1. The Second Capacity Building Workshop on “Low Carbon Development and Nationally Appropriate Mitigation Actions” Alternative Policy Scenarios For Renewable Energy Development in Viet Nam By: Nguyen Minh Bao Institute of Energy Institute of Energy 16-18 December 2013, Do Son, Hai Phong, Viet Nam

2. Contents IntroductionIntroduction Methodology and DataMethodology and Data Results of Energy Outlook-BAUResults of Energy Outlook-BAU APS Scenarios for RE DevelopmentAPS Scenarios for RE Development Assumptions for APS Scenarios Assumptions for APS Scenarios Results of Energy Outlook-APS vs. BAU Results of Energy Outlook-APS vs. BAU Key Findings Key Findings

3. Climate change is one of the most complex problems that seriously threats to the global issues. Climate change is one of the most complex problems that seriously threats to the global issues. Vietnam is considered one of countries most vulnerable to climate change. Vietnam is considered one of countries most vulnerable to climate change. Continuing the TNA project sponsored by UNEP to identify the priority technology needs and the adaptive and mitigation technologies, Viet Nam was selected for implementing FIRM project. Continuing the TNA project sponsored by UNEP to identify the priority technology needs and the adaptive and mitigation technologies, Viet Nam was selected for implementing FIRM project. FIRM project, This study is one of three main components of FIRM project, aiming to develop a national low carbon development framework and indentify the NAMA priorities Introduction Introduction

4. The objective of this study is to develop APS Scenario for RE to achieve the target of 5 percentage of RE in total primary commercial supply by 2020. The objective of this study is to develop APS Scenario for RE to achieve the target of 5 percentage of RE in total primary commercial supply by 2020. Firstly Firstly, a BAU scenario was developed for outlining future energy consumption with assumption of no any change on energy policies. An APS was also designed based on: Accessible potential of all types of RE National targets for RE development with assuming that additional policies would be developed or likely to be under consideration. The difference between the BAU and APS represents the additional RE consumption and potential fossil energy savings as well as potential GHG reduction. Methodology and Data  Methodology

5. LEAP model, LEAP model, an accounting system was used to develop energy balance tables based on final energy consumption and energy input/output in the transformation sector. Final energy demand forecasting was estimated for each sector such as industry, transport, agriculture, commercial and residential sectors. Final energy demand for the sectors (except residential sector) is forecasted using energy demand equations by energy and sector and future macroeconomic assumptions. Residential energy demand was estimated by using the bottom-up method that energy demand was broken down in to sub-sector, end-uses etc. Primary energy requirements were estimated based on the future choice for technologies, programs and available energy supply in the future. Methodology and Data  Methodology

6. Data were taken from the following souces: Energy Balances for Non-OECD Countries compiled by the International Energy Agency (IEA) with the historical energy data available for using the econometric approach. Statistics Year Book of Viet Nam and World Development Indicators published by the World Bank. Other data such as population and population growth rates were obtained from Statistics Year Book. Where official data were not available, estimates were obtained from other sources or Institute of Energy (IE). Methodology and Data  Data

7. GDP assumptions* GDP assumptions* 6.96% per year from 2011 to 2015 6.96% per year from 2011 to 2015 7.0% per year from 2016 to 2020 7.0% per year from 2016 to 2020 7.22% per year from 2021 to 2030 7.22% per year from 2021 to 2030 6.8% per year from 2030 to 2035 6.8% per year from 2030 to 2035 2010201520202030Industry42.42%41.00%42.01%41.41% Agriculture16.43%17.10%15.00%10.10% Share of GDP* Share of GDP* * National Power Master Plan (2010-2030) Methodology and Data

8. Population assumptions (Mill. persons)*: Population assumptions (Mill. persons)*: Urbanization Rate * Urbanization Rate * 2010: 30.5% 2010: 30.5% 2015: 33.6% 2015: 33.6% 2025: 40.7% 2025: 40.7% 2035: 48.2% 2035: 48.2% * Source: * Source: General Statistics Office, 2011- Viet Nam Population Forecasts 2009-2049 201020152020202520302035 86.9391.58396.179100.129103.117105.388 Methodology and Data

