170801 stox plus_vietnam renewable energy_2017_tplxxxxx
TRANSCRIPT
‹#›
Preview on Vietnam Renewable Energy 2017
Prepared by StoxPlus
July 2017 www.biinform.com
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Table of Contents
Part Content Page
I Vietnam’s Power Sector Overview 3
1.1 Vietnam’s demand for energy 4
1.2 Vietnam’s current energy supply 5
II Renewable Energy 6
2.1 Current output and potential 7
III Supporting Policies and Legal Framework 8
3.1 International Treaties 9
3.2 National Master Plans 10
3.3 Feed-in Tariff schemes 12
IV Opportunities for investors 13
4.1 Competitive landscape 14
4.2 Interest from domestic investors 15
4.3 Interest from foreign investors 16
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Contents
Section I Vietnam’s Power Sector Overview
Vietnam’s demand for energy
Vietnam’s current energy supply
4
0
20
40
60
80
100
120
140
160
2010 2011 2012 2013 2014 2015
Agriculture, Forestry and Aquaculture Others
Commercial & Hotels, Banks Administration & Residential
Industry and Construction
54%
35%
2%4%8%
Vietnam’s demand for power has been increasing at the rate of 10.9% per annum and is
expected to grow at a CAGR of 7.51% by 2030
Section I. Overview of Vietnam Renewable Energy Sector
Demand
Source: StoxPlus from EVN
Figure 2: Vietnam’s power demand - annual and projected (TWh)Figure 1: Vietnam’s power consumption breakdown by users (TWh)
• The demand for power is driven by economic growth and higher standards of living, resulting in more power consumption
in industries as well as office buildings and households.
• By 2015, industries and construction accounted for 54% of the country’s power consumption, and administration and
residential account for a further 35%.
• The 5-year CAGR of power demand registered at 10.9% per annum and, though slightly decelerating, is expected to remain
high and register at 7.51% by 2030.
• This increasing demand creates the need for a growing supply of power generation.
Source: StoxPlus from Revised Power Master Plan VII
235 352 506
10.30%
8.47%
7.51%
0%
2%
4%
6%
8%
10%
12%
0
100
200
300
400
500
600
2020 2025 2030
Projected Demand (TWh) 5 year CAGR (%)
5
37.70%
33.90%
2.10%
19.60%
1.00%
5.70%
Hydropower
Coal power
Diesel power
Gas power
Imports from China andLaos PDR
Other
Section I. Overview of Vietnam Renewable Energy Sector
Supply
Although power production also increase at CAGR 11.4% during 2010-2016, Vietnam still
has to import from China and Laos PDR to satisfy domestic demand
• The power supply of Vietnam has been increasing at the rate of 11.4% throughout the period 2010-2016, a slightly higher rate than
the growth of power demand
– Yet other than traditional hydropower and coal power plants, the country still has to import power from China to satisfy
domestic consumption
– In the year 2016, Vietnam has been able to decrease its
power imports from 3.1% in the previous years to 1% thanks to
heavy rainfall which increased hydropower output.
• Renewable energy emerges as a viable and long-term solution to
the country’s shortage of power generation
Figure 5: Timeline of Wind and Solar Energy Production in Vietnam
Source: StoxPlus
Wind Power
2012
Thuan Phong, the first wind power plant began
operation
Solar Power
The first solar power plant is set
to complete by
YE2017
2017
92102
115125
142
160
176
2010 2011 2012 2013 2014 2015 2016
Source: StoxPlus from BP Statistical Review of World Energy June 2017 Source: StoxPlus from EVN
Figure 3: Timeline of Energy Production in Vietnam (TWh) Figure 4: Energy Production in Vietnam breakdown by sources, 10M2016
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Contents
Section II Renewable Energy Production and Potential
7
1.2%
39.2%
9.6%
50.0%
Solar Consumption
Wind Consumption
Geothermal, Biomassand Other
Other sources
Section II. Renewable Energy Production and Potential
Renewable energy in Vietnam is in its early stage, with plenty of potential for
development especially in the wind and hydropower segments
Source: StoxPlus from BP
Figure 8: Vietnam’s RE potential
Source: StoxPlus from EVN, MOIT & BP Statistical Review of World Energy June 2017
3%
3%
1%
15%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Solar
Wind
Biomass
Small hydropower
• Definition: Renewable energy refers to energy that comes from resources such as water, wind, sunlight,
geothermal heat, tides, waves, biological fuels and other resources that can generate renewable
energy. (Law on Environmental Protection 2014)
• In Vietnam, the majority of renewable energy comes from small hydropower plants, which have
reached only 15% of its potential.
• Other forms of renewable energy still have a long way to go to achieve their potential, with biomass,
wind and solar power at 3% or below of their potential.
