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Giz2013 en-exploring-biogas-market-opportunities-vietnam

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Giz2013 en-exploring-biogas-market-opportunities-vietnam

  1. 1. EXPLORING BIOGAS MARKET OPPORTUNITIES IN VIETNAM www.renewables-made-in-germany.com
  2. 2. EXPLORING BIOGAS MARKET OPPORTUNITIES IN VIETNAM
  3. 3. Authors Nguyen Duc Cuong et al November 2011 Editor Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH On behalf of the German Federal Ministry of Economics and Technology (BMWi) Contact Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH Potsdamer Platz 10, 10785 Berlin, Germany Fax: +49 (0)30 408 190 22 253 Email: pep-southeastasia@giz.de Web: www.giz.de/projektentwicklungsprogramm Web: www.exportinitiative.bmwi.de This report is part of the Project Development Programme (PDP) South-East Asia. PDP South-East Asia is implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH on behalf of the German Federal Ministry of Economics and Technology (BMWi) under the “renewables – Made in Germany” initiative. More information about the PDP and about renewable energy markets in South-East Asia: www.giz.de/projektentwicklungsprogramm This publication, including all its information, is protected by copyright. GIZ cannot be liable for any material or immaterial damages caused directly indirectly by the use or disuse of parts. Any use that is not expressly permitted under copyright legislation requires the prior consent of GIZ. All contents were created with the utmost care and in good faith. GIZ assumes no responsibility for the accuracy, timeliness, completeness or quality of the information provided.
  4. 4. Exploring Biogas Market Opportunities in Vietnam I Content INTRODUCTION 1 1. REVIEW AND ANALYSIS OF THE ELECTRICITY INDUSTRY IN VIETNAM 3 1.1. Power need and growth rate for 2001-2010 3 1.2. Electricity pricing 7 1.3. Power production and potentials to 2020 (next 10 years) 10 1.4. Existing power sources and projection for the next 10 years 11 1.5. Electricity market actors 13 1.6. Roadmap for the competitive electricity market 13 1.7. Electrical grid 15 2. UNDERSTANDING AND ASSESSING THE BIOGAS ENERGY MARKET IN VIETNAM 16 2.1. Biogas sources in Vietnam 16 2.1.1. Biogas from domestic animals’ wastes 16 2.1.2. Biogas from municipal wastes 18 2.1.3. Biogas production from waste treatment processes (solid and liquid wastes) in specific food, foodstuff and beverage industries 19 2.2. Use of biogas in Vietnam 22 2.3. Overview of biogas projects in Vietnam 2.3.1. Small sized – household biogas projects 2.3.2. Medium and large sized biogas projects 27 28 29 2.4. Information about partnership in biogas development between Vietnam and foreign parties 33 2.4.1. Government and foreign organization funding for demonstration projects or policy making and market promotion; 33 2.4.2. Partnership type (ii) taking part in waste treatment methane collection projects; and (iii) provision of equipment and technology. 36 2.5. Economics of biogas projects 2.5.1. Investment cost 37 37 2.6. Available biogas technologies in Vietnam 2.6.1. Popular technologies in Vietnam 45 45 2.7. Information about local companies that are potential candidates as partners with German firms in biogas development 52 3. REVIEW, RESEARCH AND FORMATION OF THE LEGAL FRAMEWORK FOR THE DEVELOPMENT OF RENEWABLE ENERGY/BIOGAS IN VIETNAM 53
  5. 5. Exploring Biogas Market Opportunities in Vietnam II 3.1. Summary of legislative instruments focusing on renewable energy/biogas 53 3.2. Barriers to renewable energy development in general and biogas energy 58 3.3. Trends and pathways for institution, regulatory arrangements, economic arrangements and frameworks for international cooperation in the biogas energy market 61 4. RECOMMENDATIONS FOR POTENTIAL PROJECTS IN THE BIOGAS ENERGY TECHNOLOGY MARKET 65 4.1. Identifying the needs for specific technologies, services, products and opportunities for Vietnam – Germany partnership 65 4.2. Information about market entry opportunities and procedures for German companies interested in doing business (import/export) or investment (getting license, partnership) in the field of biogas energy 67 4.3. Background information about relevant local institutions and contact information for German companies’ reference – also, information about the role and responsibility of different stakeholders and agencies in the biogas field 69 APPENDICES 75 Appendix 1. Industrial scale alcohol producers 75 Appendix 2. Industrial scale aquatic production and processing facilities 76 Appendix 3. Industrial scale sugar production and processing facilities 80
  6. 6. Exploring Biogas Market Opportunities in Vietnam III ministrey List of Tables Table 1.1. Gross capacity of power plants by 2010, by owners ................................................. 3 Table 1.2. Electricity retail prices for 2011 ................................................................................ 8 Table 1.3. Tariff with avoidable costs for 2011 ....................................................................... 10 Table 2.1. Solid waste from domestic animals, 2010 ............................................................... 17 Table 2.2. Methane amount from domestic animals’ wastes, 2010 ......................................... 17 Table 2.3. Municipal waste generation in Vietnam, 2010 (million tons) ................................. 18 Table 2.4. Theoretical gross biogas potentials, 2010 ............................................................... 21 Table 2.5. Summary of expected electricity generation capacity from biogas and municipal wastes to be added to the grid (MW)........................................................................................ 22 Table 2.6. Gas consumption by system size ............................................................................. 24 Table 2.7. Classification of biogas systems as recommended by local prestigious institutions in terms of biogas technology................................................................................................... 28 Table 2.8. Medium and large sized biogas projects ................................................................. 31 Table 2.9. Projects with a foreign partner in medium and large sized biogas collection ......... 36 Table 2.17. Background information of potential investors and partners in biogas development .................................................................................................................................................. 52 Table 3.1. Summary of legal frameworks conducive to renewable energy development in Vietnam .................................................................................................................................... 54 Table 3.2. Barriers and interpretation ....................................................................................... 58 Table 3.3. The legal framework for the development of biogas/renewable energy ................. 62 Table 4.1. Potentials and ability to develop biomass and biogas energy ................................. 67 Table 4.2. Gross capacity of renewable electricity connected to the grid in use (MW)........... 67
  7. 7. Exploring Biogas Market Opportunities in Vietnam IV List of Figures Figure 1.1. Power need and growth rate, 2001-2010 ................................................................. 3 Figure 1.2. Distribution of sources, by owner ............................................................................ 6 Figure 1.3. Distribution of sources, by supply mode and fuel ................................................... 6 Figure 1.4. Distribution of power sources by 2020 .................................................................. 12 Figure 2.1. Current uses of biogas ............................................................................................ 24 Figure 2.2. Biogas lamp (illustration)....................................................................................... 25 Figure 2.3. Biogas-fired power generating system ................................................................... 26 Figure 2.4. KT 1 and KT2 models ............................................................................................ 28 Figure 2.5. Energy Institute’s floating cover biogas system .................................................... 46 Figure 2.6. Energy Institute’s fixed dome cover biogas system ............................................... 46 Figure 2.7. Can Tho University’s biogas system design .......................................................... 47 Figure 2.8. Biogas system, model KT-2 ................................................................................... 47 Figure 2.9. VACVINA’s biogas system ................................................................................... 48 Figure 2.10. RDAC’s design .................................................................................................... 48 Figure 2.11. Vinyl bag-typed biogas system ............................................................................ 49 Figure 2.12. 5,000 m3 covered anaerobic lagoon in Thai Nguyen ........................................... 50 Figure 2.13. UASB + SMAG anaerobic tank at Lam Son sugarcane plant, Thanh Hoa ......... 50 Figure 2.14. EGSB and SAR_T anaerobic tank under construction in Quang Ngai ................ 51 Figure 4.1. Balance of demand and supply of primary energy................................................. 66
  8. 8. Exploring Biogas Market Opportunities in Vietnam V Currency 1 USD = 1 EUR = VND 20.83 (Sep 2011) VND 28.384 (Sep 2011) Measurement W kW MW GW Watt Kilowatt Megawatt Gigawatt Wp kWp MWp GWp Watt peak Kilowatt peak Megawatt peak Gigawatt peak Wh kWh MWh GWh Watt hour Kilowatt hour Megawatt hour Gigawatt hour
  9. 9. Exploring Biogas Market Opportunities in Vietnam List of Acronyms ADB Asian Development Bank BF Biofuel BG Biogas CDM Clean Development Mechanism CERs Certified Emission Reductions EGSB Expansion Granular Sludge Bed Digester EI Energy Institute EU European Union EVN Electricity of Vietnam Corporation GDP Gross Domestic Product GG Greenhouse gas GW Gigawatt HCMC Ho Chi Minh City HDPE High density Polyethylene IPP Independent Power Producer JICA Japan International Cooperation Agency MARD Ministry of Agriculture and Rural Development MoIT Ministry of Industry and Trade MRD Mekong River Delta MWe Megawatt electrical N&RE New and renewable energy ODA Official development aid PDD Project design document PPA Power purchase agreement REAP New & Renewable Energy Action plan toe Ton of oil equivalent UASB Up flow Anaerobic Sludge Blanket WB World Bank VI
  10. 10. Exploring Biogas Market Opportunities in Vietnam 1 0. Introduction Development goals and visions of Vietnam’s national electricity industry in the foreseeable future are reflected in the Prime Minister’s Decision 1208/QĐ-TTg, dated July 12, 2011, in approval of the “Master plan for the development of national electricity industry in Vietnam for 2011-2010 and vision to 2030”, that available renewable energy sources in Vietnam will be prioritized and promoted to increase the proportion of power output from renewable energy from the current marginal level to 5.6% and 9.4% in 2020 and 2030 respectively (by rated capacity and not including hydropower generation of 30 MW output or higher). The development strategy for renewable energy in Vietnam to 2030 and vision to 2050, as well as the Master plan for the development of renewable energy in Vietnam for 2011-2020 and vision to 2030 (drafts1), have also been conceived and are currently being reviewed by the Government. In these draft strategy and master plan for renewable energy, biogas energy of various sources are viewed as a renewable energy of priority, as in addition to grid power production (about 439 MW), biogas electricity will also be developed for off-grid residential areas (about 12,000 households) and use of heat generated from biogas will be promoted for household cooking and agroforestry processing. About 10 million m3 of biogas instruments are expected to be developed in different types and sizes for power and heat generation as well as cogeneration. Vietnam is a developing country with favorable geographic position and climate, where economic activities rely heavily on agroforestry and animal husbandry. This is an advantage that gives Vietnam access to bounteous renewable energy resources of massive reserves that can be effectively put to use to generate enough energy to meet local needs, as a replacement to fossil fuel while contributing to environmental protection at the same time (minimizing emission of greenhouse gas, acid rain gases, dust and so on). The Project Development Programme (PDP) South-East Asia of the German Development Cooperation Agency (GIZ), on behalf of the German Federal Ministry of Economics and Technology (BMWi), aims to promote bilateral cooperation and experience exchange between Vietnamese and German companies. This study is part of the PDP South-East Asia Project and its key purpose and focus is to capture an overview of the status and potentials of producing and utilizing biogas in Vietnam, as well as identify the opportunities and challenges to the development of a biogas technology market. To be specific: ■ Capturing an overview of Vietnam’s electricity industry ■ Understanding the biogas market in Vietnam ■ Reviewing the available legal framework for renewable energy development in Vietnam ■ Making recommendations on the pathway for development of biogas energy technology and market. This report has four parts: Part 1. Overview of Vietnam’s electricity industry. This section takes a snapshot of current power consumption, power sources, needs and power sources development targets in Vietnam for the next decade (to 2020). It then lists electricity prices by categories, including prices of micro- 1 Apr. 2011, the Ministry of Industry and Trade has submitted the draft to the Government for review and is awaiting approval.
