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Viet Nam Country Report

Viet Nam Country Report

Renewable energy development in Viet Nam

Luu Duc Hai1*, Nguyen Thi Hoang Lien2
Faculty of Environmental Sciences, VNU-University of Science, Vietnam
1Prof. Dr., Dean, Faculty of Environmental Sciences, Coordinator of Vietnam SEE Forum
2Dr., Vice Dean, Faculty of Environmental Sciences, Secretary of Vietnam SEE Forum
*Corresponding Author. Tel: (84-4) 38584995, Fax: (84-4) 35582872, E-mail: luuduchai*hus.edu.vn (replace * with @)

Abstract

Viet Nam is rich in energy potential including fossil fuels such as coal, oil, natural gas, hydropower, nuclear fuel as well as renewable energy such as wind, solar, bio- and marine energy. With the average economic growth rate from 6-7% over years, energy’s needs of Viet Nam has speedily increased. However, due to many reasons, the energy development in Viet Nam, especially renewable energy, has faced various difficulties, even barriers. Vietnamese government is focusing on resources development and policy regulation towards sustainable energy development, including development of renewable energy projects.

Keywords: energy potential, renewable energy, barrier, energy policy, sustainable energy

1. COUNTRY OUTLOOK

1. GENERAL OUTLOOK OF ENERGY POTENTIAL OF VIET NAM

Viet Nam is rich in energy potential including fossil energy and renewable energy sources. Viet Nam has big reserves of fossil energy with 10 billion tons of anthracite coal, more than 200 billion tons of brown coal in the northern delta area. Oil and natural gas reserves in Viet Nam are considered as billion tons and thousand billion m3 [1]. With 9 river systems of more than 10.000 km2 basin areas, hydropower energy of Viet Nam would reach 300 GWh of total theoretical capacity and 80-84 GWh of technical capacity. Theoretical installed capacity is expected to reach 34.5 GW and technical installed capacity is expected to reach 19-21 GW. Potential of renewable energy of Viet Nam is abundant and includes many types:

Potential of solar energy
Viet Nam has abundant solar energy source with the average 2000-2500 hours of sunshine yearly (Table 1). Accordingly, solar energy can provide 3 to 4.5 kWh/m2/day in winter and 4.5 to 6.5 kWh/m2/day in summer.

Potential of wind energy
According to the program of Energy evaluation in Asia of World Bank, Vietnam has great potential of wind energy with the total potential reach 513.360 MW; in which South Central, Mekong Delta, Central Highlands and islands regions are the areas of greatest potential. There are 48 wind power projects have being considered to invest, over 20 wind power projects are under deploying with a projected capacity of 20,000 MW [3]. However, it requires more baseline data on the technical potential of wind energy at altitudes up to 60 m for effective deployment of wind energy projects.

Potential of bio-energy
As a tropical country, Vietnam has great potential for bioenergy (biogas, biomass, vegetable oil, etc.). There are tens of thousands of biogas systems have been implemented in most provinces using animal waste for providing gas and electric lighting for rural areas. Biomass in the form of agricultural by-products have not been used can be estimated about tens of millions of tons per year. Thanks to the tropical climate and large area of surface water and uncultivated land in the country, crops such as Jatropha or algae can be grown at large scale. Vietnam also has the great potential for biofuels production from cassava.

Potential of small-hydro
Vietnam has great potential of hydropower but negligible potential of small hydropower with the capacity of less than 30 MW. About 120,000 small hydropower stations have been installed with a total capacity estimated at 300 MW [3].

Potential of ocean energy (wave, tidal, temperature difference of sea water blocks, etc.)
Potential energy of wave, tidal and temperature difference of sea water blocks of nearly 1 million km2 sea of Vietnam, especially for off-shore islands, is estimated to be very large [2]. However, there are no detailed assessment report and practical deployment plan has been carried out.

Potential of geothermal
Geothermal potential of the country is not large. Only four hot water sites with the temperature >100oC have been discovered in the whole country with approximately of 200 MW capacity. However, due to the extreme weather change between seasons, especially in the North has a wide range from +5oC in winter to +40oC in summer, there is a possibility to use temperature stability of the shallow layers to regulate air temperature in high buildings.

2. COUNTRY ENERGY DEVELOPMENT PLANNING AND CURRENT SITUATION

In order to meet the needs of socio-economic development with the 7-8% average GDP growth rate in 2011-2020 period and USD3.000-3.200 GDP per capita by 2020, demand of primary energy consumption in Viet Nam is presented in Table 2.

