Administrative and Technical Requirements
for Bioenergy Projects in Vietnam
16 September 2013
Biomass and biogas development in Vietnam
Biomass and biogas consumption : 14,710 ktoe (2010) for heat, cooking, lighting…,
account for 21.1% of total energy consumption in Vietnam
For power generation : 150 MW from Biomass; and < 1 MW from Biogas (21,500
MW total installed capacity in 2010 in Vietnam).
The GOV target (PDP VII)
• 2020 : 500 MW from biomass; no specific target for biogas generation
• 2030 : 2000 MW from biomass; no specific target for biogas generation
Most suitable biomass for power generation are:
• Bagasse; Rice husk; Wood; Rice straw
Law and regulatory framework for RE power generation
Electricity Law was passed in 2005 and amended in 2012.
• Promote the exploitation and use of new and renewable energy sources to generate
electricity : Invest in power plants using new and renewable energy sources ; Encourage
organizations and individuals to invest in grid or building power stations using on-site
energy, new and renewable energy to provide electricity to rural, mountainous and island
areas; Investment in power development in rural, mountainous and island areas
• The support of the State policy include: + Support on investment; + Support for
investment loan interest rates;
National Energy Development Strategies for Vietnam up to 2020 and
outlook to 2050:
• The share of renewable energy was set at 3% of total primary energy supply by 2010, 5% by
2020, and 11% by 2050.
National Power Development Master Plan (2011-2020) with outlook to
2030, highlighted needs for development of RE, particularly biomass.
Green growth (9/2012): Reduce intensity of GHG emissions per unit of
GDP by 8-10% in 2020, then 1.5-2%/y up to 2030
Biomass and biogas Stakeholders in Vietnam
Institutional agencies
+ MOIT
+ MONRE
+ MOC
+ MARD…..
R&D and consultants
+ Bioseed Vietnam
+ Hanoi University of
Agriculture
+ Agro-Forestry University
+ Institute of Agricultural
science of South Vietnam
+ IPP, IPSARD, ISPONRE,
IEVN, RCEE.
Stakeholders
Developers and
suppliers
+ Delta Energy Corp
+ Dinh Hai Cogen JSC
+ Hung Viet composite
+ Kim Nghia
+ Bourbon Tay Ninh JSC
+ Bien Hoa JSC
State owned
companies
+ CASUCO
+ EVN; + PVN; + PV Oil
+ URENCO
+ VINACAFE,
VINAFOOD…
Others (Donors and
Financial Inst.)
+ UNIDO
+ GIZ
+ USAID
+ WB
+ ADB
+ International & Local
Banks, VDB…
Institutional agencies
MPI - Responsible for developing policy and regulations : sectors are entitled to incentives
MARD – Policy & National plan on Agriculture and rural dev.
• Department of Crop Production
• Livestock production Department
• Vietnam Administration of Forestry
MONRE - Policy & National plan on Environment
• Vietnam Environment Administration
• Vietnam Environment Protection Fund
MOIT - Policy & National plan on Trade and Industry (power sector)
• General Directorate of Energy
• Electricity Regulatory Authority of Vietnam (ERAV)
• EVN (Single buyer of power)
MOST – Policy & National plan on Science and Technology, intellectual property, standards
MOC - Policy & National plan on Construction
• Department of Technical Infrastructure
Local Authorities (provinces, district and communes)
Economic regulations
Contracts are
individually
negotiated with each
project developer,
with a major
determinant of price
level negotiate with
EVN (single buyer)
being project specific
• Benefit/Cost ratio (B/C)
• Economic Internal Rate of Return
(EIRR, %)
• Net Present Value (NPV)
• Payback period on investment (B/I)
• Indicative price: Some Cogen. bagasse
power plants sell electricity to EVN at
price 4UScents/kWh
• EIRR on project : usually 12%-14%
Price of some biomass products
Type
Rice husk
Bagasse (sugar cane)
VND/kg
100-500
0 – 250
$/t
4.7 – 24
0 – 12
Wood and its residues
Rice straw
Corn cob and stob
400 – 600
400 – 600
0 – 250
18.8 – 28.2
18.8 – 28.2
0 – 12
These prices are at local prices
FISCAL AND FINANCIAL INCENTIVES
Corporate income tax incentive rate: 10% for a period of 15 years to newlyestablished enterprises investing in power plant projects.
• Possibility of 10% tax rate being extended up to 30 years: if the projects are
classified as large scale projects, using high or new technology and in special
need of investment.
• Tax exemption for the first 4 years; 50% tax reduction for the next 9 years
Exemption of import duties: for equipment and machinery imported to create
fixed assets of the RE projects.
Special encouraged projects: exemption/reduction of land use fee/rental
(depending also on the location of the projects)
Capital incentives: Access to low-interest loan from VDB : can obtain loans of up to
70% of the investment cost, with the maximum term of 12 years at an interest rate
equivalent to government bond interest rates with a term of 5 years plus 1%
RE - related Vietnam standards (TCVN)
Energy-related TCVNs are grouped in two subjects as section 27 Energy and heat transfer engineering and section 29 - Electrical
engineering
Electrical TCVN sub-system consists of 474 TCVNs (81 % harmonized
with ISs).
Number of current (pure) energy TCVNs including energy efficiency is
more than 30 TCVNs covering:
•
•
•
•
Energy systems (Terms and definitions) – 01 TCVN;
Electricity supply systems – 9 TCVNs;
Solar energy engineering – 01 TCVN;
Energy efficiency – > 20 TCVNs (+ 09 TCVNs planned to be developed in 2012).
National technical standards on emissions from Thermal power plant
(QCVN 22/2009)
PROCEDURES FOR PROPOSING AND IMPLEMENTING A PROJECT
Main conditions for the Investor:
• Good experience in project implementation;
• Obtain written agreement on the purchase of electricity by the Electricity of
Vietnam or electricity wholesale or retail units; (see next slide)
• Prove sources of capital to be mobilized and loan commitments of credit
institutions or banks for the project implementation; and
• Have owner’s capital accounting for least 30% of the total investment capital (but
could be lowered up to 20% in special cases).
Required forms for power projects: must be in the form of a
BOT/BOO project or other forms as provided for by law (e.g.: PPP).
Recommendations for investors:
• Supply chain of biomass is of primary importance. Thorough investigation and
control of biomass supply in long term is important.
• Thorough due diligence must be conducted.
Approval process for RE generation projects (<30 MW)
Provincial
Peoples
Committee(PPC)
PPC (DPI)
B
A
Investment
Approval FS
Proposal
E
Evaluation
Committee
Investor
Construction
C
D
Approval to
Construct
Business
Registration
DOC
PPC
Sign PPA
A - INVESTIGATIONS FOR INVESTMENT APPLICATION
•
The IPP must submit plans of its proposed
development for review and approval by relevant
government authorities. This involves the following
steps :
– Preparation of a pre-feasibility study (optional).
– Preparation of a feasibility study and environmental
and social impact assessment for approval by the
Evaluation Committee.
B. INVESTMENT APPROVAL