  11. 11. Exploring Biogas Market Opportunities in Vietnam 2 hydropower (≤ 30 MW) and wind power sources. The roadmap for a competitive power market and entry in this market is also studied and documented. Part 2. Understanding the biogas market in Vietnam. The discussion concentrates on the analysis and assessment of the production and use of biogas as well as the status of previous and ongoing biogas projects. This is followed by a review of the efficiency and existing types of technology in use. Finally, the section gives an update and consolidation of information on various business activities that are going on in the biogas field, followed by discussions on technology application potentials. Part 3. Review of the conducive legal framework for renewable energy development in Vietnam. This part gives an outline of related legislative instruments including strategies, development plans and policies influencing the development of renewable energy/biogas energy. Opportunities and barriers are also identified and explained. Part 4. Recommendations on the future development of biogas energy technology and market. The need for biogas, potentials for technology development and the government’s biogas-fire power generation ambitions are compiled and analyzed. Investment opportunities, market information and potential partners for the development of a biogas market in Vietnam are also studied and discussed. Despite huge efforts in gathering information and data about biogas in Vietnam as demonstrated throughout the report, drawbacks in terms of data sources and expected information are unavoidable. Explanations for such shortcomings include: (i) additional funding for sample verification and examination in the field and interviews is recommended, (ii) materials, data or statistics about power sources, consumption levels, technologies are not readily available (no institutions are formally responsible for data collection, update and reporting); getting access to and collecting information from reports and studies in this domain in Vietnam is now a challenge, including even data from both local and international partners. As biogas projects are often small and medium-sized enterprises (Groups B and C2 projects), they are only subject to sub-national (provincial) investment licensing. Consequently, it needs some time to get access to information from private investors and local regulators, as hesitance sometimes exists in the discussion and information providing process. 2 Medium and small sized categories B, C or even below C projects, with total invested capital of less than VND 1,500 billion (about US$ 73 million).
  12. 12. Exploring Biogas Market Opportunities in Vietnam 3 1. Review and analysis of the electricity industry in Vietnam 1.1. Power need and growth rate for 2001-2010 In the last decade (2001-2010), commercial electricity sales to economic sectors and household use were on sustained increase at a high growth rate of about 14.5% on average. Commercial electricity sales volume increased from 31.1 billion kWh in 2001 to 99.1 billion kWh in 2010, which is more than three times higher in just 10 years. Commercial power output in 2010 (99.1 billion kWh) was 14.3% higher than in 2009 (a 2.5 times growth compared to GDP). The Figure below illustrates electricity need and growth in Vietnam between 2001 and 2010. Figure 1.1. Power need and growth rate, 2001-2010 Nhu cầu điện 2001 - 2010 Power need for 2001-2010 120,000 18% 17.0% 14.4% 14.3% 14% 13.7% 12.9% 13.0% 12.8% 12.8% 80,000 12% 10% 60,000 8% 40,000 6% Nhu cầu điện 20,000 4% Tốc độ tăng Growth Tốc độ (%) (%) rate tăng Power demand(GWh) Nhu cầu điện (GWh) 16% 15.5% 100,000 2% 0 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Statistics show that at the end of 2010 the total rated capacity of all power sources in Vietnam was 21,542 MW, including 11,848 MW from EVN (55%) and 9,694 MW of non-EVN output (45%, including joint ventures between EVN and other partners). Details of power sources as of 2010, by owners, fuels and technologies are described in the following tables and figures. Table 1.1. Gross capacity of power plants by 2010, by owners No Power plant Generators Gross capacity I Hydropower Rated capacity (MW) 21,541.5 Owner 7,633 1 Sơn La 1 400 EVN 2 Hoà Bình 8 1920 EVN 3 Thác Bà 3 120 EVN 4 Tuyên Quang 3 342 EVN 5 Bản Vẽ 2 320 EVN 6 Quảng Trị 2 64 EVN 7 A Vương 2 210 EVN 8 Cửa Đạt 2 97 JV with Vinaconex 9 Vĩnh Sơn 2 66 EVN
  13. 13. Exploring Biogas Market Opportunities in Vietnam No Power plant Generators 4 Rated capacity (MW) Owner 10 Hinh River 2 70 EVN 11 Pleikrong 2 100 EVN 12 Ialy 4 720 EVN 13 Sê San 3 2 260 EVN 14 Sê San 4 3 360 EVN 15 KrongH'nag 2 64 Joint venture 16 Buôn Tua Srah 2 86 EVN 17 Tranh River 2 1 95 EVN 18 Srepok 3 2 220 EVN 19 Srepok 4 2 80 EVN 20 Buôn Kuôp 2 280 EVN 21 Hương Điền 2 54 Joint venture 22 Ba Hạ River 2 220 EVN 23 Trị An 4 400 EVN 24 Đa Nhim 4 160 EVN 25 Thác Mơ 2 150 Joint venture 26 Hàm Thuận 2 300 EVN 27 Đa Mi 2 175 EVN 28 Đại Ninh 2 300 EVN Coal-fired thermoelectricity II 2,745 1 Phả Lại 1 4 440 Joint venture 2 Phả Lại 2 2 600 Joint venture 3 Uông Bí 2 105 EVN 4 Uông Bí extension 1 300 EVN 5 Ninh Bình 4 100 Joint venture 6 Haiphong 2 600 EVN 7 Quảng Ninh 2 600 EVN Fuel oil-fired thermoelectricity 1 Thủ Đức 3 169.5 EVN 2 Cần Thơ 1 37.5 EVN 3 Ô Môn 1 330 EVN III IV Steam turbines + HRSG systems 537 3,197
  14. 14. Exploring Biogas Market Opportunities in Vietnam No Power plant Generators 5 Rated capacity (MW) Owner 1 Bà Rịa 8GT+S9+S10 388 Joint venture 2 Phú Mỹ 21 4GT+ST23,26 949 EVN 3 Phú Mỹ 1 3GT+S14 1140 EVN 4 Phú Mỹ 4 2GT+ST3 468 EVN 5 Thủ Đức 4GT 102 EVN 6 Cần Thơ 4GT 150 EVN 500 Private V Diesel-fired and micro hydropower plants VI Non-EVN 6,929.5 Northwest Power Development JS Co. Que Phong Hydropower JS Co. 1 Nậm Chiến 2 32 2 Bản Cốc 3 18 3 Na Dương 2 111 TKV 4 Cao Ngạn 2 115 TKV 5 Cẩm Phả 2 600 TKV 6 Sơn Động 2 220 TKV 7 Bình Điền 2 44 8 Côn River 3 63 9 Sê San 3A 2 108 Joint venture 10 Za Hưng 2 30 Za Hung JS Co. 11 Bắc Bình 2 33 12 Đa Dâng 2 2 34 13 Cần Đơn 2 78 Da River Co. 14 Srokphumieng 2 51 IDICO 15 Hiệp Phước 3 375 Foreign investors 16 Formosa 1 150 Foreign investors 17 Phú Mỹ 3 2GT+ST3 740 Foreign investors 18 Phú Mỹ 22 2GT+ST3 740 Foreign investors 19 Nhơn Trạch 1 2GT+ST3 465 PVN 20 Nhơn Trạch 2 1GT 250 PVN 21 Cà Mau 1 2GT+ST1 771 PVN 22 Cà Mau 2 2GT+ST4 771 PVN Binh Dien Hydropower JS Co. Geruco-Song Con Hydropower JS Co. Vietnam Power Development JS Co. Southern Hydropower JS Co.
  15. 15. Exploring Biogas Market Opportunities in Vietnam No Power plant 6 Rated capacity (MW) Generators Owner 23 Amata 2 13.5 Foreign investors 24 Vedan 2 72 Foreign investors 25 Bourbon 2 24 Foreign investors 1 21 PVN 26 Phú Mỹ ammonium nitrate 27 Import from China 1000 Imported Figure 1.2. Distribution of sources, by owner Phân loại theo chủ sở Distribution by owner hữu PVN 11% Imported Nhập khẩu 5% 5% Others Khác 1% 1% Foreign ngoài NĐT nước investors 10% 10% EVN 55% TKV 5% Joint Cổ phần ventures 11% 11% Private Tư nhân 2% 2% Figure 1.3. Distribution of sources, by supply mode and fuel Distribution by loại hình mode Phân loại theo productionsản xuất Imported Nhập khẩu 5% 5% Others Khác 2%2% Hydropower Thuỷ điện 38% Steam Turbine khí turbines 32% 32% Nhiệt điện dầu Fuel gas-fired 3% thermoelectricity 3% 38% Nhiệt điện than Coal-fired 18% thermoelectricity 18% Nhiệt điện chạy Gas-fired thermoelectricity khí 2% 2% By the latest update, the total added power capacity in 2010 was 2,546 MW. This supplementary output however was not available until the end of the year, and as a result, the actual consumed output from added sourced in 2010 was modest.
