Electricity access and local value creation for the un-electrified population in Vietnam

Ener­gy access is essen­tial for eco­nom­ic and human devel­op­ment and is an impor­tant dri­ver for the eco­nom­ic devel­op­ment of a coun­try. Access to mod­ern forms of ener­gy, espe­cial­ly elec­tric­i­ty, becomes even more impor­tant for the socio-eco­nom­ic devel­op­ment of rur­al areas (which lag behind urban areas in terms of infra­struc­ture devel­op­ment). “Full elec­tri­fi­ca­tion” to achieve social and eco­nom­ic devel­op­ment goals (and SDGs) in Viet­nam requires 24/7 elec­tric­i­ty access for every house­hold, fam­i­ly, farm­ing set­tle­ment and local enter­prise, even in rur­al com­mu­ni­ties. To achieve this goal, the gov­ern­ment of Viet­nam has focused pri­mar­i­ly on pro­vid­ing access by extend­ing the cen­tralised grid.
Approx­i­mate­ly 98 % of house­holds in both urban and rur­al areas of the coun­try have been elec­tri­fied through this means, but elec­tric­i­ty access to the remain­ing 2% of the pop­u­la­tion, pre­dom­i­nant­ly locat­ed in regions with ter­rain unfavourable to grid expan­sion, has become a tech­noe­co­nom­ic moot point. To this end, dis­cus­sions have explored whether cost-effec­tive, off-grid renew­able ener­gy (RE) alter­na­tives could assist the elec­tri­fi­ca­tion of these remain­ing pop­u­la­tions and fur­ther dri­ve the socioe­co­nom­ic devel­op­ment of these pop­u­la­tion groups.

Thus, this study cen­tres on pro­vid­ing answers to two main ques­tions:

  • What is the best approach to pro­vide elec­tric­i­ty access to the remain­ing 2 % of Viet­namese house­holds locat­ed in rur­al areas: grid expan­sion or off-grid renew­able ener­gy options?
  • Can cheap­er off-grid alter­na­tives engen­der local val­ue cre­ation in rur­al areas?

 

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Policy messages

Pol­i­cy mes­sage 1: Viet­nam has tremen­dous poten­tial for off-grid renew­able ener­gy sys­tems, which are cost com­pet­i­tive against grid exten­sion in rur­al areas with chal­leng­ing ter­rain that hin­ders nav­i­ga­tion and con­nec­tion. Deploy­ing low-wind-speed wind tur­bines to elec­tri­fy clus­ters in rur­al areas with a lev­elised cost of 9087 VND/kWh is the cheap­est means of pro­vid­ing low-cost ener­gy access to remote areas of Viet­nam.

Pol­i­cy mes­sage 2: The pri­vate sec­tor or organ­ised com­mu­ni­ty groups need to be encour­aged to invest in the off-grid renew­able ener­gy sec­tor and be made exempt from import tax­es for sup­ply­ing elec­tric­i­ty to house­holds or busi­ness­es in rur­al com­mu­ni­ties. If effec­tive­ly imple­ment­ed, this can stim­u­late the local­i­sa­tion of skills for the off-grid solar PV and small wind tur­bine val­ue chains in Viet­nam.

Pol­i­cy mes­sage 3: In order to effec­tive­ly dri­ve the adop­tion of low-cost off-grid renew­able ener­gy sys­tems in remote areas of Viet­nam, there has to be close dia­logue between the gov­ern­ment, pri­vate sec­tor and finan­cial insti­tu­tions at the nation­al and provin­cial lev­els con­cern­ing suit­able financ­ing mech­a­nisms for farm­ing com­mu­ni­ties (with low elec­tric­i­ty con­sump­tion lev­els) locat­ed more than 10km away from the near­est medi­um volt­age line.

 

 

Year of pub­li­ca­tion: 2019

Edi­tors: Ayo­de­ji Okun­lo­la, Lau­ra Nagel, Nguyen Thi Mai Dung, Sebas­t­ian Hel­gen­berg­er, Nguy
Thi Khanh, Nguyen Thi Mai Dung and Sarah Kovac – IASS, GreenID, UfU

Tech­ni­cal imple­men­ta­tion: Nguyen Duc Song, Dr. Nguyen Anh Tuan, Nguyen Chi Phuc –
Insti­tute of Ener­gy, Viet­nam

Sug­gest­ed cita­tion: IASS/Green ID. Elec­tric­i­ty access and local val­ue cre­ation for the un-elec­tri­fied pop­u­la­tion in Viet­nam. Assess­ing the co-ben­e­fits of decar­bon­is­ing the pow­er sec­tor. Potsdam/Hannoi: IASS/Green ID, 2019.

DOI: 10.2312/iass.2019/023

This study is part of a 2019 series of two stud­ies assess­ing the co-ben­e­fits of decar­bon­is­ing the pow­er sec­tor in Viet­nam. Edit­ed by IASS, GreenID and UfU: