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Project: Promoting Energy conservation in

Small and medium scale enterprises in Vietnam

Results and lessons learnt

MINISTRY OF SCIENCE AND TECHNOLOGY

GEF- UNDP

NGUYEN BA VINH

PROJECT MANAGER

Sub-regional Workshop for GEF Focal Points in AsiaHanoi, Vietnam, 10-12 March 2010

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Results and lessons learnt in PECSME implementation

Content:

1. Introduction of PECSME 2. Results of project implementation 3. Lessons learnt

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1. Introduction of PECSME

Project name: “Promoting Energy Conservation in Small and Medium Scale Enterprises” (PECSME)

Implementing duration: 2006 – 2010 (5 years) Total Fund: USD 28,7 million, including:

Globe Environment Facility (GEF) funds: USD 5.5 million Local and state sectors: USD 3.7 million Business sector (Banks and Enterprises): USD 19.1 million

o Implementing agency: UNDP VNo Implementing Partner: Ministry of Science and

Technology - VN

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Project objectives:

Remove barriers to application of energy management systems and EC and EE Technologies => Reduction of GHG emission

500 projects need to be implemented 136.000 TOE need to be saved 537 thousand tons of CO2 need to be reduced for the period

2006 - 2010

o Beneficiaries: Small and medium scale enterprises in 5 sectors: brick, ceramics, textiles, paper& pulp and food processing.

1. Introduction of PECSME

1. Introduction of PECSME

Program components ( 6 )

o EC & EE policies and institutional support program

o EC&EE communication and awareness program

EC & EE technical capacity building program

EC & EE services development program

EC&EE Financial support program

EC&EE Demonstration and replication program

2. Remarkable results of project for the period 2006-2/2010

Support to develop the system of legal documents for energy conservation promotion:

Energy conservation law is under procedure for approval by National Assembly

Support Policies on energy conservation have been issued in more than 11 provinces.

System of agencies/organizations associated activities in PECSME was set up.

Improve awareness on EC & EE for SMEs, trade villages and energy efficiency service providers (EESPs);

2. Remarkable results of project for the period 2006-2/2010

o The staff of 25 EESPs trained on energy audit and EC project consultancy provision; provide training for more than 1,000 SMEs on EC technology operation;

The Loan Guarantee Fund (LGF) (total capital of US$ 1.7 million) has been effectively operated, guaranteed for 42 SMEs with total value of 27.3 billion of Vietnames Dong

400 projects have been implemented, 120 projects are being implemented => savings of 165,000 TOE, reduction of 643,000 ton CO2.

Formation of energy conservation market: involvement of SMEs, EESPs, bank/credit institutions, the government (issued policies and institutional support).

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2. Remarkable results of project for the period 2006-2/2010

Number of Projects implemented and on-going by industrial sector

Total Projects

Brick CeramicsFood

processingTextiles

Paper and pulp

520 222 109 105 38 46

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2. Remarkable results of project for the period 2006-2/2010

Result of Energy savings and CO2 emission reductions from implemented projects

Number of project have

been implemented

Energy saving (TOE) CO2 emission reduction (ton)

Total until 12/2010

An Average project per

year

Total until 12/2010

An average project per

year

400 156,000 390 643,000 1,608

Results for loans and loan guaranteesNumber

of project

Total investment(VND million )

Loan(VND million)

Guarantee commitments (VND

million)

Total An Average

project per year

Total An average project

Total An average project

42 74,000 1,668 37,000 997 28,000 610

Total fund of LGF is USD 1.7 million x 18,000 VND/ 1 USD => Total capital of Loan Guarantee Fund is 30 billion Vietnamese dong.

2. Remarkable results of projectimplementation for the period 2006 - March/2010

2. Remarkable results of project for the period 2006-2/2010

Sector Implemented EC solution

Average investment

level (VND

million)

Payback period (years)

Rate of investment

on turnover

Energy cost

savings

ratio (Achieved)

Rate of energy

cost savings

(potential)

1. Brick Replace traditional kilns that burning brick by wood and coal to vertical shaft brick kiln (VSBK)

3,000 -10,000 3 – 4 88% 30-60% 30-60%

2. Remarkable results of project for the period 2006-2/2010

Sector Implemented EC solution

Average investment

level (VND million)

Payback period (years)

Rate of investment

on turnover

(%)

Energy cost

savings ratio

(Achieved)

Rate of energy

cost savings

(potential)

2.Ceremics Replace traditional kilns that burning and drying ceramic products by coal to LPG kilns and heat recovery chamber for drying

500 – 1,000 3 – 4 75% 20-30% 15-40%

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2. Remarkable results of project for the period 2006-2/2010

Sector

Implemented EC solution Average investment level

(VND million)

Payback period (years)

Energy cost savings ratio

(Achieved)

Rate of energy cost

savings (potential)

3. Textiles Energy management; Improvement of lighting systems; Insulation of heating pipes and valves; Condensate recovery; Installation of VSD; Replacement of old motors with new high efficiency motors; Improvement of boiler operation; Overhaul of cooling machines; application of cooling accumulation at off-peak hours…

286 0.5 -3 4% 15-25%

4. Food processing

208 6% 15-25%

5. Paper and Pulp

664 12% 15-25%

2. Remarkable results of project for the period 2006-2/2010

Impacts by PECSME: • Contribution to hunger eliminate and poverty reduction: create

jobs for: • 10,000 jobs with labour income from 1.5 to 2.5 VND million per

month . • Reduce environment pollution: 643,000 ton of CO2 emission has

been reduced by 50% coal consumption level decrease from application of VSBK technology, replace traditional kilns burning with woods and coals ... By LPG kiln in ceramic sector

• Contribution to energy security: 156,000 TOE saved. • Facilitate the energy conservation market transformation that

including different stockholder's involvement: Energy Efficiency service providers (EESPs), financial providers, SMEs, EC & EE technology providers, government organizations.

3. Lessons learnt

1. Project objectives, activities have met the essential needs of SMEs so they have actively participated in

• Reduce production costs, increase productivity and product quality, enhance competitiveness.

• Loans and loan guarantee implementation of project.

2. Technological innovation to save energy is of decisive significance for SMEs to improve their productivity, product quality, increasing competitiveness

3. Policies, institutions on EC & EE should been preceded to create favourable environment for SMEs to project implementation

3. Lessons learnt

4. Local governments in participating provinces has played an important role in assisting EC&EE project implementation in their areas

• Issue local supporting policies and initiatives• EC&EE institutional development

5. Energy service providers - the bridge for SMEs to get EC technology – should get more support for it’s development.

• Enhance EESPs capacity in the provision of turn key consultancy service for SMEs

• Turnkey Technology transfer by implementing Energy performance contract (EPC)

• Loans support and loans guarantee.

Ceramic kiln of 26 m3 at Chu Đậu

The first batch of a ceramic production

household at Bat Trang

Project Evaluation Team of the Government and UNDP at Bat Trang

Brick kiln with 3 burning chambers at Hai Duong 3

Demonstration at Binh Duong province

Demonstration at Binh Duong Province

Signing ceremony of MOU on Loan Guarantee Fund Management

Brick shape creating assembly at Demonstration at Binh Duong province

Project Management Unit “Promoting Energy Conservation in Small and Medium Scale

Enterprises in Viet Nam” Ministry of Science and Technology

-------------------------------------------------------- Address: 65 B Tô Hiến Thành street, Hai Ba

Trung District, Hanoi Telephone: (84-4) 39783574 Fax: (84-4) 39783573 Website: www. ecsme.com.vn