  16. 16. Exploring Biogas Market Opportunities in Vietnam 7 1.2. Electricity pricing In the last four years, since the introduction of the Prime Minister Decision 26/2006/QĐ-TTg in December 2006, setting the roadmap for marketization of electricity prices, the country has seen five rounds of electricity price adjustment. The first round was on Jan. 1, 2007 when the average electricity price climbed to VND 842/kWh, 7.6% higher than 2006. From that point on, the electricity prices kept increasing over time by about 5%-10% each year. Typically, in the price rise spree of March 1, 2011, the electricity prices saw the highest climb rate at 15.28% to reach VND 1,242/kWh, equivalent to 6 US cents by VCB’s exchange rate of Sep. 30, 2011. Instead of being traditionally adjusted once a year on March 1 every year, the Prime Minister’s Decision 24/2011/QĐ-TTg of Apr. 15, 2011 now paves the way for electricity price changes every three months on average. Circular 31/2011/TT-BCT, dated Aug. 19, 2011 of the Ministry of Industry and Trade provides the guidelines on how electricity prices are changed based on the variance of three input components: (i) fuel costs, (ii) exchange rate, and (iii) the composition of power output transmitted on the grid from different sources.3 In addition, the directive also makes clear that this automatic pricing system from Sep. 1, 2011. The following section provides in brief information related to the Prime Minister’s Decision 24/2011/QĐ-TTg, Apr. 15, 2011 on market-based electricity pricing. In case fuel costs and exchange rates at the calculating time deviate from the values used to determine the current electricity prices and the composition of power output has changed compared to the generation plan approved by the Ministry of Industry and Trade, causing sales prices at the calculating time to be higher than the current levels by: a) 5%, Vietnam Electricity may raise electricity prices by an equivalent margin once it has applied for such a raise and received approval of the Ministry of Industry and Trade; b) more than 5%, Vietnam Electricity shall file a report to the Ministry of Industry and Trade with a copy submitted to the Ministry of Finance for verification. After 15 business days since the Ministry of Industry and Trade reported to the Prime Minister, whose reply is not received (or not yet received), Vietnam Electricity may automatically change electricity prices by a 5% limit. Below is a list of current electricity prices for 2011. 3 Changes in the distribution of power capacity can be explained by the increase of power output from coal, hydropower or gas and the cost differences of these electricity sources.
  17. 17. Exploring Biogas Market Opportunities in Vietnam 8 Table 1.2. Electricity retail prices for 2011 Electricity retail prices for business uses No 1 Prices (VND/kWh) Power supply Power supply of 110 kV or higher voltages a) Normal hours 646 8.94 1,068 5.12 670 3.2 1,937 9.3 1,093 5.24 683 3.3 1,999 9.6 1,139 5.47 708 3.4 2,061 9.89 Power supply of 22 kV to below 110 kV voltages a) Normal hours b) Off-peak hours c) Peak demand Power supply of 6 kV to below 22 kV voltages a) Normal hours b) Off-peak hours c) Peak demand 4 3.1 1,862 c) Peak demand 3 5 1,043 b) Off-peak hours 2 Prices (US cent/kWh)4 Power supply of below 6 kV voltages a) Normal hours b) Off-peak hours c) Peak demand Electricity retail prices for irrigative water pumping No 1 2 4 5 Power supply 6 kV or higher voltages a) Normal hours b) Off-peak hours c) Peak demand Below 6 kV a) Normal hours b) Off-peak hours c) Peak demand Prices (US cent/kWh)5 Prices (VND/kWh) 956 497 1,415 4.6 2.4 6.8 1,023 521 1,465 4.9 2.5 7.03 Vietcombank VND/USD exchange rate as of Sep. 30, 2011: USD 1 = VND 20,830. Vietcombank VND/USD exchange rate as of Sep. 30, 2011: USD 1 = VND 20,830.
  18. 18. Exploring Biogas Market Opportunities in Vietnam 9 Electricity retail prices for public services No 1 2 3 No 1 2 3 Power supply Hospitals, daycare centers, nursery schools, primary to high schools a) Power supply of 6 kV or higher voltages b) Power supply of below 6 kV voltages Public lighting a) Power supply of 6 kV or higher voltages b) Power supply of below 6 kV voltages Public services a) Power supply of 6 kV or higher voltages b) Power supply of below 6 kV voltages Prices (VND/kWh) Prices (US cent/kWh)6 1,117 1,192 5.4 5.7 1,217 1,291 5.8 6.2 1,242 1,291 5.96 6.2 Electricity retail prices for business uses: Power supply Prices (VND/kWh) 22 kV or higher voltages a) Normal hours 1,713 b) Off-peak hours 968 c) Peak demand 2,955 6 kV – below 22 kV a) Normal hours 1,838 b) Off-peak hours 1,093 c) Peak demand 3,067 Below 6 kV a) Normal hours 1,862 b) Off-peak hours 1,142 c) Peak demand 3,193 Prices (US cent/kWh)7 8.2 4.6 14.2 8.8 5.2 1.5 8.9 5.5 15.3 Progressive electricity retail prices for household uses No 1 2 3 4 5 6 7 Monthly household consumption 50 kWh (poor and low income households) 0-100 kWh (middle income households) 101-105 kWh 151-200 kWh 201-300 kWh 301-400 kWh 401 kWh and above Prices (VND/kWh) 993 1,242 1,304 1,651 1,788 1,912 1,962 Prices (US cent/kWh)8 4.8 5.9 6.3 7.9 8.6 9.2 9.4 Electricity retail prices for household use in rural areas, uplands and islands not covered by the national power grid are approved by provincial level People's Committees, but not outside the maximum and minimum price range below: 6 Vietcombank VND/USD exchange rate as of Sep. 30, 2011: USD 1 = VND 20,830. Vietcombank VND/USD exchange rate as of Sep. 30, 2011: USD 1 = VND 20,830. 8 Vietcombank VND/USD exchange rate as of Sep. 30, 2011: USD 1 = VND 20,830. 7
  19. 19. Exploring Biogas Market Opportunities in Vietnam 10 a) Minimum price: VND 1,863/kWh (or 8.9 US cents/kWh) b) Maximum price: VND 3,105/kWh (or 14.9 US cents/kWh). Wind power tariff Buyers are responsible to purchase the entire power output from wind power projects at the price of VND 1,614/kWh at the point of delivery (exclusive of VAT; equivalent to 7.8 US cents/kWh). Power purchase prices are subject to changes of the VND/USD exchange rate.9 Tariff with avoidable costs for 2011 (attached to Decision 66/QĐ-ĐTĐL, dated Dec. 31, 2010, of the head of Electricity Regulation Administration). Table 1.3. Tariff with avoidable costs for 2011 (VCB exchange rate as of Sep. 30, 2011: USD 1= VND 20,830) Dry season Peak demand Electricity price (VND/kWh) North Central South Rated price (for all the 3 regions, VND/kWh) 603 573 575 Normal hours 590 567 568 Offpeak hours 561 563 555 Peak demand 529 481 511 Rainy season OffNormal peak hours hours 498 468 501 484 460 492 Surplus output 242 230 246 1,772 The average price with avoidable cost according to this list is VND 916/kWh (about 4.43 US cents/kWh). Nevertheless, this low price level can only be applicable to renewable energy projects being micro hydropower plants with advantageous locations (proximity to roads and connection nodes, and profuse water supply). 1.3. Power production and potentials to 2020 (next 10 years) ■ ■ Sufficient supply to meet domestic need for electricity with generated and imported power output by 2015 of about 194-210 billion kWh, and about 330-362 billion kWh by 2020; ■ 9 For power production, the targets set in the master plan of electricity industry development for 2011-2020 and vision to 2030 are: Priority given to the development of renewable energy sources for power production; and increase of power output from these sources from a marginal level to 4.5% of the total power output by 2020. By Vietnamese laws, the currency used in purchase and sales agreements within the Vietnam territory must be the VND. Accordingly, this Decision must clearly note that the electricity purchase price is in VND and at VND 1,641/kWh (when the Decision was released, the VND/USD exchange rate was 1614 : 7.8 = 20692, or USD 1 = VND 20,692). Adjustment of electricity purchase prices by VND/USD exchange rates variance is good for investors. This can be interpreted as in case electricity from a wind power plant is bought after the Decision release date and the exchange rate is higher than the above mentioned rate, the investors selling electricity to EVN may use the exchange rate at the time of sales to set the sales price in VND/kWh. For example, in June 2012, a wind power investor sells electricity to EVN. The exchange rate at that time is VND 22000 for one USD. The wind-propelled electricity price in the agreement will then be 22000 x 7.8 = VND 1,716/kWh, not VND 1,614/kWh as original specified in the Decision.
  20. 20. Exploring Biogas Market Opportunities in Vietnam ■ 11 Generated and imported power capacity by 2020 is expected to be about 330 billion kWh, including 19.6% of hydropower, 46.8% of coal-fired thermoelectricity, 24.0% of gas-fired thermoelectricity (with 4.0% of LNG fuel), 4.5% of power generated from renewable energies, 2.1% of nuclear power and 3.0% of imported electricity. 1.4. Existing power sources and projection for the next 10 years As discussed in section 1.1 on retrospective power demand (2001-2010), it is known that at present (Dec. 31, 2010), the gross rated capacity of all power sources in Vietnam is 21,542 MW and the usable capacity is 19,735 MW. The electricity demand in Vietnam will increase by nearly 3.3 times in the next decade, from 100.071 billion kWh in 2010 to 194 billion kWh by 2015 and 330 billion kWh by 2020.10 To sufficiently meet the power need for development and at the same time, enlarge reserved sources from the existing levels, key perspectives in developing power sources in Vietnam in the future include: ■ Balanced development of source capacity in the North, Central and South regions; ■ Expansion of reserved sources by 6%-7%, taking into account the risk of delay in the construction of power plants, often for 1-2 years; ■ Estimation of coal supply capacity and potential development of natural gas mines; ■ Increasing the proportion of coal-fired thermoelectricity in the Central and South; ■ Maintaining coal-fired power sources at less than 60% of the total source capacity; ■ Development of micro hydroelectricity and power sources from renewable energies at appropriate proportions; ■ Early introduction of pumped-storage hydroelectricity in the South to level the leverage graph for thermoelectricity sources; ■ Development of nuclear power plants to relieve over time the dependence on fossil fuels; ■ Sustained increase of electricity import from Laos, Cambodia and China; ■ Promotion of BOT, BOO projects. With these perspectives in mind, a pathway for the development of power sources in Vietnam in the next decade has been drawn and elaborated upon (based on the Prime Minister’s Decision 1208/QĐ-TTg, July 21, 2011): ■ ■ Upgrading the total capacity of wind power from the currently marginal level to about 1,000 MW by 2020; ■ Priority given to hydroelectric sources, especially multipurpose projects, including flood control, water supply, power production; raising the capacity of hydroelectric sources from the current 9,200 MW to 17,400 MW by 2020; ■ 10 Development of biomass electricity generation and co-generation so that by 2020, this source provides a gross capacity of about 500 MW; Research and development conducted to put pumped-storage hydropower plants in operation, in sync with the development pace of the overall power system to improve efficiency: by 2020, pumped-storage hydroelectricity to yield a total capacity of 1,800 MW; The Prime Minister’s Decision 1208/QĐ-TTg, July 21, 2011, approving the national electricity development master plan for 2011-2020 and vision to 2030.