0.11 0.14
0.21
0.29 0.29 0.29 0.30
0.44
0.62
2008 2009 2010 2011 2012 2013 2014 2015 2016
Figure 6: Renewable Energy Supply in Vietnam (TWh), 2008-2016 Figure 7: Breakdown of Renewable Energy Supply in Vietnam, 2016
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Contents
Section III Support from Regulatory Framework
3.1 International Treaties
3.2 National Master Plans
3.3 Feed-in Tariff schemes
9
Vietnam is signatory to environmental treaties the Kyoto Protocol and the Paris
Agreement 2015/COP21, pledging to reduce its greenhouse gas emissions and encourage
renewable energy
Section III. Regulatory Framework
International Treaties
•The first agreement between nations to mandate country-by-country reductions in greenhouse-gas emissions.
•Set emission cutting targets for a handful of developed countries
Kyoto Protocol 1997
•To keep global temperatures "well below" 2.0C (3.6F) above pre-industrial times and "endeavour to limit" them even more, to 1.5C
•To limit the amount of greenhouse gases emitted by human activity to the same levels that trees, soil and oceans can absorb naturally, beginning at some point between 2050 and 2100
•To review each country's contribution to cutting emissions every five years so they scale up to the challenge, starting from 2018
•For rich countries to help poorer nations by providing "climate finance" to adapt to climate change and switch to renewable energy.
Paris Agreement 2015 / COP21
The Intended Nationally Determined Contribution of Viet Nam includes the promise to cut down on greenhouse gas emissions
(concrete greenhouse gas mitigation) and adopt climate change measures.
With domestic resources, by 2030 Viet Nam will reduce GHG emissions by 8% compared to Business-As-Usual scenario, in which:
- Emission intensity per unit of GDP will be reduced by 20% compared to the 2010 levels
- Forest cover will increase to the level of 45%.
- The above-mentioned 8% contribution could be increased to 25% if international support is received through bilateral and multilateral
cooperation, as well as through the implementation of new mechanisms under the Global Climate Agreement, in which emission intensity per
unit of GDP will be reduced by 30% compared to 2010 levels.
To achieve the aforementioned targets, Vietnam includes measures that encourage renewable energy sources, such as:
- Assure national energy security by developing and exploiting different energy sources, while simultaneously using energy sources effectively
- Change the energy structure towards a reduced share of fossil fuel, encouraging the exploitation and use of renewable and low GHG emission
energy sources
10
Revised Electricity Master Plan VII outlines the development of renewable energy, to
account for up to 21% of total power supply by 2030
Section III. Regulatory Framework
Revised Power Development Master Plan VII
• Specific objectives of the Master Plan
• Ensure energy security to meet the domestic demand and satisfy socio-economic development objectives with average
GDP growth rates of 7% during 2016-2030
• Automate and improve the efficiency of electricity distribution
• Accelerate the electrification of rural areas
• Increase the proportion of renewable energy sources in electricity generation
Figure 9: Locations of RE projects according to the Master plan Figure 10: Vietnam’s Planned Renewable Power Generation Structure and
its percentage in total power generation, 2016-2030 (MW)
RE
output
Total
power
supply
Source: StoxPlusSource: StoxPlus
0.4% 9.9% 12.5% 21.0%
Location of RE projects
2015 2020 2025 2030
Coal-fired Power Hydropower Gas-fired Power
Solar Wind Nuclear
Diesel & Small Hydropower Oil-fired Power
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Development Strategy of Renewable Energy of Vietnam by 20230 with vision to 2050 via
Decision 2068/QĐ-TTg
Section III. Regulatory Framework
Development Strategy of Renewable Energy of Vietnam
• The Development Strategy set goals to:
1. Increase accessibility of clean energy source and electric power
2. Mitigate greenhouse gas emissions in energy activities and reduce
imported fuels for energy purposes
3. Increase total renewable energy sources for production
4. Increase power output produced from renewable energy
5. Increase the absorption area of water heating unit from solar energy
6. Increase the scale of using biogas technology
7. Convert the use of traditional biomass energy to the advanced biomass
energy converting equipment with high performance
8. Increase the biofuel output
9. Promote development of renewable energy technology and industries
• The Plan proposes the following policies and measures:
1. Create a market for renewable energy
2. Feed-in Tariffs and investment guarantees
3. Organizations working in the electricity generation and retail industries
have to comply to Renewable Portfolio Standard
4. Net Metering policy where end-users who could generate renewable
energy could participate in the electricity grid
5. Incentives and support for the renewable energy development and usage
6. Environment Fees for organizations and individuals who use fossil energy
56
90 96
2015 2020 2030
14.4 16.232.2
62.5
2015 2020 2030 2050
0.18 2.5
16
53
2015 2020 2030 2050
0.01 1.435.4
210
2015 2020 2030 2050
Hydropower
Biomass
Wind
Solar
TW
hT
Wh
TW
hT
OE
Figure 11: Planned Output by Renewable Energy
sources , 2015-2050
12
Section III. Regulatory Framework
Feed-in Tariff Schemes
6
• Vietnam has the tariff scheme which offers a fixed
rate offtake agreement with EVN to commercialize
the solar and wind generated power.