9. * Changes in Technology - Base year 2010 thermal efficiencies by fuel type (coal, gas, and oil) were derived from Energy Balance Tables. - Thermal efficiencies by fuel (coal, gas, and oil) in the Viet Nam were projected based on the forecasting future power plant technologies in USDOE’s Annual Energy Outlook, 2008. * Renewable Energy Technologies Installed electricity generating capacity from renewable energy is assumed based on: - Current status of policies and RE application - RE potential and planning to develop RE technologies In BAU, it assumed that RE would reach to 4300 MW in 2030 with small hydro contributing 4000 MW wind 200 MW, and biomass 100 MW.

10. Results of Energy Outlook-BAU Final Energy Demand by Sector, BAU Unit: MTOE 19902010201520202030 Annual Average Growth Rate (%) 1990- 2010 2010- 2030 Residential9.510.812.114.020.20.63.2 Industry4.517.523.431.954.57.05.8 Transportation1.411.115.220.634.110.95.7 Agriculture0.20.60.81.01.24.63.6 Commercial0.31.82.63.87.88.67.7 Total16.041.854.171.2117.84.95.3

11. Results of Energy Outlook-BAU Final Energy Demand by Sector, BAU

12. Results of Energy Outlook-BAU Share of Final Energy Demand by Sector, BAU Unit: % 201020202030 Residential25.819.617.2 Industry41.944.846.3 Transportation26.728.928.9 Agriculture1.51.41.1 Commercial4.25.36.6 Total100100100

13. Results of Energy Outlook-BAU Final Energy Demand by Fuel, BAU Unit: MTOE 19902010201520202030 Annual Average Growth Rate (%) 1990- 2010 2010- 2030 Solid Fuels (Coal) 1.39.912.616.424.110.64.6 Oil2.415.320.928.046.89.85.7 Natural gas 0.00.50.81.32.7-8.9 Electricity0.57.512.720.142.314.19.1 Biomass11.88.66.95.21.2-1.6-9.3 Renewable0.00.020.10.40.7-19.6 Total16.041.854.171.2117.84.95.3

14. Results of Energy Outlook-BAU Final Energy Demand by Fuel, BAU

15. Results of Energy Outlook-BAU Share of Final Energy Demand by Fuel, BAU Unit: % 199020102030 Solid Fuels (Coal) 8.323.720.5 Oil14.736.739.7 Natural gas 0.01.22.3 Electricity3.317.935.9 Biomass73.720.51.0 Renewables0.00.040.6 Total100100100

16. Results of Energy Outlook-BAU Power Generation Output, BAU Unit: Bill. k Wh 199020102030AAGR2010/1990AAGR2030/2010 Coal2.017.0302.111.315.5 Oil1.34.60.36.4-12.9 Natural gas 0.043.181.055.93.2 Nuclear0.00.058.5-- Hydro5.425.964.78.24.7 Renewables0.01.812.9-10.2 Total8.792.3519.312.59.0

17. Results of Energy Outlook-BAU Power Generation Output, BAU (Bill. kWh)

18. Results of Energy Outlook-BAU Share of Power Generation Output, BAU Unit: % 199020102030 Coal23.118.458.2 Oil15.04.90.1 Natural Gas 0.146.615.6 Nuclear0.00.011.3 Hydro61.828.012.5 Renewables0.02.02.5 Total100100100

19. Results of Energy Outlook-BAU Primary Energy Supply, BAU Unit: MTOE Primary Energy Supply, BAU Unit: MTOE 19902010201520202030 AAGR (%) 1990- 2010 2010- 2030 Solid Fuels (Coal) 2.214.627.844.391.89.99.6 Oil2.717.721.229.148.79.85.2 Natural gas 0.08.48.412.318.148.73.9 Nuclear0.00.00.01.215.2-- Hydro0.52.23.84.95.68.24.7 Biomass11.68.67.05.21.3-1.5-9.0 Renewables0.00.31.01.62.5-11.0 Imported electricity 0.00.40.60.91.4-6.4 Total17.052.269.899.3184.55.86.5