  21. 21. Exploring Biogas Market Opportunities in Vietnam 12 ■ Natural gas-fired thermoelectricity: by 2020, power sources using natural gas fuels to have a capacity of about 10,400 MW; ■ Coal-fired thermoelectricity: the available domestic coal supply is to be brought into full use for the development of thermoelectric plants, where use of locally made coal will be preferred for the North; by 2020, the total coal-fired thermoelectricity capacity is to reach about 36,000 MW. ■ Development of nuclear power plants to help stabilize power supply in the future when local primary energy sources become depleted; putting the first nuclear power generator in Vietnam in operation in 2020; ■ Development of power plants using liquidated natural gas (LNG) to diversify fuel sources for power generation and maintain power and fuel gas security; by 2020, power sources using LNG to have a capacity of about 2,000 MW; ■ Distribution of power sources: by 2020, the gross capacity of all power plants is expected to reach about 75,000 MW, including 23.1% of hydropower, 2.4% of pumped-storage hydroelectricity, 48.0% of coal-fired thermoelectricity, 16.5% of gas-fired thermoelectricity (with 2.6% of LNG fuel), 5.6% of power generated from renewable energies, 1.3% of nuclear power and 3.1% of imported electricity. Details are illustrated in the Figure below. Figure 1.4. Distribution of power sources by 2020 Distribution of power sourcesnăm2020 Cơ cấu Công suất nguồn đến by 2020 Coal-fired Nhiệt điện thermoelectricity than 48% 48.0% Pumpedstorage Thủy điện hydroelectricity tích năng 2.4% 2.4% Hydropower Thủy điện 23.1% 23.1% Imported Điện Nhập electricity khẩu 3.1% 3.1% NLTT Renewable energies 5.6% 5.6% Gas-fired Nhiệt điện thermoelectricit khí đốt y 16.5% Điện Hạt Nuclear 16.5% nhân power 1.3% 1.3%
  22. 22. Exploring Biogas Market Opportunities in Vietnam 13 1.5. Electricity market actors EVN is owning the majority of power source capacity and controlling the entire process of power transmission, system operation, distribution and retailing to end-users. ■ In power generation, EVN owns or is holding the control stake of over 70% of the gross nameplate capacity of the entire system. The remaining is owned by other state-run groups or large companies such as Vietnam Petroleum Group, Vietnam Coal and Minerals Group, Da River Co., among others, foreign investors (in BOT, IPP approaches) and local private sector investors in the IPP format. These power plants sell electricity to EVN under a long-term power purchase agreement (PPA). However, in accordance with the approved pathway, the electricity market in Vietnam in the near future will come into form and develop in three stages: i) electricity generation market ii) wholesale electricity market, and iii) retail electricity market. The competitive electricity generation market will have a sole buyer. Electricity generating agencies will sell their capacity through PPAs and competitive offering on the spot market. EVNaffiliated electricity distributors will be formed and restructured as independent business units. In the foreseeable future (see details in section 1.6 below), the competitive electricity generation market will run in line with the set pathway. Participants in this market will include: ■ Competitive power generation entities: power plants with rated capacity of over 30 MW connected to the national grid (except for wind power plants, geothermal power plants); ■ The sole electricity dealer: EVN’s electricity purchase and sales company; ■ Regulator of the electricity system and market: National electricity system regulation center; ■ Provider of power measurement data collection and management services: Information technology center, Electricity Information and Telecoms Company; ■ Provider of electricity transmission services: National electricity transmission company. 1.6. Roadmap for the competitive electricity market Pursuant to the Prime Minister’s Decision 26/2006/QĐ-TTg, Jan. 26, 2006, endorsing the roadmap and conditions for the formation and development of various stages of the electricity market in Vietnam, the electricity market will be established and developed through three stages. ■ Stage 1 (2005-2014): competitive electricity generation market ■ Stage 2 (2015-2022): competitive wholesale electricity market ■ Stage 3 (after 2022): competitive retail electricity market. Each stage will comprise of two phases: pilot and full-fledged markets, to be specific:
  23. 23. Exploring Biogas Market Opportunities in Vietnam 14 a) Phase 1, stage 1: pilot competitive electricity generation market (2005-2008). ■ A competitive electricity generation market will be developed between different power plants of Vietnam Electricity Group (EVN) to experiment competition in power generation with one single buyer. Power plants, electricity transmission companies and electricity distributors affiliated to EVN will be restructured as independent business units. ■ Independent power producers (IPPs) not affiliated to EVN will continue to sell electricity to EVN through subscribed long-term power purchase agreements (PPAs). ■ At the end of the piloting phase, major power plants playing key roles in the existing power system belonging to EVN will be converted to IPPs as independent state-owned companies, while the remaining plants are converted to independent power producers in the form of jointstock companies to prepare for a full-fledged competitive electricity generation market. b) Phase 2, stage 1: full-fledged competitive electricity generation market (2009-2014). ■ The electricity generation market will be deemed full-fledged once the preconditions for this phase are met. ■ IPPs not owned by EVN will be allowed to offer to sell to get a full-fledged competitive electricity generation market started (with one single buyer). Power generating entities will sell to the market through PPAs and competitive offers in the spot market in a two-sponged allocation scheme decided for each entity by the Electricity Regulation Administration. c) Phase 1, stage 2: pilot competitive wholesale electricity market (2015-2016). ■ The wholesale electricity market will be piloted once the preconditions for this phase are met. ■ A number of distributors and major buyers are selected to pilot a competitive wholesale electricity market. Some new wholesalers will be formed to promote competition in the sales and purchase of electricity. Existing electricity transmission companies will be merged to form a single national electricity transmission company under EVN. Distributors, system operators and market transaction operators will continue to work under EVN. d) Phase 2, stage 2: full-fledged competitive wholesale electricity market (2017-2022). ■ The competitive wholesale electricity market will be deemed full-fledged once the preconditions for this phase are met. ■ Existing EVN-attributed electricity distributors will be converted to independent companies (state-owned or joint-stock companies) to buy electricity directly from power generating entities and in turn, power generating entities will also compete to sell electricity to these buyers. Wholesalers also participate in the competition to sell to distributors and major buyers. đ) Phase 1, stage 3: pilot competitive retail electricity market (2022-2024). ■ The competitive retail electricity market will be piloted once the preconditions for this phase are met. ■ A number of distribution grid areas of appropriate sizes will be selected for the pilot. Based on the consumption level determined by the Electricity Regulation Administration, buyers may select power suppliers they see fit (electricity retailers). The electricity retailing function of distributors selected for the experiment will be separated from the distribution grid management and operation function. Electricity retailers will compete to sell electricity to individual end-users and buy electricity from wholesalers. e) Phase 2, stage 3: full-fledged competitive retail electricity market (from 2024). ■ Based on the consumption level determined by the Electricity Regulation Administration, electricity users nationwide may select power suppliers they see fit (electricity retailers) or buy
  24. 24. Exploring Biogas Market Opportunities in Vietnam 15 directly from the electricity market. ■ Entities and individuals meeting the requirements for power supply activities are allowed to form new electricity retailers to stay competitive in the retailing domain. These retailers may buy electricity from power generating entities or the electricity market to sell retail to users. 1.7. Electrical grid The existing electrical power transmission grid in Vietnam is running at 500 kV, 220 kV and 110/66 kV voltages. A 500 kV transmission line links the electrical system of the three regions (North, Central and South). 220 kV power lines now cover the entire country with a gross length of about 8,500 km (as of 2010) and the total length of the 110/66 kV is about 12,500 km. General assessments of the development of the electrical grid in Vietnam to 2010 indicate that while the transmission grid has been extensively developed, only about 50% of the set targets have been achieved, where only 41% of the 500 kV grid and 50% of the 220 kV grid have been developed. Causes of the delay include: funding constraints, hindrances in site clearance, increasing material costs, poor contractors’ capacity and so on. In the future (2011-2020), the local electrical power transmission grid will be further developed to meet the needs of: ■ Having a reliable electrical grid for supply and transmission of electrical power and reduction of power loss in transmission; ■ Connecting electrical centers nationwide into an uniform electrical system; ■ Developing the 220 kV and 110 kV grids to meet transmission needs when different sources are put in use; ■ Designing an electrical grid scheme with high reserve level and flexibility to supply and transmit electricity safely and reliably, meeting standard quality requirements (voltage and frequency).
  25. 25. Exploring Biogas Market Opportunities in Vietnam 16 2. Understanding and assessing the biogas energy market in Vietnam 2.1. Biogas sources in Vietnam Vietnam is a developing agricultural country, with a sustained high annual average GDP growth rate (of about 7%) for the last 10 years. Apart from achievements in living conditions and economic development, Vietnam is encountering various issues of energy supply and environmental protection amid the current climate change. Wastes and disposed of substances from households and the processes of industry, agriculture, forestry production are emerging as a pressing concern that needs a harmonized and urgent response, both at the macro (policies, solutions etc.) and micro (technology, equipment etc.) levels, to efficiently tackle the sources of waste emission and solve the problems of pollution, and at the same time generate energy for sustainable development. One of the technologies that may serve to both aggressively tackle wastes to meet environmental standards and create energy sources in place of fossil fuels such as coal and oil, and has been used in Vietnam as far back as in 1960 is the biogas technology. With a conducive climate and as an agricultural country with high GDP growth, Vietnam has a very diverse material source for biogas production, from domestic animals’ wastes, human wastes to wastes from such industries as food, foodstuff and beverages processing. To be specific: 2.1.1. Biogas from domestic animals’ wastes Domestic animals’ wastes (livestock, poultry excrements) are being used to produce biogas in Vietnam. The biogas output depends on the number and type of domestic animals and ability to gather wastes. In Vietnam, domestic animals with large numbers are pigs, cows and bulls, buffalos and poultry such as chicken, ducks and so on. Other domestic animals like horses, goats, sheep, among others only take up a small share compared to the afore mentioned animals. In 2010, there were about 27.4 million pigs, 5.9 million cows and bulls and 2.9 million buffalos, and some 300 million of various types of poultry. Every year, the domestic animal herd discharges nearly 100 million of solid wastes, a couple of hundreds of millions of liquid wastes and multiple millions of gaseous wastes.11 Domestic animals’ waste treatment is therefore receiving growing interest from public regulators, the civil community and livestock farmers. The total waste amount is estimated based on empirical data and actual measurement12, compiled and illustrated in the following Table. 11 The Ministry of Education and Training, Agriculture University No. 1, 2009, “Report at the Workshop on breeding wastes: status and solutions”, Hanoi, Nov. 26-27, 2009. 12 Energy Institute, 2005, Assessment of biogas energy potentials in Vietnam.
