AHK BUSINESS TRIP CONFERENCE ON “ENERGY EFFICIENCY AND

MANAGEMENT IN INDUSTRIES”

Ho Chi Minh City, 15/01/2018

NGUYEN NGOC HUNG, PHD

INSTITUTE OF ENERGY – MINISTRY OF INDUSTRY AND TRADE

CONTENTS

1. Background2. Overall Energy Development Status3. Overall Energy and Energy Efficiency Policies4. Challenges for Promote Energy Efficiency

2

BACKGROUND (2017)

3

• Population: 93.7 million persons;• Area: 331,698 km2;• Urban population: 32.9 million persons

(35.1%); • GDP (nominal): US$220 billion → 2,385 US$

per capita;• GDP growth rate: 6.2% p.a. in 2005-2017;• Primary energy consumption: ~78.3 MTOE (→

835.7 kgoe per capita;• Total electricity consumption: 174 TWh →

1,852 kWh per capita;• Electrification rate: 98.95% of rural

households (end of 2016);

SOCIO-ECONOMIC TRENDS

4

• GDP growth rate for 2005-2017: 6.2% p.a; GDP per capita: 5% p.a.

• In 2005-2017:o Electricity intensity with respect to GDP: 0.53 1.00 kWh/USD 2010

o Electricity elasticity with respect to GDP: 1.94 times

1,58

8,64

6 1,

699,

501

1,82

0,66

71,

923,

749

2,02

7,59

12,

157,

828

2,29

2,48

32,

412,

778

2,54

3,59

62,

695,

796

2,87

5,85

63,

054,

470

3,26

2,47

9

8.4%

7.0%7.1%

5.7%5.4%

6.4%6.2%

5.3%5.4%6.0%

6.7%6.2%

6.8%

0.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%8.0%9.0%

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

% p

.a

Bn. V

ND @

2010

GDP and annual GDP growth rate

GDP GDP growth rate

GDP, 2.05

Population, 1.14

Urban population,

1.51

GDP per capita, 1.81

Electricity demand, 3.87

Primary commercial

energy, 2.40

-

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

2005 2007 2009 2011 2013 2015 2017

Trends for major energy economic indicators (2005=1)

ENERGY DEVELOPMENT TRENDS2,666

2,501 2,494 2,421 2,407 2,414

2,354 2,280 2,271

2,343

2,497 2,600

2,510

1,000

1,200

1,400

1,600

1,800

2,000

2,200

2,400

2,600

2,800

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

KTOE

Coal Oil Gas Combustible biomass Hydro Import HHI

5

• Drivers for energy consumption: economic activities, recent industrial developments; increased urbanization; enhanced energy access; improved living standard.

• HHI (Herfindahl-Hirschman Index) represents diversification of fuel mix (HHI 0~10.000)

• Data on primary energy supply are estimated for 2016 & 2017

Coal20.0%

Oil29.3%Gas

11.7%

Combustible

biomass35.4%

Hydro3.5%

2005

Coal35.9%

Oil26.9%

Gas10.3%

Combustible

biomass

17.3%

Hydro9.5%

2017

Fuel mix of primary energy supply

IMPORTED ENERGY DEPENDENCY

-21,023-19,581

-10,762-13,940

-7,867 -6,966 -8,059 -6,535-2,277

3,460

11,020 12,141

-40,000

-30,000

-20,000

-10,000

0

10,000

20,000

30,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017KTO

E

Export Import Net import

6

• The country turned to a net energy importer by 2015 after being net energy exporter for a long period;

• Significant increase in coal import in recent years;

• Limit on coal export;

• Increased reliance on imported fuels for power generation and industries.