The small power projects will come under categories B
and C and investment approval will be decided by
either the Minister of the Ministry in charge or the
Chairman of the Peoples Committee. The need for a
particular development to comply with specific
regulations may be different for each category.

If the proposed development is approved by the
Evaluation Committee, the Peoples Committee or the
Minister in Charge will issue a development license.
C - ESTABLISH A BUSINESS ACTIVITY
Investor must establish a business entity in the form of
a limited liability company or shareholding, the
procedure for which is as follows:
 Obtain a Decision of Entity Establishment
(operation license) from the Chairman of the PPC
for private groups or from the Prime Minister or
other relevant Minister (ERAV-MOIT for power
license >3MW).
 Register the Business Activity with MPI or the
Provincial Department of Planning and Investment.
 A Power Purchase Agreement can be signed with EVN
at any time after completion of this step

D - APPROVAL TO CONSTRUCT
The final stage in the development approval process is
issue of the construction permit. This involves
submitting applications to the following government
agencies for approval:







Department of Construction for Approval to Construct.
Department of Lands and the Peoples Committee for approval
of land use, clearance and compensation.
Department of Trade and Department of Customs for issue an
import license for imported plant and equipment.
Power Companies for interconnection to the grid
Department of Labour for registration of staff.
Department of Tax for issue of a tax code for VAT.
Procedure of proposing and implementing a small scale
IPP project (<30MW)
Proposal for
project
Investor
Project proposal
PPC (DPI)
Approval
Add to project
list
Negotiation
and draft of
contracts
Initial Project
contract and other
relevant contracts
Obtaining
Investment
Certificate
Application
dossier
Relevant
ministries
for
consultation
opinions
Implementation
of the Project
Negotiating with authorized
competent authority
Request for amendment (10
days)
Investor
PPC
Amended project contract
(10days)
15 days
Issuing Investment certificate
Procedures for grid-connection and PPA for RE
Preliminary PPA ;
Grid-connection study;
Negotiation on selling price;
Metering agreement and designing
Design and agreement on SCADA/EMS (Optional for small IPP);
Negotiation and sign PPA.
MoIT’s Decision No. 32/2010/TT-BCT of 30 July 2010 provides detailed conditions and
procedures for connecting power plants to the power distribution network
Case Study – Nam Son Land-fill Gas Power Generation
2x2.5 MW
Task Name
Duration
PROCEDURES
Feasibility Study
65 days
FS writing and editing
45 days
FS approval
20 days
Grid Connection Plan
105 days
Report of connection
30 days
Approval of connection point
30 days
Submission for addition to the Grid Master Plan
15days
Approval of Grid Connection Plan
30 days
Fire Fighting Plan
EVN Hanoi
45 days
FF report writing and editing
30 days
FF approval
15days
Environment Impacts Assessment Report
Consultant
Police fire dept.
75 days
EIA report writing and editing
30 days
Consultant
EIA approval
45 days
DONRE
Power Purchase Agreement (PPA)
105 days
Submit for e sale with EVN
15 days
Power Purchase Prio-Agreement letter
30 days
Contract negotiation and signing
60 days
EVN Hanoi
Outlook for Biomass generation in Vietnam

Roadmap for liberalizing electricity market in Vietnam:
 2005 – 2014: competitive generation market
 2015 – 2022: competitive wholesaling market
 After 2022: competitive retail market
For RE

 RE master plan is under consideration
 Road Map to establish fund and complex incentives for RE are on-going
(assistance from GIZ)
Specially for Biomass generation

 Currently 10 projects in pipeline (average capacity 10 MW, 8 are
domestic and 2 are Joint Stock Companies)
 FIT for biomass is under finalization (the approval is expected by end
2013)
 Renewable/biomass energy development plans on provincial and
national level are being developed
Thank you for your attention!
Contact:
Nguyen Anh Tuan
Institute of Energy, MOIT
Website: www.ievn.com.vn
Email: tuannguyen.icd@gmail.com