  26. 26. Exploring Biogas Market Opportunities in Vietnam 17 Table 2.1. Solid waste from domestic animals, 2010 Livestock & poultry Number (million) Daily discharged waste amount* (kg/animal/day) Buffalo 2.9 18-25 Cow and bull 5.9 15-20 Pig 27.4 1.2-4.0 Poultry 300 0.18-0.34 Total Average Waste amount (million tons/year) 19-26 (Average: 22.5) 32-43 (Average: 37.5) 12-40 (Average: 37.5) 19-37 (Average: 28) 82-145 113.5 Source: Statistics Yearbook 2010, (*) Animal Husbandry Administration, Netherlands Development Agency, Apr. 2007, “Training material ...”, Studying team. Biogas (with about 60% being methane) from domestic animals’ wastes can be gathered and used for energy generation with appropriate digester instruments and technology. The potential biogas sources from domestic animals’ wastes are estimated based on domestic animal data in Table 2.1 above (Statistics Yearbook 2010), and an experimental formula13 compiled and presented in the following Table. Table 2.2. Methane amount from domestic animals’ wastes, 2010 Animal Buffalo Cow and bull Pig Poultry Total Daily gas volume* (liter of gas/kg of fresh materials) Biogas output (million m3/year) 15-32 15-32 335-720 562-1200 40-60 50-60 1500-2250 1400-1680 3797 - 5850 Average biogas Percentage output (%) (million m3/year) 527.5 10.93 881 18.26 1875 1540 4823.5 38.87 31.94 100 Source: + (*) Animal Husbandry Administration, Netherlands Development Agency, Apr. 2007, “Training material ...” Studying team (methane takes up 60% of the biogas share). 13 The biogas potentials are reviewed by the methane output that can be generated in a year. The annual potential biogas output from breeding wastes is calculated using the following formula: Ki = Si x Ri x Ti x Ci x Hi where, Ki – potential biogas output from the ith waste Si – number of ith livestock headcounts Ci – Dry matter content (%) of ith material Hi – gas generation efficiency of ith material based on dry matter content. Ti – byproducts that can be used for biogas production Ri – annual manure discharge of a livestock individual. This parameter is identified through surveys or available data for the area. To estimate the potentials, an assumption used is 100% of input materials are collected. With existing technology level, up to 75% of input materials are digested and hence, Ti= 75%. Ci and Hi are data specific to the target area and also verified in laboratories.
  27. 27. Exploring Biogas Market Opportunities in Vietnam 18 As seen above, the current volume of animal husbandry waste in Vietnam may serve to create nearly 5 billion cubic meters of biogas a year if processed by different digesters. Biogas has a calorific value of about 20MJ/m3 and is a very good fuel for electricity generation or supply of heat for such internal production purposes as burning and drying in various industrial and agricultural processes or sales of electricity to the national grid as well as to adjacent household energy users. 2.1.2. Biogas from municipal wastes In addition to domestic animals’ wastes, biogas can also be collected through urban waste treatment. Municipal wastes in Vietnam may be grouped in four categories – household, construction, industrial and medical wastes. Normally, human wastes include those emanating from individual homes, commercial facilities, offices and market places. The outstanding human wastes for each city may be calculated using the following formula: MSW = P × WGR × 365 × 1000 where, MSW is the amount of municipal solid waste (tons/year), P is the city’s population (people), WGR is the per capita waste generation rate (kg/person/day), 365 is the number of days in a year, and 1000 is the conversion factor from kilogram to ton. According to the Vietnam Environmental Development 2004 report, generated waste in 2003 was 12.8 million tons, 50% of which (6.4 million tons) from urban lives. The per capita waste generation rate is in this case 0.84 kg/person/day, and is expected to be 0.95 kg/person/day by 2010. Municipal waste volumes in Vietnam’s cities are described in the following Table. Table 2.3. Municipal waste generation in Vietnam, 2010 (million tons) 2005 City 14 All cities in Vietnam Hanoi15 HCMC Haiphong Da Nang Can Tho 2010 7.34 1.15 2.37 0.65 0.28 0.37 10.54 2.01 3.15 0.83 0.40 0.44 Municipal wastes may be used to generate electricity by landfill gas collection technologies (using a landfill to collect biogas as already done in HCMC, at Go Cat dumping ground, with a power output of 2.4 MW). As seen in the above Table, by 2010, municipal solid waste accumulated from all Vietnam cities will be about 10 million tons. The five largest cities in Vietnam (Hanoi, HCMC, Haiphong, Da Nang and Can Tho) account for 67.6% of that amount (6.7 million tons). Aware of this, in the nearterm future, the government will focus on using these municipal waste sources for electricity production.16 14 The per capita waste generation rate for all municipal areas was 0.9 kg/person/day in 2005 and 0.95 kg/person/day in 2010. 15 Waste generated in 2010 was attributed to the new Hanoi area. 16 Source: http://www.xaluan.com/modules.php?name=News&file=article&sid=306212, 11th “Southern urban area and industrial zone environment Conference”, 2011, Nov. 4, 2011, in Binh Duong.
  28. 28. Exploring Biogas Market Opportunities in Vietnam 19 It is very difficult to estimate the power output generated from burning methane collected from landfills, since it depends on the specific technology, landfill techniques used, composition, physical properties (types and sizes of wastes, water contents and specific weight), and chemical properties of the wastes (vaporizing composition, fixed carbon content, carbon and nitrogen contents, calorific value and some other chemical components). Even so, the volume of methane collected from one ton of waste a year using a normal landfill technology may still be roughly calculated at 15-25 liters of gas/kg of waste a year or 100 tons of waste (with 50%-60% organic matters) may generate 11.5 MWh of electrical power.17 2.1.3. Biogas production from waste treatment processes (solid and liquid wastes) in specific food, foodstuff and beverage industries Another considerable useful biogas source is from waste treatment processes in specific food, foodstuff and beverage industries. From cassava starch plants: Vietnam cassava production output in 2010 was about 8.5 million tons. About 30% of this amount was processed in major facilities. In recent years, Vietnam’s cassava processing capacity has seen impressive improvements. A large number of cassava is processing projects being built and developed. There are now about 60 cassava starch processing plants of industrial scale in operation with an yearly gross capacity of more than 0.5 million tons of cassava starch, consuming nearly 2.5 million tons of fresh cassava or 21% of the total cassava output. This is double the number of plants and three times the capacity from five years ago (see a list of major plants in Appendix 1). Cassava processing discharges a huge volume of liquid and solid wastes. Management of theses wastes is compulsory and must be strictly controlled to uphold environmental standards. To date, some plants have or are going to install methane collection systems in their production chain. When this is done, the collected methane gas will be used for generation of energy such as being fuel for industrial kilns to provide heat for product drying and electricity generation (see more information on the Intimex project in Thanh Chuong district, Nghe An, Green Field’s project in Quang Nam and other cassava starch plants in the section below). From alcohol and beverage factories: Similar to cassava starch processing plants, the production and brewing of alcohol and beverages discharge a large amount of solid and liquid wastes. In addition to the imperative requirement for a concentrated waste treatment facility, combined production of biogas has also been considered by the factories (see more information about beer breweries in Appendix 2). From aquatic products (shrimp, fish etc.) processing plants: Enormous liquid and solid amounts of wastes from aquatic products processing needs to be managed. A number of integrated aquatic products processing projects adopting the Clean Development Mechanism (CDM) are being reviewed in aquatic products processing centers in Mekong River Delta provinces, for example the CDM project for development of aquaculture sewage treatment and biogas collection for electricity generation (Hoai Nam Hoai Bac Ltd. Co., HCMC, as the owner) was recently commenced on Dec. 24, 2010, at Thuan An 1 aquaculture processing plant in Chau Phu district, An Giang province. This is the first CDM project in the field in the Mekong River Delta and also the first in 9 aquaculture plant wastewater treatment and biogas collection for electricity generation projects in An Giang province in phase I (2011-2012), to be followed in phase II with 12 similar projects in the remaining aquatic products processing plants in the province. The total power generating capacity from these 21 CDM 17 Source: http://urbanindia.nic.in/publicinfo/swm/chap15.pdf, “Energy Recover from Municipal Solid Waste”
  29. 29. Exploring Biogas Market Opportunities in Vietnam 20 projects at aquatic products processing plants in An Giang province is approximately 25 MW, or equivalent to 1,177,900 tons of carbon (CO2) a year.18 A list of typical aquatic products processing plants is provided in Appendix 3. From milk processing plants: This is a similar case to cassava starch plants and aquatic products processing plants. A list of typical milk producers is given in Appendix 4. From sugar plants: Sugarcane molasses are produced in sugar plants. One ton of sugarcane can produce 0.04 tons of molasses. With 9.4 million tons of sugarcane processed in sugar plants in 2005, 0.376 million tons of molasses were produced. In accordance with the master plan for the sugarcane industry in Vietnam by 2010 and vision to 2020, the gross volume of sugarcane being processed will increase to 14.7 million tons (105,000 tons of sugarcane a day) by 2010. The amount of sugarcane molasses produced by sugar plants will be 0.588 million tons at that time. A list of typical sugar producers is provided in Appendix 5. A biogas energy market in Vietnam in the near future is apparently feasible in some key areas discussed above, with varying technologies and scales. Below is a summary of biogas energy from wastes potentials in Vietnams.19 18 Source: http://hoainamhoaibac.com/Dich-Vu/Du-an-Xu-Ly-Nuoc-Thai-Thuy-San-Thu-Hoi-Biogas-Theo-Co-Che-PhatTrien-Sach-CDM.html 19 The biogas potentials are estimated based on assessments of the potential annual biogas output. The annual potential biogas output from various types of input materials is calculated using the following general formula: Ki = Si x Ri x Ti x Ci x Hi; where: i – ith input material Ki – potential biogas output from ith material Si – number of livestock headcounts or annual amount of ith waste Ri – the ratio between byproducts and main products of ith material Ci – dry matter content ith material Hi – gas generation efficiency of ith material based on dry matter content. Ti – byproducts that can be used for biogas production For human, animal and poultry feces, Ri is the amount of excrement an individual discharges in a year. Ti is a parameter identified based on survey of different uses of a specific byproduct, e.g. as fuel, animal feed, manure etc. In addition, it also depends on transport, storage and technology conditions. To estimate the potentials, an assumption used is 100% of input materials are collected. With existing technology level, up to 75% of input materials are digested and hence, Ti= 75%. Ci and Hi are data specific to the target area and also verified in laboratories (conducted by the Energy Institute).