In recent years, Vietnamese government has issued many laws, regulations, policies and development planning on the country's energy sector such as: Law on Energy Saving and Efficiency 2010, Electricity Planning VII, Decision 37/2011/QD-TTg - dated 29 June 2011 on mechanisms to support wind power development in Vietnam, etc.

Planning for development of coal industry in Viet Nam
Development planning for coal industry until 2020 has been issued by Decision 60/QĐ – TTg of Prime Minister on 9 January 2012. Accordingly, yearly exploitation of coal is expected to reach 45-47 million tons (2012), 55-57 million tons (2015), 60-65 million tons (2020), 65-70 million tons (2025) and over 75 million tons (2030). Coal is mainly exploited from anthracite reserve in Quang Ninh. Brown coal in the Red River Delta region is expected to be exploited by 2015 with the capacity of 1 million tons in 2020, 2 million tons in 2025 and 10 million tons in 2030.

Planning for development of gas industry in Viet Nam
Development planning for gas industry until 2015 and vision to 2025 has been approved by the Prime Minister of Vietnam in Decision 495/QĐ-TTg dated 30 March 2011. Accordingly, the exploitation of natural gas in the country would reach 14 billion m3 per year by 2015 and 15-19 billion m3 per year for the years 2016-2025.

Planning for exploitation of oil
Period 2011-2015: 18-19 million tons/year, excludes oil exploited outside the territory of Viet Nam.
Period 2016-2025: 21-30 million tons/year, includes 7-14 million tons/year within the territory of Viet Nam.

Planning for development of power sector
National electricity development plan for the period 2011-2020, with a vision to 2030 (Electricity Plan VII) has been approved by the Vietnamese Government in Decision 1208/QĐ-TTg dated 21 July 2011. Accordingly, targets of electricity and electricity generated from renewable energy sources are demonstrated in Table 3.

Energy consumption in Viet Nam
There has been no official information about the structure of energy use in Vietnam in general and electricity use in particular. Based on the statistics and data of EVN (Viet Nam Electricity), electricity use in Vietnam from the year 1990 to 2010 can be calculated as shown in Table 4.

According to EVN, by early of the year 2012, 100% of districts, 98.8% of communes and 97.38% of households in Viet Nam have been electrified, among them 96.43% are rural households. According to Electricity Plan VII, 100% of communes and 98.6% of rural households will be electrified by the year 2015 and 100% of rural households will be electrified by 2020. According to official data of EVN, the average electricity price in the period 2002-2012 will increase by 38%, from USD4.7 cents/1 KWh in 2002 to USD6.5 cents/1 KWh in 2012.

2. DEVELOPMENT OF RENEWABLE ENERGY IN VIETNAM AND BARRIES

1. The exploitation and use of renewable energy in Viet Nam
Exploitation of renewable energy

Although potential of renewable energy of the country is quite large as mentioned above, but the exploitation and use of renewable energy in the national economy and people's activities are very limited. Besides a number of wind power projects, ethanol production, solar water heating, Viet Nam has not formed an economic sector to develop renewable energy. Current biogas projects focus only on a single goal of providing fuels for rural areas. Solar equipments for water heating has not been interested by community and investors. Training on renewable energy in universities and colleges are spontaneous and Viet Nam still lacks technological and technical infrastructure for the development of renewable energy. Only some kinds of renewable energy projects are developed in Viet Nam such as biogas, solar water boiling, wind power electricity plant and ethanol production plant. Indeed, the cost of those energy types can not compete with other traditional commercial energy types. However, after the decision to support 1 UScent/1 kWh of wind power [4], the development of wind power projects in Viet Nam are turning to a new stage.

Power generation from renewable energy sources
Electricity production is a type of important commercial energy and considered as an important measure for evaluating the exploitation and use of renewable energy. According to the official data reported by the Ministry of Industry and Trade in March 2012, capacity of small hydropower is 800 MW, of biogas’s electricity is 1.5 MW, of solar power is 1.5 MW, and of wind power is 47.5 MW. It shows that despite a great potential of energy sources, electricity generation in Viet Nam is still very slow compared to other countries in the region-wide and worldwide.

2. BARRIERS FOR RENEWABLE ENERGY DEVELOPMENT IN VIET NAM AND SOLUTIONS

Targets and a number of solutions for developing renewable energy have been mentioned in the national energy development strategy, electricity plans VI and VII, as well as several decisions of the Government and ministries. However, there are various reasons for the under-development of renewable energy in Viet Nam. The next section analyzes those barriers and proposes solutions for development of renewable energy in Viet Nam.

