RENEWABLE ENERGY DEVELOPMENT AND BUSINESS OPPORTUNITIES IN VIETNAM

Transcription

1 BITEC, Bangkok Friday 3 rd June 2011 RENEWABLE ENERGY DEVELOPMENT AND BUSINESS OPPORTUNITIES IN VIETNAM M.Eng. Nguyen Dang Anh Thi Deputy Director, Energy Conservation Center of Ho Chi Minh City, Vietnam M: E: thi.nguyen@ecc-hcm.gov.vn W:

2 CONTENTS 1. INDUSTRY SNAPSHOT 2. LEGAL FRAMEWORK 3. BUSINESS OPPORTUNITIES

3 INDUSTRY 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. [Source: Institute of Energy, 2008] The Government of Vietnam has recognized the important role of RE in supplying sustainable energy and recently in tackling climate change. 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.

4 INDUSTRY SNAPSHOT Share of RE electricity in total power generation in Vietnam [Source: Institute of Energy, 2008]

5 INDUSTRY 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).

6 Some implemented RE projects in Vietnam 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 Bạch Long Vĩ island Youth Union Central Committee of Youth union 0,8MW capacity Combining 2 Diesels of 414 kva 3 Wind energy project 1, Tuy Phong, Bình Thuận Phase 1: Phase 2, 3: VN Renewable energy (REVN) JSC. Phase 1: 30MW Phase 2: 33MW Phase 3: 57MW

7 Some implemented RE projects in Vietnam No. Project name 4 Biogas Programme for the Animal Husbandry sector of Viet Nam Vietnam renewable energy development project (REDP) 6 Assessing processing technology and on site trial of biodiesel processed from fish fat to establish Vietnam Standard for Biodiesel 7 Biodiesel production from catfish s fat plant 8 Đình Hải rice husk thermalpower co-generation plant Year Implementer Ministry of Agriculture and Rural development and SNV From 2008 Energy Department, Ministry of Industry and Trade Vietnam Industrial Chemical Institute Notes Implementing in 38 provinces Renewable energy projects, soft loan from WB Minh Tú Co. Ltd. Private investor Đình Hải JSC. Private investor

8 INDUSTRY SNAPSHOT: RE POTENTIAL Small hydropower energy: Technical potential > 4000 MW [Source: Institute of Energy, 2008]

9 INDUSTRY SNAPSHOT: RE POTENTIAL Solar Energy: Over 100 solar measurement stations throughout the country Average solar radiation is 5 kwh/m 2 per day Average number of sunny hours is about hours/year. [Source: Institute of Energy, 2008]

10 INDUSTRY SNAPSHOT: RE POTENTIAL Wind energy: Wind power density: kwh/m2 per year on islands kwh/m2 per year in coastal areas and highlands. Other areas: less than 500 kwh/m2 per year. [Source: Institute of Energy, 2008]

11 INDUSTRY SNAPSHOT: RE POTENTIAL Biogas: Biogas resources: landfills, animal waste, agricultural residues. 80,000 biogas plants have been constructed. Biogas potential is about 10 billion m 3 /year. 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%). [Source: Institute of Energy, 2008]

12 INDUSTRY SNAPSHOT: RE POTENTIAL Potential locations for rice husk power plant

13 INDUSTRY SNAPSHOT: RE POTENTIAL Bio-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

14 INDUSTRY SNAPSHOT: Development Scenarios Three scenarios for producing electricity from RE until 2025: Base case scenarios: 4051 MW High scenarios: 4790 MW Low scenarios: 2267 MW [Source: Institute of Energy, 2008]

15 LEGAL FRAMEWORK ON RENEWABLE ENERGY Laws and guidance decrees sets out the RE policy and legal framework: Law on Electricity 2004; Law on Energy Efficiency and Conservation 2010; Law on Environmental Protection 2005; 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).

16 LEGAL FRAMEWORK: Law on Electricity 2004 The Electricity Law (effective on 1 st 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 which will apply to the RE sector. [Source: DuaneMorris, 2009]

17 LEGAL FRAMEWORK: Law on Energy Efficiency and Conservation 2010 The Law on Energy Efficiency and Conservation 2010 (EE&C Law, effective on 1 st 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, Clause 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 economical cal and efficient use of energy, Clause 3f: Research and development of new energy resources to substitute traditional fuels.

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

19 Bio-fuel development program (Prime Minister s decision No. 177/2007/QD-TTg) Main objectives: 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 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.

20 Energy policy in responding to the climate change (Prime Minister s decision No. 158/2008/QD-TTg) 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. Installing electricity generation plants from RE sources for grid connection (Prime Minister s Decision No.110/2007/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.

21 BUSINESS OPPORTUNITIES IN RE IN VIETNAM 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.

22 BUSINESS OPPORTUNITIES IN RE IN VIETNAM Legal 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 1 st 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.

23 BUSINESS OPPORTUNITIES IN RE IN VIETNAM Investment incentive policies on renewable energy 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 , 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.

24 BUSINESS OPPORTUNITIES IN RE IN VIETNAM Investment incentive policies on renewable energy 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.

25 Thank you for your attention! M.Eng. Nguyen Dang Anh Thi Deputy Director, Energy Conservation Center of Ho Chi Minh City, Vietnam M: E: W: