Clean energy is the energy resource which was produced base on the basis of premilinary/renewable energy transmittion that have less impact on the environment such as hydro, wind energy, solar energy, thermal energy, tide energy, bio fuel…
Clean energy is also produced and supplied from primary energy source of fossil (coal, oil products and gas) and nuclear based on the basis of using energy transformation technology is clean technology, environmental friendly technology with production process, energy supply implement strictly compliance with environmental regulations.
In recent years, clean energy is invested and encouraged to use worldwide in order to reduce the dependence on oil, decrease environment pollution and are considered as the effective measure to curb the global warming. Clean energy has fast growth rate every year. The most development is solar power; electricity generated from solar panel annually is 60% and from concentrated solar thermal plant is 43%, then wind power contributes 25% and bio fuel increases 17% each year. Leading nations and have high propotion of renewable energy are European nations and the US.
Vietnam clean energy development potential
Vietnam has potential and opportunity to develop clean energy because of suitable geographic, environment and topographic for such fields include: hydropower, wind power, biomass, solar, tidal…
Small hydropower: Vietnam has strength to develop hydropower because there are more than 3.450 rivers and streams with the total average amount of water annully are about 830 billion m3. According to the latest report, there are more than 1000 identified locations have potential to generate small hydropower, scale from 100kW to 30MW with the total capacity is 7.000MW.
Wind power: Located in a subtropical monsoon region with long coastline, Vietnam has the biggest potential of wind power in the SEA with total wind power potential estimated to 513.360 MW, in other word, it has more than 10 times of total forecasted electricity capacity in 2020.
Biomass: With an agriculture characteristic national, Vietnam has a large and diversity biomass from wood, rice husk, coffee grounds, straw and bagasse with nearly 60 million ton biomass from agriculture waste, which includes 40% are being used to meet the energy demand of household and generate electricity. Moreover, there is other biomass includes wood product, urban waste and animal waste.
Solar Energy: Vietnam has large potential on solar energy, especially in central and southern of the nation with the estimated potential in theory is about 43.9 ton TOE. This energy source can be used to generate electricity and heat…
Tidal Power: Vietnam has high potential to exploit tidal energy because there are so many bays, estuaries, lagoons and especially has a coastline of over 3200 km.
Biofuel: The Government targeted to reach 1.8 million ton ethanol gasoline production and vegetable oil or 5% oil/fuel demand of 2025.
Biogas: Biogas resource: landfill, animal waste, agriculture residues, sewage… Biogas potential capacity is about 10 billion m3/year.
Clean energy development policy
Vietnam Government has issued many policies to develop renewable energy, set target to use renewable energy and orient a competitive electricity market with investment source and diversified business model. Particular prescribed in Decision No.1855/QD-TTg dated 27/12/2007 of the Government approving the Strategy of Vietnam Nation Energy Development to 2020 and the vision to 2050; Decision No.1208/QĐ-TTg dated 21/7/2011: Approving National Electricity Development Planning phase 2011-2015, can be extended to 2030; Especially, the Government approved Renewable Energy Development Strategy to 2030, vision to 20150 (Decision of the Government No.2068/QĐ – TTg ngày 25/11/2015).
The Government has set target to increase renewable energy in the total commercial primary energy from 3% in 2010 to 5% in 2020 and 11% in 2050 (Decision 1855/QD-TTg dated 27/12/2007); Increase the total renewable energy product resource, using from 25 million TOE (approximately ton of oil) in 2015 to about 37 million TOE in 2020; and about 62 million TOE in 2030 and 138 million TOE in 2050 (the Government Decision No.2068/QĐ – TTg dated 25/11/2015). Renewable energy rate in the total primary energy consumtion in 2015 reachs approximately 31.8%; about 31% in 2020; about 32.3% in 2030 and increases to 44% in 2050 (the Government Decision 2068/QĐ – TTg dated 25/11/2015).
Development Strategy of Renewable Energy to 2030, vision to 2050 also set a target to promote the development of renewable energy technology and industrial sectors, building renewable energy industrial system: Reaches 30% in 2020; increase to 60% in 2050 and ensure domestic’s demand as well as exporting a part of to other nations in the region and global.
Along with orientation policies of clean energy development, other supportive policies for specific types of energy such as wind, hydro power, biomass, waste to generate electricity are enacted, including: Decision No. 37/2011/QĐ-TTg dated 29/6/2011: About the supportive mechanism of wind projects; Decision No.24/2014/QĐ-TTg dated 24/3/2014 about the supportive mechanism of developing biomass projects in Vietnam; Decision No.31 /2014/QĐ-TTg dated 5/5/2014 about supportive mechanism of developing generating electricity using solid waste projects in Vietnam.
In 2014 and 2015, MOIT also enacted Circular 32/2014/TT-BCT dated 9/11/2014: which prescribed on the development procedure, applying avoid tariff cost and model electricity buy/sale contract for small hydropower plant; Circular 32/2015/TT-BCT dated 8/10/2015 prescribed on project development and model electricity sale contract applied to generation projects using solid wastes;
Under the current documents, investors are entitled to maximum incentives for all matters related to solar power project, wind power, biomass and small hydro power… such as exempt leasing land in a certain period of time, preferential enterprise income tax, VAT, import and export duties, clearance and depreciation of fixed assets…
Solar power and wind power projects are considered under the Clean Development Mechanism (Decision No 130/2007/QĐ-TTg dated 02/8/2007), investors are subsidized by the Government through Vietnam Environmental Protection Fund for the difference between real input cost and electricity cost according to the agreement in contract to supply generated energy from solar or wind power (Decision No 37/2011/QĐ-TTg dated 29/6/2011 of the Government).
Clean Energy Development Barrier
Although there are policies and extraordinarily potentials to develop clean energy, this sector in Vietnam is still remaining primitive and undevelops. Clean energy marketshare in the total energy level of the nation is still low, the quantity of investment project is small, clean energy production technology domestically has been not developed …
Because of lack of effective and possible mechanism for investors which related to electricity cost from solar and wind power. At the moment, electricity cost in Vietnam is always the biggest barrier for investors because it is the lowest price comparing to other nations in the region. In fact, the electricity cost of EVN always lower than the actual input cost of renewable energy. According to Decision No 37/2011/QĐ-TTg dated 29/6/2011, EVN will has to pay 1.614 dong (khoảng 0,078 USD) for each kilowatt of generated wind power, and the Government will subsidize 207 dong (approximately ~ 0,01 USD) through Vietnam Environmental Protection Fund. However, this subsidize is not enough, additionally, the limitation from the Fund is that the Fund only has revenue from selling CERs certification. Therefore, investors are still very careful when investing on this field. Moreover, there is a lack of regulation document of tax incentives and initial investment cost for clean energy is high.
Recommendation
– The Government has practical action and justice between state corporation and private organization; Transparency and public investment roadmap for clean and renewable energy;
– Completely remove all subsidies for fossil energy because the dependence of the world on fossil fuel is threatening the sustainability of environment, also creating short-term risk of political instability and implementing transparency incentives mechanism for clean energy;
– Support to research and transfer technology from developed countries to produce solar-using equipment such as cooker and water boil system from solar power, solar battery, wind turbine, biogas, thermal heat and bio fuel…From that, localization products will be implementing to create million jobs.
– Research solution to make commercial bank participate in the underwriting of clean energy technology investment.
Necessary to publish more guilding documents on measure implementation such as tax incentives. At the moment, project investors cannot take full advantage of tax incentive’s benefit, because the tax authorities do not have guide to implement these measures.