Institutional and policy barriers
Lack of a national strategy for renewable energy development is the first barrier. Therefore, we do not have the ability to gather inside and outside resources. Hence, developing a national strategy on renewable energy should be paid more concerned.
To mobilize domestic and foreign resources, we need to develop an open market, ensuring fair competition among economic sectors. In fact, decisions on the energy market in Viet Nam still concentratedly made by monopoly agencies. As evidence, EVN holds about 50% of electricity capacity and entire power purchase; competition between EVN with TKV (Viet Nam National Coal-Mineral Industries Holding Corporation Limited) and PVN (Petro Viet Nam) in power purchasing over time revealed weaknesses in the transparency of the market and the monopoly of EVN. Therefore, along with the establishment of the Department of Energy under the Ministry of Industry and Trade and the formation of the competitive electricity market since 1st July 2012, it is needed to separate production from trading of electricity. It is suggested to convert EVN into an individual public enterprise responsible for power trading, and current power plants of EVN should be converted into independent businesses participate in competitive electricity markets. Similarly, in order to develop renewable energy it is needed to avoid the formation of monopoly economic units in the fields of production, circulation and distribution.
Laws, strategies and plans on energy sector of Vietnam have set targets for renewable energy (such as National Energy Development Strategy until 2020, with a vision to 2050 dated 27 December 2007 or Power Planning VII dated 21 July 2011) but have not determined responsibilities of each sector and locals including EVN and solutions for achieving defined objectives. This is completely different from developed countries such as Japan, Germany, etc. As a result, most of the strategic goals and plans are hardly achieved.

Barriers of technological infrastructures
Requirements for technical infrastructure for renewable energy development are as below: testing, evaluation and standards of equipments; methods and techniques to connect renewable energy related products to the current energy market such as voltage, power, DC voltage of solar electrical equipments or wind power; damage of equipments due to production fault or natural disasters, decline of output of the device over time of use; less stability of the renewable energy supply system in the day time and at night, due to climate change which requires adjustment of sub-load and energy storage devices, etc.
Technical infrastructure of renewable energy is made up of three main elements: production- equipment manufacturers, equipment installation and maintenance, and operation of energy production in close relationships with capital (Figure 1).

According to Figure 1, Viet Nam has not got any centers for installation and maintenance of renewable energy equipments (which is currently undertaken by the manufacturers), or environmental and technical standards for renewable energy devices. In other words, we are lacking of technical infrastructure for renewable energy development. Therefore, it is required to develop institutional system and technical infrastructure, especially centers for technical inspection, equipment installation and maintenance, and financial system. Viet Nam also needs to establish manufacturing industries and connecting new energy to current commercial energy system.

Economic barriers
The biggest barrier to the development of renewable energy in the world is mainly related to high cost and price per unit of energy compared to traditional energy [1, 2, 3]. The cost of electricity generated from renewable energy sources in developed countries is generally much higher than the cost of electricity generated from traditional energy sources. For example, the case of wind power in Vietnam shows that [3]: the cost of the “cheapest” renewable energy production in the country is inland wind power is 2.5 times higher than hydro power and 1.5 times higher than thermal power (run by coal). That is because we have not taken into account the risks of climate incidents of solar and wind energy projects; or the rapid decline in power generation capacity of the device over time. Renewable energy projects often require higher costs (geothermal, solar power, tidal power, wave power, etc.); especially projects in the islands and coastal areas if they are not supported by the government. Reasons for the low production costs of hydro and thermal power in Vietnam currently is the "subsidy" where the cost of environmental losses (land loss for hydropower plant reservoirs, changing of rivers’ environmental conditions and ecology, subsidy for coal price selling for thermal power, low coal and environmental taxes, not improper environmental costs, etc.). Therefore, it is crucial to remove price subsidies, properly and sufficiently charge environmental costs for hydropower and (coal running) thermal power projects in order to develop a fair market for renewable energy development.

Low electricity price is another economic barrier to projects of electricity development in general and electricity generated from renewable energy sources in particular. This has not encouraged the investment in electricity generation from abundant potential renewable energy sources of Vietnam. It leads to insufficient supply of electricity or limited replacement of renewable energy equipments and energy saving. In deed, many small-scale electricity producers in Vietnam (small and medium-sized hydropower plants, Tuy Phong wind power plant) could not sign the contract for selling or have to sell electricity at lower price to EVN, whilst we have to buy electricity from China for the shortage amount. However, the increase in electricity price needs to follow the route based on the total cost and socio-economic conditions of the country.