  30. 30. Exploring Biogas Market Opportunities in Vietnam 21 Table 2.4. Theoretical gross biogas potentials, 2010 Potential (million m3) 1. Wastes from food and food crop processing20 - Cassava starch processing 314.3 - Beverage production 95.6 - Aquaculture processing 314.3 - Milk, sugar and other foods 345.9 processing Subtotal 1 1070.1 2. From domestic animals’ wastes - Buffalo 527.5 - Cow and bull 881 - Pig 1875 - Poultry 1540 Subtotal 2 4823.5 3. From municipal wastes 1675.0 TOTAL (1+2+3) 7568.6 Material source Tons of oil equivalent (million toe) Percentage (%) 0.53505 14.1 2.41175 0.8375 3.7843 63.7 22.1 100.0 Of the overall collectible biogas potentials, biogas output from domestic animals’ wastes has the highest share, at about 63.7%, followed by municipal wastes at 22.1%, and about 15% of the remaining from the processing industry. Farm-based agricultural production has been recently taking shape and developed as the animal husbandry farms are growing in number and the environment concern has become more pressing. The question is how the production pattern can be modified to allow both development of farming and best use of local available material sources, without hurting the environment. In industrial scale animal husbandry farms, waste treatment using a biogas system is a good option. In addition to using different biogas technologies in domestic animals’ waste treatment, this technology also has a clear potential in municipal waste treatment (primarily in major cities like Hanoi, HCMC, Da Nang, Can Tho, Haiphong etc.), waste treatment in aquatic products processing, animal feed production, sugar making, cassava starch production, food and beverage production and others. These are also potential areas for use of methane collection technology in waste treatment at medium, large and mega industrial scales. Of course, to develop biogas technologies, apart from the availability of technology and businesses’ needs (meeting the requirements on emission to the surrounding environment), a very important factor to take into consideration is the markets for the products (electricity, heat, greenhouse gas abatement certificates). For the time being, the government and relevant ministries have been working out strategies and policies to promote green development, low-carbon technologies and in particular, finalizing a framework pathway for the development of renewable energy in Vietnam in the near future. As discussed above, in light of increasing energy demand in Vietnam and limited local energy supply capacity (coal for electricity production likely to be imported from after 2015), whereas the potential for biogas sources in Vietnam is enormous, coupled with very high demand for electrical 20 Rough estimates only, since no official data or controlled tests were available or done.
  31. 31. Exploring Biogas Market Opportunities in Vietnam 22 power and heat for production, the opportunity of using available biogas resources for electricity generation and co-generation (CHP) is very real, both in terms of technology and economic and environmental considerations. In such context, the Prime Minister Decision 1208, approving the 7th master scheme for electricity development (2011-2020, vision to 2030) will be the foundation for biomass/biogas energy development in Vietnam. A plan associated with biogas development is being drafted with goals and schedules summarized in the following table. Table 2.5. Summary of expected electricity generation capacity from biogas and municipal wastes to be added to the grid (MW)21 2011-2020 Total renewable energy Municipal wastes (landfill and direct incineration technologies) + other biogas Biomass (solid) Other renewable energies 2021-2030 2011-2030 3,606 9,588 13,194 174 355 3,077 265 1,500 7,823 439 1,855 10,900 2.2. Use of biogas in Vietnam Biogas technologies were first used in Vietnam in early years of the 1960s. The development process of biogas and its application may be summarized as below: ■ ■ Phase II (1976-1980): after 1975, biogas regained attention in light of the mineral oil crisis and social development needs. The Energy Institute, Ministry of Electricity and Coal, was asked to initiate the “Use of biogas in Vietnam” project, and later in 1977, the project for “Research and development of methane fermentation tanks”. Ever since, biogas was made a formal part of the national research agenda. In addition to the Energy Institute, some other research institutions have also been interested in biogas, including the Soil and Fertilizers Research Institute, Animal Husbandry Institute, HCMC Agriculture and Forestry University, Can Tho University, among others. ■ Phase III (1981-1990): through two 5-year plans of 1981-1985 and 1986-1990, biogas was a regular top priority in a new national energy program, which was Program 52C, under the auspices of the Ministry of Higher Education. Many biogas studies were very successful and more agencies and universities joined the research along with the Energy Institute. Major projects were found in Ho Chi Minh City with 700 projects, Dong Nai with 468 projects, Hau Giang with 240 projects, as there were about 2,000 small sized facilities of 2-10 m3 and a few larger facilities of 100-200 m3 volume using normal and simple anaerobic fermentation technology. ■ 21 First phase (phase I), 1960-1975: primitive stage, mostly research for adaptability and applicability; the results however were less than expected. Some tiny scale facilities were built, scattering in various provinces, with little efficiency. By early 1970, research was almost forgotten. Phase IV (1991-2002): when Program 52C was terminated, no national focal agencies seemed N.D. Cuong, 2011, Energy Institute, proposal of “Master plan for renewable energy development in Vietnam by 2020 and vision to 2030”.
  32. 32. Exploring Biogas Market Opportunities in Vietnam 23 to pay attention to biogas. The Energy Institute continued its own researches as part of ministerial and corporate level projects. The researches mostly focused on improvement of type NL-5 fixed dome cover facilities, experiment of a number of new models, the digestion process of plant materials, diversifying use of gases and so on. In this period, biogas strongly developed in rural water and sanitation projects, gardening programs etc. In March 2002, the Ministry of Agriculture and Rural Development released industry grade standards for small sized biogas projects. ■ Phase V (2003 to present): this is the time of strongest biogas development in all areas of agriculture, industry and urban contexts, and with all sizes from small to medium and large. The Energy Institute is still the lead agency in biogas research and development. By far, there have been over 200,000 projects under construction, 60% of which using the Energy Institute’s model, followed by other models from Can Tho University, HCMC Agriculture and Forestry University and others. These are however all small-sized biogas projects, mostly suitable for households raising pigs. The size of biogas digester varies within 5-25 m3. As for medium and larger sized biogas projects, there are now two main demonstrated technologies: UASB systems and covered anaerobic ponds. Application however remains small scaled and little. A survey on users of biogas22 indicates two key purposes of using biogas: (i) for heating (with dominantly over 90% of produced biogas), and (ii) for electricity generation based on internal combustion generators available in the market with modified carburetors. Only one single large sized power generating facility of 2.4 MW was installed in Go Cat dumping ground. Heating use includes household cooking, lighting and sometimes keeping warm. Biogas usage is illustrated in the following Figure. 22 Energy Institute, 2005, and T. V. Dung, H. V. Hung et al, 2007-2008, Biogas user survey.
  33. 33. Exploring Biogas Market Opportunities in Vietnam 24 Figure 2.1. Current uses of biogas Biogas Small-sized power generation Heating Cooking Lighting Biogas-fired generator Keeping warm (i) Use of biogas for heating Cooking is the most common form of biogas use for heating. Biogas cookers are made locally or imported from China. A few biogas development companies or LPG cooker dealers import spare parts from China or LPG cooker manufacturers to build modified biogas cookers. Experiments show that locally made single stoves consume 0.22-0.40 m3 of biogas per hour while twin imported or modified LPG-based cookers consumes about 0.30-0.70 m3 of biogas per hour. The per capita household need of gas, given the long tradition of cooking and other daily uses of rural dwellers in Vietnam, is estimated at about 0.15-0.30 m3 of biogas/person/day. A 6-member household therefore needs at least 0.9-1.8 m3 of biogas a day and hence a facility of 5 m3 and above capacity and a livestock herd of 6-10 pigs or 2 buffalos or cows (see details in the Table below). Table 2.6. Gas consumption by system size23 Unit: m3 biogas/m3 of system size System size Biogas use Consumption ≤5 > 5-10 0.19 >10-15 0.10 >15 0.15 0.80 Source: Energy Institute, Biogas user survey, 2005. The second biogas heat use is for lighting using network lamps. These network lamps are imported from China and consume about 0.07-0.10 m3 of biogas per hour. Network lamps also require a minimum gas pressure of a 200-700 mm water column; the higher the pressure the brighter the lamps. Households using biogas for lighting are still few in numbers, accounting for only about 2% of the households having biogas installations (by Biogas user survey report, 2005, Energy Institute). Low use of biogas for lighting may be explained by the availability of grid power and lamps imported from 23 “Biogas user survey” report, 2005, Energy Institute.
  34. 34. Exploring Biogas Market Opportunities in Vietnam 25 China often have poor quality. Lamp spare parts such as mantles, honeycomb filters and so on are not readily available in the market. Figure 2.2. Biogas lamp (illustration) Other uses in heating include boiling water sing China imported water heaters or modified LPG cookers. This use is also very low, at less than 1%. Use of biogas for business and household production purposes such as animal husbandry, handicraft and processing is not yet common since the gas supply from small sized facilities is often only enough for cooking, and for production purposes, facilities of larger sizes will be needed depending on types of use and gas consumption. Also according to the Biogas user survey 2005 of the Energy Institute, biogas use for production purposes like making pig feed, rice noodle and pancakes in rural areas takes up about 6% of all uses by households having a biogas facility. Some other biogas uses such as for keeping piglets, small chickens warm in winter, running freezers, maintenance of fruits and cereals, and incubating poultry eggs have only been restricted to research, experiment or demonstration, and not yet replicated. (ii) Use of biogas for electricity generation Use of biogas for electricity generation has been in existence in recent years, though still at small scales. The Energy Institute, HCMC Technology University and Da Nang Technology University are some of the most successful names in building small sized biogas-fired generators of 0.5-20 kW. These researching efforts however have been just limited to modification of gasoline or diesel-fueled 4-stroke engines for biogas compatibility, and not creation of machines running directly on biogas. The advantage of modified engines is reasonable costs, not too sophisticated modification and installation, and users’ familiarity with these machines from previous uses. The weakness of these machines is that they do not have a gas filter while biogas is a mixture of steam saturated gases and such gases as H2S and NOx may easily combine with water to turn into acids causing corrosion to metal parts of the generators, reducing the equipment’s life longevity. The efficiency of these machines is also not very high (20%-25%), and they need gas bags to stabilize gas pressure while in operation.
  35. 35. Exploring Biogas Market Opportunities in Vietnam 26 While the biogas supply is available, use of biogas for electricity generation at household scale remains very low, with only about 500 out of a total of 200,000 biogas facilities installed. Below are some biogas-based models for farm-scale power generators in Southern provinces. A farm-scale biogas generator has five key components: 1) the biogas facility, 2) gas filter system, 3) gas bag to stabilize gas pressure while the generator is running, 4) generator, and 5) control system. Biogas generated in the biogas forming instrument is routed through a filter to remove unwanted gases before the cleaned gas is led to the pressure stabilizing gas bag and subsequently the generator. Figure 2.3. Biogas-fired power generating system Studies by the Energy Institute indicate that gasoline or diesel-fired 4-stroke engines can all be modified to run on biogas. A gasoline generator modified to run on biogas or as a hybrid unit consumes 0.6-0.7 m3 of biogas for 1 kWh or power generated. Capacity need of a farm is often 8-20 kW. The most common power generators today are those within the capacity range of 2.2-20 KW and capable of running 6-10 hours a day. Therefore, biogas instruments of 30-200 m3 capacity or higher will be suitable for power generation. As the electrical power generated by biogas-based machines are alternating currents, it can be connected directly to the distribution system of the regular power grid or used in an independent distribution system.
