Clean energy to Vietnam
(Last updated: 8 Jul 2011)
Trends and opportunities
The market
Vietnam is rich in renewable energy resources. Renewable energy resources suitable for electricity generation include solar, biomass, wind and geothermal. Total capacity of geothermal is estimated at 200MW. Wind, solar and biogas are relatively abundant. About 75 per cent of Vietnam’s population live in rural areas with about 8.5 per cent of households in these regions having no access to electricity. Direct burning of wood and waste dominates primary energy demand, but is currently not used in the generation of electricity.
Energy supply from renewables (ie. wind, solar PV, geothermal, waste-to-energy, and biomass) is expected to increase. The government has set a target for renewable energy to account for five per cent of total electricity production in the country by 2025.
The National Energy strategy contains the following key elements:
- Developing energy infrastructure and ensuring adequate, stable and long-term energy supplies for development.
- Developing energy, taking into account environmental considerations and sustainable development.
- Encouraging the economical and efficient use of energy by:
- taking steps to replace low efficiency equipment and facilities,
- encouraging domestic manufacture of end-use equipment and facilities that meet energy efficiency standards,
- carrying out measures to improve energy conservation in large buildings
- applying the principles of demand side and energy supply management
- Developing new and renewable energy resources, such as wind power, solar energy, and geothermal.
- Promoting rural energy policy by ensuring adequate energy supply for the sustainable development of remote populations.
- Enhancing international cooperation in energy.
- Improving legal frameworks and market-oriented reforms, especially in the power sector.
Opportunities
Wind power
According to a survey by the World Bank in 2009, Vietnam has the potential to produce more wind power along its coast than Thailand, Laos or Cambodia. The central provinces of Ninh Thuan and Binh Thuan are especially prolific according to a survey by the government of Vietnam, cited in a report by United Press International.
Solar photovoltaic
Vietnam has a relatively good solar resource, which makes solar energy an ideal source to meet the off-grid needs especially in the more diffuse population areas where mini-grids are not feasible.
The major organisations active in implementing solar energy systems are the Solar Laboratory of Vietnam Science Institute (Solarlab) based in Ho Chi Minh City, the Institute of Energy in Hanoi (which is a part of Electricity of Vietnam within the Ministry of Industry) and the Renewable Energy Centre of the Hanoi University of Technology.
Biomass
Biomass, including wood fuel and agricultural residues (rice husk, rice straw, coffee husk, bagasse), is widely used for energy production in Vietnam. Biomass fuels sources that can also be developed include forest wood, rubber wood, logging residues, saw mill residues, sugar cane residues, rice residues and coconut residues.
Currently biomass is generally treated as a non-commercial energy source, and collected and used locally. The use of biomass for producing energy in a commercial sense has not received the attention of energy planners in the same way as sources such as solar power and hydroelectricity.
Municipal solid waste
A number of municipal waste to energy projects are under development utilising municipal solid waste, in general concentrating on the treatment of organic / liquid effluents from landfills to capture methane for small scale power generation. As with many similar projects in the region the challenges include the ability to secure an acceptable tipping fee that can be enforced and the generally poor quality of the landfill installations.
Geothermal energy
Vietnam is located on the contact of the East Sea basin and the continental ridge of Indochina. Estimates for direct, non-electrical, utilisation of geothermal energy across the country indicate there are 269 geothermal prospects with surface temperatures above 30˚C and an energy capacity totalling 649 MW.
Tariffs, regulations and customs
The Ministry of Industry and Trade (MoIT) is responsible for the management of all energy industries. The MoIT presides over the formulation of law, policies, development strategies, master plans and annual plans, and submits them to the government for approval. The MoIT is also responsible for directing and supervising development of the energy sector and reporting its findings to the prime minister.
Electricity of Vietnam is a state-owned utility founded in 1995, and is engaged in the generation, transmission and distribution of electricity. In accordance with the Strategy for Electricity Sector Development approved by the government in October 2004, a policy to gradually establish a domestically competitive power pool, diversify investment and trading methods, and stimulate the participation of several economic sectors was instigated. The state maintains a monopoly in transmission, construction and operation of large-scale hydro-power and potential nuclear power plants.
Marketing your products and services
Market entry
In order to be successful in the Vietnamese market, Australian suppliers are highly encouraged to visit the market and spend time assessing market needs, sales potential and possible distributors for their products. It is important to conduct a detailed analysis of the market prior to entry.
Organising seminars on your products and technologies for potential end-users is critical to building brand recognition in this still somewhat insular industry. Providing technical support to your local partner will also signal your commitment to the market.
Barriers to entry
The current policy and regulatory framework for encouraging the use of renewable energy is inadequate to provide the necessary drivers to accelerate the development of the Vietnamese renewable energy industry.
Corruption and a lack of transparency and are also major concerns and although the Government is taking serious steps to address these issues they continue to present challenges for foreign companies.
Links and industry contacts
Government, business and trade resources for Vietnam
Asian Development Bank – www.adb.org/VietNam/
Ministry of Planning and Investment – www.mpi.gov.vn
Ministry of Industry and Trade – www.moit.gov.vn
The World Bank Group – www.worldbank.org.vn
Contact details
The Australian Trade Commission – Austrade – is the Australian Government’s trade, investment and education promotion agency.
Through a global network of offices, Austrade assists Australian companies to grow their international business, attracts productive foreign direct investment into Australia and promotes Australia’s education sector internationally.
For more information on how Austrade can assist you, contact us on:
Australia ph: 13 28 78 | Email: info@austrade.gov.au
A list of Austrade offices (in alphabetical order of country) is also available.