Barriers of information and awareness
Articles and TV news on renewable energy appear more often on today mass media. However, specific information related to the mining equipments and use of renewable energy is only provided in the conferences/workshops or exhibitions held in big cities, where conditions of renewable energy applications are often limited. On the other hand, benefits of the exploitation and use of renewable energy (economic, environmental, social justice and cultural life) have not been adequately addressed in those articles and information. Therefore, awareness of Vietnamese people on the significance, benefits and the ability of exploitation and uses of renewable energy is limited.
Thus, the lack of information and awareness is a barrier to exploitation of great potential renewable energy for sustainable development in the country.

3. ACTIVITIES OF HUS - VNU ON RENEWABLE ENERGY DEVELOPMENT

On behalf of HUS – VNU, Faculty of Environmental Sciences has tried to expand research and education on Energy and Environmental activities: to setup energy education for climate change mitigation, new researching program on renewable energy, to organize workshop and conference on energy and environment, etc.

As a coordinator of Vietnam SEE Forum Network, In 2011, Faculty of Environmental Sciences, HUS have actively contacted with scientists from HUST, University of Technology HCM City, Institute of Strategy and Policy on Natural Resources and Environment and others institutions to successful completed UNESCO – ODA Project on energy science education in Vietnam. Powerpoint lectures of this project at that time are using as teaching material in more than ten Universities in Vietnam and transfering to Project “Promotion of Energy Science Education for Sustainable development in Laos”.

As members of VNU, Vietnam SEE Forum members of FES have actively contributed in the establishment of new center for energy reseach in VNU – Center of Nano Technology and Energy, set up new research program “ Energy program in period 2012-2017”. Many subjects of energy policy and renewable energy development have been entered into postegraduated core education program such as: “Program on Climate Change”, “Sustainability Science”, “Natural Resources and Environmental Management” and etc.

In Master Program “ Energy and Environment”, FES has trained 11 MSc, five of them are teachers in universities in Vietnam now, two of them work in Insitute of Energy and four others work as management members in government offices.
SEE Forum members of FES have four reports in national workshops and conferences for renewable energy development in Vietnam and national energy development plans, such as: Planning for development of coal industry in Vietnam, Planning for development of power sector, etc.

Activites of FES SEE-Forum members have positively impacted to renewable energy development in Vietnam in general and in VNU in particular.

4. CONCLUSION AND RECOMMENDATIONS

Based on the above analysis, following conclusions and recommendations have emerged:
Vietnam is a country with great potential for renewable energy: solar energy, wind energy, small hydro power, bio-energy, ocean energy. However, due to some difficulties and barriers, the exploitation and use of renewable energy in Vietnam are still at small scale and slow. It is required to overcome those shortcomings.

The barriers include: lack of institutional and strategic national renewable energy development, poor technical infrastructure, and some other economic barriers such as improper calculation of environmental costs which leads to unfair competition between renewable energy and existing traditional energy, low electricity price, insufficient information and information exchange for better understanding and investment on renewable energy.

Government should develop a national strategy on renewable energy, and policies and mechanisms to ensure fairness for all economic sectors in investment on renewable energy production, as well as providing favorable conditions for technical infrastructure for renewable energy development.

FES SEE-Forum members have positive activities for renewable energy development and sustainable development in Vietnam.

5. REFERENCES

[1] Tran Viet Ngai (Chief Editor), (2012), Energy Book of Viet Nam. Labor Publisher, Hanoi, Viet Nam.

[2] Nguyen Xuan Cu, Luu Duc Hai, Tran Thanh Lam, Tran Van Quy, (2009), Potential and orientation for exploitation of renewable energy in Vietnam. Labor Publisher, Hanoi, Vietnam.

[3] Nguyen Chan Giac (2012) What are the barriers to the development of renewable energy in Vietnam, Journal of Scientific Activities, Vol. 5 (636), 2012, p.16-18.

[4] Luu Duc Hai, Nguyen Thi Hoang Lien (2012), The barriers for development of renewable energy in Viet Nam and it’s solutions. International Symposium on Green Technology and Sustainable Development, Hochiminh City 29-30 September, 2012.

[5] Decision No. 37/2011/QĐ – TTg issued by Prime Minister on 29 June 2011 on support mechanism for wind power development in Vietnam.