) A Proposal B Investment Approval FS PPC (DPI) Evaluation Committee E Construction D Approval to Construct Investor C Business Registration DOC Sign PPA PPC

14 Procedure of proposing and implementing a small scale IPP project (<30MW) Proposal for project Investor Project proposal PPC (DPI) Approval Add to project list Negotiation and draft of contracts Obtaining Investment Certificate Initial Project contract and other relevant contracts Application dossier Negotiating with authorized competent authority Relevant ministries for consultation opinions 15 days PPC Request for amendment (10 days) Amended project contract (10days) Investor Implementation of the Project Issuing Investment certificate

15 Procedures for grid-connection and PPA for RE Preliminary PPA ; Grid-connection study; Negotiation on selling price; Metering agreement and designing Design and agreement on SCADA/EMS (Optional for small IPP); Negotiation and sign PPA. MoIT s Decision No. 32/2010/TT-BCT of 30 July 2010 provides detailed conditions and procedures for connecting power plants to the power distribution network

16 Outlook for Biomass generation in Vietnam Roadmap for liberalizing electricity market in Vietnam: : competitive generation market : competitive wholesaling market After 2022: competitive retail market For RE RE law is on pipeline. RE master plan is under consideration Proposal to establish funding and complex incentives for RE are on-going (assistance from GIZ) Specially for Biomass generation Currently 10 projects in pipeline (average capacity 10 MW, 8 are domestic and 2 are Joint Stock Companies) FIT for biomass is under preparation (the approval is expected in ) Renewable/biomass energy development plans on provincial and national level are being developed

17 Thank you for your attention! Contact: Dr. Nguyen Anh Tuan Director, International Cooperation Department, Institute of Energy, MOIT Website: