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
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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
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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
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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: [email protected]
− PDP Vietnam - Trang Nguyen: [email protected]
− PDP Vietnam – Dung Tran: [email protected]
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