part 1: overview of cogeneration and its status in asia - Fire

Summary of country study – Viet Nam
4.4 Conclusions and Recommendations for Follow-up Actions 1
Conclusion
Cogeneration is an important issue in the National Energy Conservation & Efficiency Master
Plan of Viet Nam. Cogeneration can be applied in big and medium scale factories, centralized
industrial estates and commercial building complexes where power, heating and cooling are
required. Beside, Cogeneration can be applied also in agriculture for post-harvest
processing. The wide application of Cogeneration technology can bring positive effects on
energy conservation, production cost reduction, and environment protection of the country as
well as the region.
Cogeneration technology has been employed in Viet Nam since a very long time (Viêt Trì and
Hà Bác industrial zones, Cogido paper mill, sugar mills) but it has not been widely
propagated. Cora supermarket has recently set up a cogeneration facility in order to generate
high quality and reliable power as well as meet the cooling demands.
Results of the techno-economic and sensitivity studies undertaken for selected sites show
that the financial viability of a cogeneration project is strongly affected by the energy demand
pattern, system configuration and fuel type. The purchase price of electricity also strongly
affects the IRR. It can be considered as a key-factor in the consideration of alternatives.
The IRRs of steam turbine option vary from 20 per cent for oil fired boilers to above 30 per
cent with coal-fired boilers. The IRR of coal fired steam turbine cogeneration is not affected
by the change of investment cost whereas the oil fired option can be unfeasible if there is
more than 15 per cent increase in the investment.
The heavy fuel oil would be the most suitable fuel for reciprocating engine option since it can
lead to very high IRR.
The escalation in fuel price does not have any adverse impact on coal-fired steam turbine
cogeneration, but the IRR of oil fired option is sensitive to hikes in fuel prices.
Tax rates beyond 25 per cent can affect some of the cogeneration projects, but these rates
can be considered too high for the energy sector in Viet Nam. Therefore, enterprises opting
for cogeneration presently need not give importance to the effect of tax rate on their project’s
financial feasibility. There is so far no official document about taxation on energy generated by
unconventional plants.
Recommendation for follow-up actions
The first objective to consider for effective promotion of cogeneration in Viet Nam is to satisfy
the energy demand of the cogenerator. The sale of excess electricity is important but it
should not be considered as the first priority.
By taking care of their energy demand through self-generation and cogeneration, big energy
consumers can reduce a part of the burden on the electricity sector.
Most of industrial factories in Viet Nam is out-dated and are in the process of renovating their
facilities. There are a lot of new investment projects in industrial and commercial sectors that
provide an ideal occasion for promoting cogeneration.
1 These conclusions and recommendations are based on the deliberations of participants in the
South-East Asia Sub-Regional Seminar organized at Ho Chi Minh City on 9 November 1998 and at
Hanoi on 10 and 11 November 1998. The programme details of the Seminars are included in Appendix
4A.
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