• Wind power: 7.8 cents/ kWh, in which 1 cent is from
the Environmental Fund, for onshore projects and 9.8
cents/ kWh for offshore projects per Decision
37/2011/QĐ-TTg.
• Although the offtake scheme has been established
since 2011, up till now only 4 wind power plants
are in operation. The offtake price is considered
too low to make the investment worthwhile.
• Biomass power: 5.8 cents/kWh for co-generation per
Decision 24/2014/QĐ-TTg.
• Solar power: 9.35 cents/ kWh per Decision
11/2017/QĐ-TTg.
Among the support mechanisms such as avoided cost tariffs, tax exemptions, etc., Feed-
in Tariff schemes were introduced to attract investment in renewable energy
Figure 12: Incentives to renewable energy investors
Corporate
Tax
Tariff
Land
Investment
Capital
Import
Source: StoxPlus
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Contents
Section IV Opportunities for investors
4.1 Competitive landscape
4.2 Interest from domestic investors
4.3 Interest from foreign investors
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2012 2015 2019 2021 2023
Vietnam Competitive
Generation Market
(VCGM)
Vietnam Wholesale
Electricity Market
(VWEM)
Vietnam Retail
Electricity Market
(VREM)
PilotFull
OperationPilot Full
Operation
Pilot Full
Operation
Section IV. Opportunities for Investors
Competitive Landscape
The government plans for a more competitive power generation market, however the
Wholesale and Retail market is still monopolized by EVN.
EVN, 53.5%
JSC, 14.7%
PetroVietnam,
10.8%
FDI,
7.2%
Local
Developer, 5.3%
Vinacomin, 4.9%
Import, 3.2%Others, 0.4%
Figure 13: Power generation marketshare 2016
• Under the framework of the Vietnam Competitive Generation Market and government incentives, players such as PVN and
Vinacomin have been entering the Vietnamese power generation market since 2012
• Although flourishing in numbers, small hydropower plants have been built on the forest lands, which affect overall
environmental protection
• Local governments have intervened with these projects
• In 2015, the MOIT issued Decision 8266/QD-BCT on the design of Vietnam Wholesale Electricity Market, paving the way for
more participants in the Vietnam’s energy market.
Source: StoxPlus from EVN Source: StoxPlus
Figure 14: Timeline for the Vietnam competitive power market
15
Section IV. Opportunities for Investors
Local investors
Domestic investors have been showing an increasing interest in infrastructure and
renewable energy investments, especially from the conglomerate businesses
• In addition to the conglomerates which are powerful both in their financial capital and relationships, some smaller local
companies are only strong in the relationship with the government but lacking in financial capabilities. They could only use
their strength to procure the land area, however they are looking for partners, especially foreign partners to provide the
financial strength.
Thanh Thanh Cong Group:19 hydropower plants and 7 thermal plants, total capacity 350 MW
REE’s associated company, Thuan Binh Electricity Company, has started construction on a wind
power plant. In total, REE owns 593 MW.
Invests in 20 hydro power plants with total capacity of 550 MW
Invested VND 3,965 bn (US$17.4 mn) in a wind power plant
And many other groups such as Bitexco, HAGL, Hung Loc Phat, etc.
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Section IV. Opportunities for Investors
Foreign Investors
Foreign investors are also showing interests in the power market, with both private
equity funds and international organizations actively participating
In 2015, UK FCO Prosperity Fund
partnered with Dragon Capital Group and
the Energy Conservation Center – HO Chi
Minh (ECC) to fund solar projects in
Vietnam through the £1.3 billion Solar Hub
Program, which generate the annual
power of 18m KWH
JBIC provided
EVNGENCO 3 with a
US$ 202.9 mn loan for
the thermal power
plant Vinh Tan 4
IFC and Armstrong S.E Clean Energy
Fund are investing in Gia Lai
Electricity Joint Stock (GEC), a big
player in the hydropower sector, to
fund wind and solar power projects
A wind developer also belonging
to Armstrong Asset Management
has started construction of first
40 MW wind project in Dam Nai
project in Ninh Thuan, in
partnership with Vietnamese
partner TSV. The construction is
projected to be completed in
2018 for a total budget of
US$58m
Private Equity
funds such as
Bowpower, Nexif,
IC Power and Glow
Energy are also
interested in
hydropower
projects in Vietnam
Figure 15: Current state of foreign-invested renewable
energy projects in Vietnam
16 foreign-invested projects
US$778mn total registered capital
18% projects invest in solar power
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