Connecting German energy services and

expertise to meet local demand

Trang Nguyen

Project Development Programme (PDP)

� German Energy Solutions Initiative

� Barriers in implementing energy efficiency measures in Vietnam

� Sector specifics: garment and textile sector

� Conclusions and support from the Project Development Programme

Agenda

Trang Nguyen | AHK EE Conference 2018 | 15.01.2019 | Page 2

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Promotion of renewable energy and energy efficient technologies

Showcase sustainable energy solutions

Implementation of projects

Know-how transfer

Contribution to international climate protection

German Energy Solutions Initiative

Federal Ministry for Economic Affairs and

Energy (BMWi)

PDP Team Berlin

PDP-colleagues in GIZ-country

offices

Project Development Programme

Trang Nguyen | AHK EE Conference 2018 | 15.01.2019 | Page 4

Project Development Programme support activities

We offer:

Market information

Support pilot projects &

capacity development

Facilitate networking &

business partnership

PDP Projects in Vietnam:

Industrial rooftop solar systems

PV application for shrimp greenhouses

On-going support to:

� Logistics

� Garment & Textile

� Aquaculture

� Other industrial operations

Source: PDP

Source: PDP

Trang Nguyen | AHK EE Conference 2018 | 15.01.2019 | Page 5

Vietnam energy efficiency targets

Agriculture,

forestry, fisheries

2%

Industry &

Construction

54%

Commercial and

hospitality

services

6%

Management &

Residential

consumption

34%

Other activities

4%

Energy consumption by sector (2016)

Total: 153.3 billion kWh

Source: EVN NLDC 2017

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Industrial operations

Agriculture

Transportation

Construction & Public

lighting

Construction & Public

lighting

Households &

Commercial business

Households &

Commercial business

Period 2016 - 2020: reducing 10%

electricity consumption

Period 2019-2030: 8%-10% electricity

consumption (under discussion)

Barriers for realization

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• Lack of motivation for energy savingLow electricity

price

• Lack comprehensive over view of saving potentials by sectors and technologies

• Existing data: representative for the whole country?Data access

• EE measures: too broad

• Specific knowledge of energy in different sectors

• Energy audits quality, similar saving measures

• Focusing mainly on “electricity form”

Local capacity

• Limited investment in modern and high efficient equipment & machinery

• Third party financing models in Vietnam

Finance

• Voluntary basis

• Lack of enforcement scheme

• Lack of monitoring system

Regulatory frameworks

Motivations are increasing

Lean production:

� Production costs � Competitiveness

� Improving resources and business efficiency � productivity

Pressures on energy security:

� Electricity price to be increased

� Electricity supply in Vietnam facing challenges

Entering global markets:

� Sustainable requirements from clients

� Commitment by Vietnamese Government

� Vietnam National Energy Efficiency Programme 3 being developed

� C&I operations encouraged to apply RE & EE measures

� Increasing private participation: ESCO, leasing business models

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“Where” are the motivations?

Source: Wikipedia

ME

CH

AN

ICS

WOODEN PRODUCTS

GA

RM

EN

T &

FO

OT

WE

AR

OIL

& C

HE

MIC

AL

SAGRI & AQUA & FOOD PRODUCTS

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Key energy users (KEU):

� Consuming more than 1000 TOE per year

� 2496 enterprises nationwide (2018)

� Major areas: Ho Chi Minh (302); Hanoi (288); Binh Duong (253); Dong Nai

(126); Quang Ninh (123); Bac Ninh (86)

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“Where” are the motivations?

Obligations:

� Energy audits every 3 years

� Develop a 5-year energy efficiency plan

� Annual report to DOIT/ MOIT on implementation results

Focused technologiesVietnam pilot Energy Efficiency Network 2017-2018

8 members: paper, plastic, textile, rubber, packaging, port & container companies

Cross-cutting technologies

Trang Nguyen | AHK EE Conference 2018 | 15.01.2019 | Page 11

Company

A

Company

A

Company

B

Company

B

Company

C

Company

C

Light-

ing

Light-

ingAir

Com-

pressor

Air

Com-

pressor

CoolingCooling

HVACHVACVSDVSD

Focus technologies

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Sector specifics: Garment and textile

PDP has been supporting global brands: Esprit, H&M, The North Face, Adidas, Puma,

Nike, Timberland, Target, C&A, Uniqlo, v.v as well as local factories.

� Understanding regulations for rooftop solar energy and energy efficiency

� Field visits to existing solar systems in Vietnam

� Information seminars on solar technology

� Developing pilot projects (mainly rooftop solar)

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Ownership

3 million workers

Vietnam textile & garment sector

� Vietnam is the top five textile & garment exporter in the world;

� 226 factories in the KEU list (total 2496)

� Sector’s total electricity consumption 2013: appx. 7,576,604 MWh

� Large factories consume up to 30,000 – 40,000 MWh/year each

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Motivations in garment and textile sector

Requirements

• Cost & quality

• Increasing productivity

• Reducing energy ratio in production cost

• Good working conditions

• Minimizing environmental footprint

• CO2 emission reduction

• Energy saving targets

• Renewable energy supply

• Rules of origins

Which brands?

• Sustainable policies and targets

• Membership of sustainable program/ initiative

• Big brands with large number of local partners in Vietnam

Which manufacturers?

• Large foreign companies: Hong Kong, Germany

• Large Vietnamese enterprises

• Strategic suppliers of the brands

Examples:

� H&M targets: climate neutral by 2030 and climate positive by 2040, commitment

to use 100% renewable energy

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Sector specifics: Garment and textile

Focused technologies

Compan

y A

Compan

y A

Compan

y B

Compan

y B

Compan

y C

Compan

y C

Light-

ing

Light-

ingAir

Com-

presso

r

Air

Com-

presso

r

MotorMotor

HVACHVAC

BoilerBoiler

Rooftop

solar

Rooftop

solar

Barriers:

� Limited awareness on benefits of EE

and profit margin

� Energy management system is not

common

� Savings are hard to quantify and

measured to prove business case

� Upfront costs are perceived as too

high � ESCO is preferred

� High risks perceived by ESCO

investors � bankability criteria limit

the number of clients

� Investment decisions based on

upfront costs, excluding O&M costs

� cheaper and less efficient

equipment

Take-aways

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Opportunities:

� Energy supply from 2021 expected to be challenging

� Energy savings and efficiency are essential

� Business models for 3rd party financing (ESCO, leasing) available

� Framework conditions for ESCO being improved/ developed

Recommendations:

� Awareness raising

� Upstream participation � identifying saving opportunities and benefits

� Sector knowledge

� Suitable business model

Through BMWi, PDP supports advising GER companies on market entry and local partners – please get in touch!

Thank you for your attention!

For more information, please contact:

− PDP Berlin - Simon Bittner: simon.bittner@giz.de

− PDP Vietnam - Trang Nguyen: trang.nguyen1@giz.de

− PDP Vietnam – Dung Tran: dung.tran1@giz.de