  36. 36. Exploring Biogas Market Opportunities in Vietnam 27 Box 1. Use of biogas highly efficient for breeders24 Use of biogas energy: As part of events in the lead up to the World Intellectual Property Day this year, Dong Nai Department of Science and Technology visited the model biogas energy facility using pig manure at Mr. Pham Van Ngu’s Dong Tam ranch (Bach Lam 1 village, Gia Tan 2 commune, Thong Nhat district). Ngu told the visitors that he used biogas to run a generator and thus saved up to VND 7-8 million a month of electricity bill for the farm, while also having sufficient, if not abundant, heat for other uses. More important, this helps prevent pollution since it absorbs the massive amount of pig manure generated in the ranch. The biogas system operator at Dong Tam ranch described the process as follows: “When the biogas tank is filled with pig manure, gases are created from the pig manure in a anaerobic environment and are led into two vinyl containers, each 10 meters in length and 1.5 meters in diameter. A modified diesel-fired engine, with the injection nozzle replaced with a spark plug and the air filter replaced with a carburetor (where the biogas fills up before being injected to the combustion chamber). When the engine is started, a 12 V battery activates the IC unit, which creates electricity for the spark plug to ignite and burn the biogas inside the combustion chamber, moving the piston nonstop. When the running engine is hooked up with an alternator, the more the valve is open, the more biogas will flow in, powering up the engine and generating up to a 220 V electrical current. As this is a diesel type engine, it needs a liquid cooling system while it runs.” Ngu added that using biogas is not only environment-friendly and cost-efficient but also gives him more freedom in household and production activities. With his 2,000-plus pig count ranch, Ngu is among the pioneers in using biogas for electricity generation in Dong Nai province. 2.3. Overview of biogas projects in Vietnam Based on the sizes in capacity of biogas equipment and users, on-going biogas projects in Vietnam may be grouped in two categories: (i) small sized, fit for breeding households, and (ii) medium and large sized, fit for concentrated pig farm and production waste treatment. Current sizebased classification often focuses on the volume of the digester tank. By the Ministry of Agriculture and Rural Development’s standard 10 TCN 97 ÷ 102:2006, for small sized biogas instruments, only biogas systems with digester tank volume of ≤ 40 m3 are accounted for. Below is some reference information on how biogas systems are classified in China or recommendations of some local prestigious institutions in terms of biogas technology. 24 Source: dongnai.gov.vn
  37. 37. Exploring Biogas Market Opportunities in Vietnam 28 Table 2.7. Classification of biogas systems as recommended by local prestigious institutions in terms of biogas technology Biogas component, QSEAP project Volume of one tank (m3) ≥ 1000 ≥ 500 Medium 100 - 1000 100 - 500 < 100 < 100 Large ≥ 100 ≥ 100 Small (household) < 10 0 < 100 Large > 1000 Medium > 50 ≤ 1000 Small (household) Biogas Technology Center (BTC) Total volume (m3) Small (household) China Size Large Origin ≤ 50 If classified as above mentioned, biogas projects in Vietnam with updated status to date may be described as follows (section 2.3.1). 2.3.1. Small sized – household biogas projects The project supporting the biogas program for animal husbandry in Vietnam started in 2003. This is the largest scale and coverage in the field, with financial support from the Netherlands government and the Animal Husbandry Administration, Ministry of Agriculture and Rural Development as the focal agency. The project has two stages. In Stage I, the project is underway in 12 selected provinces aiming to build 12,000 small-household biogas systems with input materials of animal husbandry wastes (pig manure). The technology used in this project includes fixed dome cover biogas systems, KT1 and KT2 models (see Figure 2.4 below). Figure 2.4. KT 1 and KT2 models25 KT1 model 25 1. Inlet tank, 2. Inlet hose, 3. Digester tank, 4. Gas collecting hose, 5. Outlet hose, 6. Pressure regulator tank.
  38. 38. Exploring Biogas Market Opportunities in Vietnam 29 KT2 model At the end of phase I in 2005, 18,000 systems were built. In the transitional period in 2006, the project coverage was expanded to 20 provinces and 9,600 more systems were developed, raising the total to 27,600 facilities. The total project investment is USD 9,194,076, including 57.3% of beneficiary contribution, 39.2% of ODA fund and 3.5% of provincial level counterpart fund. The project has been successful owing to two essential factors: (i) management, and (ii) quality assured construction work for every system. The project has a central office based in Hanoi and 20 provincial offices in participating provinces. Phase II continued from 2006 to the end of 2011. The overall goal of the project in this phase is to develop a sustainable, market-oriented biogas sector. Project objectives include: ■ Existence in 50 out of 64 province and cities in the country; ■ Development of about 150,000 biogas systems. In addition to this biogas project applicable to breeding households as mentioned above, there are also some parallel projects of similar nature but with smaller scales (mostly focusing on specific locations such as districts, communes or residential areas). These projects are also often public private partnerships, meaning a part of the cost is covered by public or corporate funding (mostly in terms of technology, training and technical transfer, with some material and supply support, about 305-50%), and the remaining to be covered by household pocket money. Apart from the funding from relevant ministries and agencies, these efforts are mostly supported through target programs or annual researches of the line agencies, such as the Ministry of Industry and Trade’s national target program for energy saving and efficiency, the Ministry of Agriculture and Rural Development’s water and sanitation program, among others. 2.3.2. Medium and large sized biogas projects There are currently about 20 completed, on-going or planned for medium to large sized projects for biogas collection from waste treatment (in animal husbandry, forestry-agricultureaquaculture production etc.). Information about some of these projects has been recently mustered and summarized in the following section and Table 2.8. Green Field Joint-stock Co. based in Quang Nam province has engaged in a project to produce 65% of methane gas from the waste treatment process of the biofuel workshop (making ethanol from cassava) with a capacity of 100,000-120,000 m3 a day, to collect methane for electricity generation. The project cost is estimated at about USD 5.3 million (not including equipment transportation cost). Recently, to alleviate serious pollution from the stench of wastewater, FOCOCEV Cassava Starch Joint-stock Co. (Hinh River district, Phu Yen province) resorted to the anaerobic wastewater treatment technology. In the process, organic matters digested by microorganisms help reduce
  39. 39. Exploring Biogas Market Opportunities in Vietnam 30 pollution while creating biogas. This biogas is recovered and burned in boilers in place of the plant’s anthracite coal energy supply. Methane collection for electricity generation in aquaculture production is an approach being aimed at by Clean Development Mechanism (CDM) investors. The CDM biogas collection from aquaculture production wastewater treatment project initiated by the HCMC-based Hoai Nam Hoai Bac Ltd. Co. commenced on Dec. 24, 2010 at Thuan An 1 Aquatic Products Processing Plant, Chau Phu District, An Giang province. This is the first CDM project in the field in the Mekong River Delta, and also the first of 9 wastewater treatment projects in different aquaculture plants in the area for electricity generating biogas collection in An Giang province (phase 1 expected to commence from 2011), with a phase 2 consisting of 12 similar projects in the remaining aquaculture plants in the province. The estimated gross power capacity from the 21 CDM projects in aquaculture plant in An Giang province is about 25 MW, equivalent to a cut-down of 1,177,900 tons of carbon (CO2) a year. The German national electricity group also promised to buy all Certified Emission Reductions (CERs) these CDM projects obtain from aquatic waste treatment in An Giang province once the power generating systems are in operation.26 Also in An Giang province, there is another CDM project for pig farm wastewater treatment (each farm with 50 pigs or more), for a total of 37 farms and a pig herd of nearly 6,000 individuals. Each of these farms is a sub-project that collects gas from pig breeding wastes for heating fuels and electricity generation used right in the farm. The Swedish Energy Institute supported the project, pledging to buy CERs from the project at the initial ask price of USD 10/ton of CO2. The project cost is about VND 150 billion from An Giang provincial PC, Hoai Nam Hoai Bac Ltd. Co. and Swedish Energy Institute. The generated energy in the form of biogas will be used as fuel and provided free of charge to farm owners, and the electricity generated from the biogas will be sold to farm owners at lower prices than EVN’s levels. The project is estimated to cut 37,000 tons of CO2 emission a year and produce a power capacity of 14,500 kWh a day. In addition to CDM projects in aquaculture, there is another CDM project in An Giang using the Low temperature conversion (LTC) waste treatment technology. The 25 MW capacity power plant uses input materials being human waste of about 300 tons a day, with CO2 volume equivalent to aquatic CDM projects in the province. The project is expected to commence after 2012 and, following two years of construction, start operation to effectively solve the waste puzzle in Chau Doc, Chau Phu and Tinh Bien areas of An Giang province. The project has a total investment fund of about USD 200 million, or VND 3,926 billion. It is financed by the German MBM financial group and counterpart fund from Hoai Nam Hoai Bac Ltd. Co. (HCMC), as a co-owner of the project. The German national electricity group has also agreed to buy the entire CERs acquired by this project. 26 Source: This information is readily available in various websites in Vietnam.