20. Results of Energy Outlook-BAU Primary Energy Supply, BAU Unit: MTOE Share of Primary Energy Supply, BAU Unit: % 199020102030 Solid Fuels (Coal) 13.127.949.8 Oil16.133.926.4 Natural gas 0.016.19.8 Nuclear0.00.08.3 Hydro2.74.33.0 Biomass68.116.50.7 Renewables0.00.61.3 Imported electricity 0.00.70.7 Total100100100

21. Results of Energy Outlook-BAU Primary Energy Supply, BAU Unit: MTOE GHG Emissions, BAU Unit: Million Tonnes of CO 2e 20102015202020252030AAGR2010-30 1. Energy Industry 50.386.9148.7212.8323.79.8% Electricity Generation 38.674.3129.6189.1294.710.7% Gas Production 0.70.70.90.80.6-0.8% Crude oil production 5.33.45.75.65.50.3% Coal Production 5.68.512.517.322.97.3% 2.Energy Consumption 91.4120.6158.9200.3252.75.2% Residential11.413.916.518.820.93.1% Industry40.252.569.887.9110.95.2% Transport33.545.360.777.799.75.6% Agriculture1.62.22.52.93.23.4% Commercial4.86.79.413186.9% Total (1+2) 141.7207.4307.7413.2576.47.3%

22. Results of Energy Outlook-BAU Energy Indicators of BAU 201020202030 GDP (billions of 1994 USD) 62.8123.4247.7 Population (millions of people) 86.996.2103.1 GDP per capita (thousands of 1994 USD/person) 0.71.32.4 Primary energy consumption per capita (toe/person) 0.601.031.79 Primary energy consumption per unit of GDP (toe/million 1994 USD) 832805 745 745 CO 2 emissions per unit of GDP (t-CO 2 /million 1994 USD) 2,2572,4932,327 CO 2 emissions per unit of primary energy consumption (t-C/toe) 2.713.103.12

23. APS Scenarios for RE Development Assumptions for APS Scenarios This section focuses on development of APS for RE to achieve the target 5% of RE in total primary commercial supply by 2020 based on the existing planning and programs with assumptions that additional policies would be developed.   Small hydro power plants substitute for coal thermal power plants Installed Capacity of SHP (MW) Scenarios2012*20152025 BAU1,269.42,6004,000 APS1,269.42,9505,600 * Source: Statistic Data until Sep. 2012, General Department of Energy, MOIT

24. APS Scenarios for RE Development Assumptions for APS Scenarios   Biomass power plants substitute for coal thermal power plants Installed Capacity of Biomass PP (MW) Scenarios201020152030 BAU4060100 APS40500*2000* 40MW in 2010 to 60 MW in 2020 and 100 MW in 2030. * Source: Decision No. 1208/2011/QD-TTg, 2011 on approval of the National Power Development Plan for the 2011- 2020 period with a vision to 2030.

25. APS Scenarios for RE Development Assumptions for APS Scenarios  Wind power  Wind power plants substitute for coal thermal power plants 40MW in 2010 to 60 MW in 2020 and 100 MW in 2030. * World Bank (2001) Wind Energy Resource Atlas of Southeast Asia. ** Decision No. 1208/2011/QD-TTg, 2011 on approval of the National PDP VII. The total potential of wind energy in Vietnam is estimated to be as high as 26,700MW (at speeds over 6m/s)*. There have been 48 projects on wind power development registered (until May 2011) with the total registered capacity of 5,000 MW. Assumption: Installed Capacity of WPP (MW) Scenarios201120152030 BAU30100200 APS301000**6200**

26. APS Scenarios for RE Development Assumptions for APS Scenarios  Biogas Energy 40MW in 2010 to 60 MW in 2020 and 100 MW in 2030. Biogas stoves substitute for coal stoves: By 2030, the share of HH using biogas stoves will increase to 12.0% from 2.0% (in BAU) in rural areas. Each household used biogas consumes 0.16 TOE per year, while old coal stoves consumes around 0.4 TOE per year. Biogas stoves substitute for LPG stoves: By 2030, the share of HH using biogas stoves will increase to 12.0% from 2.0% (in BAU) in rural areas. Each household used biogas consumes 0.16 TOE per year, while LPG stoves consumes 0.143 TOE per year.