-47.2% -42.7%

-21.8% -26.4%-13.8% -12.2% -13.9% -11.0%

-3.5%4.9%

14.5% 15.5%

-60.0%

-40.0%

-20.0%

0.0%

20.0%

%

POWER SECTOR TREND

• In 2005-2017: installed capacity increased 12.3% p.a; peak load 10.6 % p.a; total generation 11.7% p.a;

• Coal-fired generation increased 18.0% p.a; hydro 14.8% p.a; gas-fired 4.4% p.a (it is worthy noting that 2017 marked an extreme increase in hydropower generation);

• Small share of renewable power (excluding hydro).7

Fuel mix of power generation

11,576

45,410

9,255

30,881

- 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000

-

50,000

100,000

150,000

200,000

250,000

2005200620072008200920102011201220132014201520162017

MW

GWh

Hydro Coal-fired Oil-fired

Gas-fired Wind Import

Installed capacity Peak load

Hydro31.15%

Coal-fired17.64%

Oil-fired4.99%

Gas-fired46.22%

2005

Hydro43.6%

Coal-fired34.1%

Oil-fired0.3%

Gas-fired20.7%

Wind0.2%

Electricityimport 1.2%

2017

INTERNATIONAL COMPARISONS

WorldOECD

China

Non-OECD Asia

Indonesia

Malaysia

Philippines

Thailand

Singapore

Vietnam

0

0.2

0.4

0.6

0.8

1

1.2

1.4

0 0.05 0.1 0.15 0.2 0.25 0.3 0.35 0.4 0.45 0.5

t CO

2/20

10 U

SD

toe/000 2010 USD

TPES/GDP vs. CO2/GDP in 2015(circle area size represents CO2

emission/Population tCO2/capita)

8

Sources: Energy data: International Energy Agency. Population: OECD/World Bank. GDP (in 2010 USD): OECD/World Bank/CEPII (Paris).

High energy & high carbon intensities with respect to GDP while still low CO2 emission and primary energy consumption per capita

Vietnam

World

average

Energy intensity(toe/000 USD)

0,45 0,18

CO2 intensity(tCO2/USD)

1,09 0,43

CO2 emissionper capita (tCO2/capita)

1,83 4,40

MAJOR POLICIES FOR SUSTAINABLE ENERGYDEVELOPMENT

Legal document Description in related to clean energy transitionLaw on Energy Efficiency and Conservation (2010)

Promoting energy efficiency and conservation activities through regulations, standards, incentives etc.

Electricity Law (2004) and Amendment of Electricity Law (2012)

Prescribing the electricity development planning and investment; electricity saving; electricity markets andothers.

Sustainable Development Strategy (2012)

Reduction in energy intensity to GDP; Increased share of renewable energy in energy consumption.

Viet Nam Green Growth Strategy (VGGS) (2012)

Introducing GHG reduction targets aiming to reducing fossil fuel and promoting renewable energy.

Law on Environment Protection (2014)

Promoting clean and renewable energy; environmental protection fee; environmental protection fund; strategic environmental assessment.

Intended Nationally Determined Contributions (INDCs) (2015)

Quantitative GHG emission reduction objectives for all the sectors of the economy; Reduction compared to BAU scenario; Reduction of emission intensity (GHG/GDP, GHG/per capita); GHG emission reduction measurement policies.

Renewable Energy Development Strategy (2015)

Setting RE targets in energy and power sectors; supporting schemes for RE development (FITs; RPS, Net metering etc.). 9

Sustainable Energy Developm

ent

Promoting energy efficienc

y

Promoting

renewable energy

CO2 emission reduction

targets

Implementation

of energy markets

ENERGY POLICY TARGETSItem 2020 2030

Energy intensity to GDP Reduce 1.5-2% annuallyEnergy elasticity to GDP Reduce to 1

RE share in primary energy supply

31% 44% (2050)

RE share in total electricity generation

38% 43% (2050)

GHG emission reductionGreen growth strategy 10-20% 20-30%

INDC 8% (unconditional) 25% (conditional)

RE strategy 25% (energy sector)

10

LAW ON EE&C 2010• Objective: Promoting energy efficiency in every sectors by

regulations, standards, financial supports and incentives;• Obligations for designated energy users: annual and 5-year EE

plans, energy manager, energy management model; compulsory energy audit for every 3 year;

• Standards and labelling: domestic appliances, industrial equipment and power generation technologies;

• Supporting measures: tax reduction, land acquisition, preferable loans from Vietnam Development Bank, the Science and Technology Development Assistance Fund, the Fund for National Technology Innovation, the Environmental Protection Fund; and National Target Programs on Energy Efficiency and Conservation (VNEEP)

• Organization: Ministry of Industry and Trade (MOIT) takes the lead in state management of EE activities with involvements from other ministries, provincial authorities...