  40. 40. Exploring Biogas Market Opportunities in Vietnam 31 Table 2.8. Medium and large sized biogas projects Area of operation Livestock and poultry breeding Capacity 1. Thai Duong Imported Pig Breed JS Co. Location: Đô Lương, Nghệ an 2. Pig farm Location: Yên bình Lương Sơn, Hoà bình Processing 150,000 m3 of wastewater a day to collect methane Processing 1,500 m3 of wastewater a day to collect methane 3. Pig farm Location: Đan hoài Location: Đan phượng, Hanoi 4. Co Dong, Son Tay Animal Husbandry services cooperative Location: Co Dong, Son Tay, Hanoi Cassava processing Company, location Processing 150 m3 of wastewater a day to collect methane 5. Phu Tho cassava starch plant Location: Phú thọ Processing 4,000 m3, 3,000 m3, 2,000 m3, 750 m3 and 800 m3 of wastewater a day to collect methane Processing 15,000 m3 of wastewater a day to collect methane Technology used Covered lagoon Estimated time 2007 Covered lagoon 2007 Prefabricated composite dome tank, KT3-1 model Covered lagoon 2007 2008-2010 Covered lagoon 2009 6. Cassava starch plant; Location: Tinh Phong IP, Agroproduct and Food JS Co. Quảng Ngãi Upflow anaerobic sludge blanket digestion (UASB) 2009 7. Dung Quat alcoholbiogas plant Location: Dung Quat IP, Quang Ngai Sugar production Processing 3,500 m3 of wastewater a day to collect methane Processing 300,000 m3 of wastewater a day; Estimated gas output: 80,00090,000m3 of biogas/day Processing 900 m3 of wastewater a day to collect methane EGSB 7/2011 Upflow anaerobic sludge blanket digestion (UASB) combined with Structured media attached growth (SMAG) 2003 8. Alcohol plant, Lam Son Sugarcane Co. Location: Lam sơn, Thanh hoá
  41. 41. Exploring Biogas Market Opportunities in Vietnam Aquatic production 9. CDM methane collection from wastewater treatment project at Thuan An 1 aquaculture plant, Chau Phu dist., An Giang prov. Processing 100,000 m3 of wastewater a day; Estimated gas output: 25,000m3 of biogas/day Alcohol production 10. South East Asia Beer Brewery Location: Hanoi Processing 600 m3 of wastewater a day to collect methane 600m3/day 11. Alcohol and liquor factory Location: Bình định. Processing 360 m3 of wastewater a day to collect methane 12. Go Cat waste-to-energy power plant Location: Ho Chi Minh City Estimated gas output: 410m3 of biogas/day Installed capacity: 3 generators of 2.4 MW capacity Installed capacity: 3.5 MW Municipal waste 13. Nam Son waste-toenergy power plant Location: Hanoi 14. Dong Thach waste-toenergy power plant Location: Ho Chi Minh City 15. Phuoc Hiep 1 waste-toenergy power plant Location: Ho Chi Minh City 16. Da Mai Tan waste-toenergy power plant Location: Thai Nguyen City Capacity: 8 mil. of wastes/year Power output: 28,000 MWh/year Power output: 14,000 MWh/year Capacity: 450,000 tons of waste; Power output: 1,360 MWh/year 32 Upflow anaerobic sludge blanket digestion (UASB) combined with Structured media attached growth (SMAG) Upflow anaerobic sludge blanket digestion (UASB) Upflow anaerobic sludge blanket digestion (UASB) HDPE canvasing and gas collection piping HDPE canvasing and gas collection piping HDPE canvasing and gas collection piping HDPE canvasing and gas collection piping HDPE canvasing and gas collection piping 2010 2003 2009 2007 2009 2009 2009 2009
  42. 42. Exploring Biogas Market Opportunities in Vietnam 17. Trang Cat waste-toenergy power plant Location: Haiphong City Capacity: 1,1 tons of waste; Power output: 2,800 MWh/year 18. Thuy Phuong waste-toenergy power plant Location: Hue City Capacity: 540,000 tons of waste; Power output: 1,630 MWh/year 19. Khanh Son waste-toenergy power plant Location: Da Nang City Capacity: 1,4 tons of waste; Power output: 3,200 MWh/year 33 Technology: HDPE canvasing and gas collection piping Technology: HDPE canvasing and gas collection piping Technology: HDPE canvasing and gas collection piping 2010 2009 2010 2.4. Information about partnership in biogas development between Vietnam and foreign parties There are currently three forms of partnership in the field of biogas in Vietnam: (i) Government and foreign organization funding for demonstration projects or policy making and market promotion; (ii) taking part in waste treatment methane collection projects; and (iii) provision of equipment and technology. 2.4.1. Government and foreign organization funding for demonstration projects or policy making and market promotion; ■ Biogas development project supported by the Asian Development Bank (ADB). The Ministry of Agriculture and Rural Development is the local stakeholder. This project aims to improve the quality and safety of agricultural products and promote biogas development (QSEAP for short) and will be implemented in 16 provinces and cities and ended by June 2015.27 This project is part of a USD 95 million loan agreement out of a total project investment capital of over USD 110.4 million. The purpose of the project is to increase the safety and quality of agricultural commercial products from Vietnam, while providing a clean energy source in place of fossil energy through the development of biogas. The project is scheduled for 2009-2015 in the three major cities of Ho Chi Minh, Hanoi and Da Nang and 13 provinces with the largest share of vegetables, fruits and tea in the country, including Bac Giang, Ben Tre, Binh Thuan, Hai Duong, Lam Dong, Ninh Thuan, Phu Tho, Son La, Thai Nguyen, Tien Giang, Vinh Phuc and Yen Bai. The project has four components: Development of the regulatory framework and establishment of a working safety and quality control system for agricultural products; upgrade of 27 Based on the Government’s website, Dec. 2, 2009.
  43. 43. Exploring Biogas Market Opportunities in Vietnam 34 infrastructure and equipment to support safety and quality control of agricultural products; mitigation of animal husbandry waste through development of biogas and improvement of project management. In addition, to support project management and the development of the biogas program, ADB also provides technical assistance for the project worth USD 1.5 million. The QSEAP project has also been planned to be integrated in phase 2 of the “Science and Technology project” (AST) under a new title called “Low Carbon Agriculture Support project (LCASP)”. This idea was raised by ADB in the discussion with the Ministry of Agriculture and Rural Development in March 2011 and was accepted by the latter in August 2011. The newly proposed project has three major focuses. First, LCASP does not concentrate on household scale biogas systems but instead on more professional and advanced biogas systems for medium and large sized animal husbandry farms in Vietnam. Second, biogas projects are only viewed as an integrated part of a comprehensive breeding waste management system. Third, the proposed project will focus on capacity building at all levels to create sustainability for subsequent expansion of the approach elsewhere. ■ “Biogas program for the animal husbandry sector” support project This project was initiated by the Netherlands government and the local key stakeholder was the Animal Husbandry Administration of the Ministry of Agriculture and Rural Development. Started in 2003, the project was implemented in two phases. ■ At the end of phase I in 2005, 18,000 systems were built. ■ Phase II continued from 2006 to the end of 2011. The overall goal of the project in this phase is to develop a sustainable, market-oriented biogas sector. Project objectives include: ■ Existence in 50 out of 64 province and cities in the country; ■ Development of about 150,000 biogas systems. The total project investment is USD 9,194,076, including 57.3% of beneficiary contribution, 39.2% of ODA fund and 3.5% of provincial level counterpart fund. The project has a central office based in Hanoi and 20 provincial offices in participating provinces. By far, this is the largest household biogas development initiative in Vietnam. ■ Livestock waste management project: The Livestock waste management in East Asia project (LWMEA) is supported by the Global Environment Fund (GEF) through the World Bank (WB). In Vietnam, LWMEA is implemented by the Institute of Natural Resources and Environment Strategy and Policy, Ministry of Natural Resources and Environment. The project aims to support participating countries to collectively work to alleviate the adverse effects on the environment and human health of water source pollution from animal husbandry. This is especially the case as such effects are increasing fast in concentrated breeding areas near water sources. The benefits on the global environment that the project helps create is reduction of soil and environment pollution in littoral areas. External support is distributed among three key components: ■ Development and dissemination of methane mitigating technologies and practices: (i) identifying and developing practices and technologies to effectively reduce methane emission applicable to livestock waste management in ranches located in the project areas;
  44. 44. Exploring Biogas Market Opportunities in Vietnam 35 (ii) sharing these practices and technologies to other stakeholders, policy makers, experts, the private sector, producers and service providers; ■ Review of policies on renewable energy and market development: (i) conducting targeted studies to identify existing hindrances marketing products made with greenhouse gas alleviation technologies; (ii) conducting policy review at the national and sub-national levels, to develop policies promoting commercial use of biogas energy; ■ Awareness education campaign targeting local residents; training and support fund management: (i) workshops with the participation of key stakeholders to disseminate study findings on renewable energy and renewable energy market development; promote coordination between government agencies responsible for livestock waste management and cut down greenhouse gas discharge; (ii) provide training and workshops for pig farm owners in the project areas; and (iii) develop software, publications and other forms of experience sharing to be used in education and awareness campaigns. In Vietnam, the LWMEA project was underway from September 2006, with the Resources and Environment Strategy and Policy Institute, Ministry of Natural Resources and Environment, as the key implementer. The project aims to mitigate the adverse effects on the environment and human health, which are increasing fast in concentrated breeding areas near water sources. In addition, it also has a broader purpose of cutting soil pollution and environmental depreciation in the China Sea and Thailand Bay. As part of its broad activities, LWMEA assists the development of demonstration practices in livestock waste management and awareness raising for the community on environmental protection in animal husbandry. In the last few years, LWMEA supported the development of 3 model biogas tanks (of community and household scales) for livestock waste management in Tu Duong village, To Hieu commune, Thuong Tin district, Hanoi (former Ha Tay province). In addition to environmental improvement and alleviation of the damaging effects of waste to the environment and human health, these systems also provide fuel gas for cooking, lighting and electricity generation. The project also delivers multiple training and education activities to raise public awareness on environmental protection in livestock breeding. ■ Project to introduce medium sized plug flow digester equipment to the biogas market in Vietnam, financed by the Finish Ministry of Foreign Affairs and Nordic Development Fund. The project “Introducing medium-sized plug flow digester equipment to the biogas market in Vietnam” is part of the Energy & Environment Partnerships (EEP-Mekong) program. The project is scheduled for 2009-2012 with financial support from the Finish Ministry of Foreign Affairs and Nordic Development Fund. The key purpose of the project is to plan and develop the market in Vietnam for medium-sized plug flow digester equipment for biogas collection through the introduction, demonstration and presentation of economic efficiency of 10 sample systems in 10 pig farms in Vietnam. The project involves four partners, the Netherlands’ SNV, Energy Institute, Stockholm Environment Institute (SEI) and Global Energy Consultancy Investment and Trading Company (GECI). Expected outputs include: ■ 10 medium-sized digester systems to be designed and built to collect methane for reduction of
  45. 45. Exploring Biogas Market Opportunities in Vietnam 36 greenhouse gas emission; ■ Training materials developed; ■ Efficiency assessments made; ■ Use of biogas and wastes from the digestion process optimized. The total support fund is 286,000 Euros, including 191,500 Euros from EEP and the remaining from the four other stakeholders (exclusive of contributions from the pig farms for building digester equipment). The project life cycle is 18 months, starting from June 2011. 2.4.2. Partnership type (ii) taking part in waste treatment methane collection projects; and (iii) provision of equipment and technology. In this form of partnership, international stakeholders will directly or indirectly get involved in the development of the project (prefeasibility) study, project (feasibility) outline and/or provision of equipment. Unfortunately, detailed information about specific types of partnership and company names are not readily available. Below is some background information about business cooperation in waste management for biogas collection to produce energy. Table 2.9. Projects with a foreign partner in medium and large sized biogas collection Company, location 1. Thai Duong Imported Pig Breed JS Co. Location: Đô Lương, Nghệ an 2. Cassava starch plant; Location: Tinh Phong IP, Agroproduct and Food JS Co. Quảng Ngãi 3. Dung Quat alcohol-biogas plant Location: Dung Quat IP, Quang Ngai 4. Alcohol plant, Lam Son Sugarcane Co. Location: Lam Sơn, Thanh Hoá Capacity 150,000 m3 of wastewater a day Technology used Covered lagoon Partner Thailand – Vietnam 3,500 m3 of wastewater a day Upflow anaerobic sludge blanket digestion (UASB) Vietnam Thailand 300,000 m3 of wastewater a day Estimated gas output: 80,000-90,000m3 of biogas/day 900 m3/day EGSB Vietnam China Upflow anaerobic sludge blanket digestion (UASB) combined with Structured media attached growth (SMAG) Upflow anaerobic sludge blanket digestion (UASB) 2003, Vietnam India 5. Alcohol and liquor factory Location: Bình định. 360 m3 of wastewater a day Partner: China 6. Go Cat waste-to-energy power plant Location: Ho Chi Minh City Estimated gas output: 410 m3 of biogas/day Installed capacity: 3 generators of 2.4 MW capacity HDPE canvasing and gas collection piping Partner: the Netherlands 7. Nam Son waste-to-energy power plant Location: Hanoi Installed capacity: 3.5 MW HDPE canvasing and gas collection piping Partner: Japan

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