27. APS Scenarios for RE Development Assumptions for APS Scenarios  Biogas Energy 40MW in 2010 to 60 MW in 2020 and 100 MW in 2030. Biogas power plants substitute for coal thermal power plants Installed Capacity of Biogas PP (MW) Scenarios201020152030 BAU000 APS03060

28. APS Scenarios for RE Development Assumptions for APS Scenarios  Solar water heaters substitute for electric water heaters 40MW in 2010 to 60 MW in 2020 and 100 MW in 2030. By 2030, it assumes that the share of HH used SWH will increase to 70% in urban and 40% in rural areas (from 10% and 3% in BAU) to replace to electricity heaters.  Bio-ethanol fuel substitutes for gasoline in transportation Amount of ethanol substituted for gasoline (KTOE) Scenarios201020152030 BAU0.10300600 APS0.10556*1150* * Source: Based on the p roject for bio-energy development up to 2015 with a vision to 2025

29. APS Scenarios for RE Development 20102015202020252030 Biomass00000 Electricity0-28.1-108.6-257.6-511.1 Natural Gas 00000 Oil Products 0-137.2-340.1-538.4-736.3 Renewables0228.9580.4998.41519.7 Solid fuels (Coal) 0-150.5-291.1-415.3-516 Total0-87-159.4-213.0-243.7 Results of Energy Outlook-APS vs. BAU Final Energy Demand by Fuels, APS vs. BAU Unit: KTOE

30. APS Scenarios for RE Development Results of Energy Outlook-APS vs. BAU Final Energy Demand by Fuels, APS vs. BAU

31. APS Scenarios for RE Development Results of Energy Outlook-APS vs. BAU 20102015202020252030 Solid Fuels 0-802.3-1970.2-3950.4-5981.6 Oil0-111.5-265.1-485.9-773.1 Natural Gas 028.634.8-71.5-109.1 Nuclear00.04.4-41.3-128.6 Hydropower014.518.5-29.4-46.9 Biomass0156.3398.91083.21848.4 Renewables01484.33421.05651.87907.4 Electricity (Imported) 01.54.06.4-42.3 Total0771.41646.32162.92674.2 Primary Energy Demand by Fuels, APS vs. BAU Unit: KTOE

32. APS Scenarios for RE Development Results of Energy Outlook-APS vs. BAU Power Generation Input by Fuel-Energy Types APS vs. BAU Unit: KTOE Power Generation Input by Fuel-Energy Types APS vs. BAU Unit: KTOE 20102015202020252030 Coal-651.8-1,679.1-3,535.1-5,465.6 In which: - Anthracite 0-538.1-1,400.7-2,328.6-3,165.4 - Import Coal - Import Coal0-113.7-278.4-1,206.5-2,300.2 Oil00.00.00.0-72.7 Natural Gas 025.534.8-71.5-109.1 Nuclear00.04.4-41.3-128.6 Hydro014.518.5-29.4-46.9 Small Hydro 090.8238.6389.5406.4 Wind042.6108.8425.9778.4 Biomass0156.3398.91,083.21,848.4 Biogas010.836.255.677.9 Total0-311.2-838.8-1,723.1-2,711.9

33. APS Scenarios for RE Development Results of Energy Outlook-APS vs. BAU  Evaluation of the Share of Renewable Energy The basic principles for calculating the share of RE in total primary commercial energy sources are based on the outputs of yearly energy balance tables determined as follows: * Primary commercial energy sources include crude oil, oil products imported, coal exploited and imported, natural gas exploited and imported, nuclear fuel, electricity imported (and not including fuel-energy exported). * Primary RE sources include small hydro, wind, solar, animal waste for producing biogas, cassava for producing ethanol and biomass fuels for power generation (not including biomass for residential cooking).