11

VIETNAM EE PROGRAM 2012-2015 (VNEEP 2)

• Targets:• Energy saving 5-8% of total energy consumption (achieved 5.65% ~ 11.26

MTOE);• Implementation of EE&C Law (Decree 21 and many Circulars);• Promotion the use of efficient appliances by MEPS and labeling (Compulsory

labeling started from 2012: 665 products in 2012; 1532 products in 2013 and 2655 in 2014);

• Reducing 10% in energy intensity of energy intensive sectors (SEC for steel, paper, beverage, chemical etc.);

• Mandatory implementation of the Building Code (Lack of guidance circulars for implementing the Building code);

• Meeting 10-15% of transportation in big cities by public transport (Low share of public transport in big cities).

• Incentives:• Training for capacity building for enterprises in EE;• Supporting for enterprises in applying ISO 50001 (energy management system);• Supports for energy audit;• Supporting partly investment in EE measures;• Technical assistances for EE activities. 12

INTENDED NATIONALLY DETERMINEDCONTRIBUTIONS (INDCS)

• National contribution to international climate change commitments with 17 options in energy sector have been identified.

• CO2 reduction targets for energy sector: unconditional 4.4% (29.46 MtCO2e) and conditional 9.8% (65.93 MtCO2e) corresponding to levels of 8% and 25% of the nation.

• NDC is being reviewed and updated by MONRE with BAU based on PDP7 Revised.

13

E8E3

E6 E1 E4E2 E9 E5

E10 E12 E15E16 E13 E14

E17

-400.0

-300.0

-200.0

-100.0

0.0

100.0

200.0

0 50 100 150 200 250 300 350 400 450

MAC

(U

SD/t

CO2e

)

CO2 avoided to 2030 (MtCO2e)

E8. Passenger transport mode shift from private to public E9. Freight transport switch from roadE3. High efficiency residential lighting E5. Cement-making technology improvementsE6. Brick-making technology improvements E10. High efficiency commercial air conditioningE1. High efficiency residential air conditioning E12. Small hydropower plantsE4. Solar water heaters E15. Biogas power plantsE2. High efficiency residential refrigerators E16. Ultra-supercritical coal power plantsE7. Substitution of ethanol for gasoline in transport E13. Wind power plants by domestic fundingE14. Wind power plants by international support E17. Solar PV power plants

OUTLOOKS FOR FUTURE FUEL MIX FORELECTRICITY GENERATION

Power Development Plan (PDP7 Revised)• Increased share of coal-fired

with 53.3% of total generation by 2030;

• RE and small hydro accounts for 10.7% of total generation;

• Nuclear is expected to contribute for 5.7% of total generation by 2030

14

Hydro12%

Coal-fired53%

Gas-fired17%

Small hydro +

RE11%

Nuclear6%

Import1% PDP7, 2030

HHI = 3400Hydro14%

Coal-fired45%

Gas-fired24%

Small hydro +

RE15%

Nuclear0%

Import2% EOR, 2030

HHI = 3100

Energy Outlook Report (Energy Development Plan)• Energy sector’s CO2 emission

reduction by 15% as compared to BAU scenario;

• Electricity demand in 2030 decreased from 506 TWh (PDP7) to 461 TWh (EOR);

• Increased amount of RE, LNG and import displacing coal-fired and

More diversified fuel mix under

energy efficiency & GHG reduction

efforts

MAIN OBSTACLES FOR EE PROMOTION

• Regulatory and policy: lack of technical capacity in designing and implementing EE policies and projects;

• Institutional and administrative: lack of effective system for data collection, baseline assessment, EE planning and MRV;

• Market: Lack of effective incentive mechanisms for EE to compete with mature fossil fuel technologies;

• Economic: low energy/electricity prices making EE less attractive;

• Financial: Shortage of sustained fund to finance EE;• Awareness and skill: Lack of awareness, expertise and

technology knowledge in developers and consumers.

15

Thank you for your attention!

Questions & Answers