34. APS Scenarios for RE Development Results of Energy Outlook-APS vs. BAU Primary Energy Supply by Energy Types in APS Up to 2030 Unit: KTOE Primary Energy Supply by Energy Types in APS Up to 2030 Unit: KTOE 20102015202020252030 Coal14591.827036.742282.657018.985813.9 Oil17674.121101.828869.536910.747866.8 Natural Gas 8423.88405.912291.816511.217941.8 Nuclear0.00.01171.67184.815100.6 Hydro2224.13784.64871.55112.55512.7 Biomass8607.07140.95612.14394.13168.8 In which: for power generation 40.0205.3453.11157.71946.6 Animal Wastes 162.61403.52870.34318.35782.3 Cassava0.2276.9846.21307.71769.2 Small Hydro 144.8744.31033.01383.11453.4 Solar0.533.7126.9298.4589.8 Wind0.050.3120.8444.6804.6 Electricity Imported 390.2624.9854.41082.81311.2 Total52219.170604.0100951.0135967.2187115.0

35. APS Scenarios for RE Development Results of Energy Outlook-APS vs. BAU 20102015202020252030 Total Primary Energy 52219.170604.0100951.0135967.2187115.0 Total Primary Commercial Energy 41079.957169.385469.9118708.4168034.3 Total Primary Renewable Energy 348.12714.05450.38909.812345.9 Share of RE/TPCE 0.8%4.7%6.4%7.5%7.4% Primary Energy Supply by Energy Types in APS Up to 2030 Unit: KTOE

36. APS Scenarios for RE Development Results of Energy Outlook-APS vs. BAU 20102015202020252030 Biomass for power generation 0.10%0.36%0.53%0.98%1.16% Cassava for ethanol production 0.00%0.48%0.99%1.10%1.05% Animal Wastes for biogas 0.40%2.45%3.36%3.64%3.44% Small Hydro 0.35%1.30%1.21%1.17%0.86% Solar0.00%0.06%0.15%0.25%0.35% Wind0.00%0.09%0.14%0.37%0.48% Total0.85%4.75%6.38%7.51%7.35% The Share of Renewable Energy by Types of Technology

37. APS Scenarios for RE Development Results of Energy Outlook-APS vs. BAU GHG Reduction Potential Unit: Million Tones CO 2e 20102015202020252030AAGR2010-2030 APS141.7203.7298.6395.3549.57.0% BAU141.7207.4307.7413.2576.47.3% Reduction0-3.7-9.1-17.9-26.9-0.3%

38. APS Scenarios for RE Development Results of Energy Outlook-APS vs. BAU GHG Reduction Potential

39. APS Scenarios for RE Development Results of Energy Outlook-APS vs. BAU GHG Reduction Potential in Power Generation Unit: Million Tones CO 2e 20102015202020252030 AAGR 2010-2030 APS38.671.7123174.9272.610.3% BAU38.674.3129.6189.1294.710.7% Reduction0 - 2.6 - 6.6 - 14.2 - 22.1 - 0.4%

40. APS Scenarios for RE Development Results of Energy Outlook-APS vs. BAU GHG Reduction Potential in Power Generation

41. Key Findings * Energy demand in Viet Nam is expected to continue to grow at a significant rate. RE sources potential could contribute significantly to meeting higher demand in a sustainable manner. * Electricity demand is increasing with highest annual growth rate of 9.1 percent in BAU and is projected to decline to 9.0 percent in APS. This decline seems to be modest due to SWH applied in residential sector only. * Coal thermal power plants will be the major power generation in Viet Nam in coming years. This area presents the largest energy conservation as well as the GHG mitigation potential in Viet Nam. * The share of primary RE in total primary commercial energy increases from insignificant share of 0.8 percent in 2010 to 6.4 percent in 2020 and 7.4 percent in 2030, indicating that Viet Nam could be achieve the goal of 5.0 percent of RE in total primary commercial energy by 2020.

42. Thank you very much