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Financial Support for Energy-Savings Investment
15:27 - 09/10/2024
Access to capital is the "key" solution for enterprises to invest in energy-saving projects, which is crucial for promoting energy efficiency in industries.
Vietnam has significant potential for energy savings in the industrial sector. However, many technologies and equipment used in industrial enterprises are outdated, resulting in low efficiency and high energy consumption. Access to capital is the "key" solution for enterprises to invest in energy-saving projects, which is crucial for promoting energy efficiency in industries.
Efforts Toward Sustainable Industrial Development
Over the past decades, energy demand in the industrial sector has continuously increased. Particularly, electricity demand in this field grew by an average of 13% per year from 2001 to 2010 and 10.5% per year from 2011 to 2019. Since 2015, Vietnam has shifted from a net energy exporter to a net energy importer, putting immense pressure on energy supply development and affecting the stable growth of various economic sectors, including industry.
Mr. Trinh Quoc Vu, Deputy Director of the Department of Energy Efficiency and Sustainable Development, Ministry of Industry and Trade (MOIT), highlighted that industry accounts for a large share of energy consumption (over 50% of total national energy consumption). Therefore, enhancing energy efficiency, saving energy, and reducing electricity consumption are crucial. These are key priorities of the MOIT and the Vietnam National Energy Efficiency Programme (VNEEP). In the current situation and upcoming periods, the ministry will strongly promote energy-saving solutions across all sectors, especially in industry.
"The Ministry of Industry and Trade has been implementing activities to support enterprises in identifying losses and technologies through energy audits, so they can proactively choose to invest in and replace old, outdated, and energy-consuming technologies" - Mr. Trinh Quoc Vu, Deputy Head of Department of Energy Efficiency and Sustainable Development, Ministry of Industry and Trade.
The Push Needed for Energy Savings in Enterprises
Energy efficiency is a highly effective and practical solution for ensuring energy security and stabilizing economic development. However, in reality, investment in energy-saving measures in industrial enterprises has not yet matched the potential benefits.
Mr. Chu Ba Thi, Senior Energy Specialist at the World Bank in Vietnam, explained that the main reason for this gap is the lack of capital for technology upgrades. Implementing energy-saving measures, such as installing high-efficiency energy systems, waste heat recovery, or integrating renewable energy, requires substantial investment. Yet, accessing financial resources for such investments remains a challenge for most domestic enterprises.
"To promote energy efficiency in Vietnamese industries, the Government needs to have financial incentives and policies for businesses to access cheaper capital sources" - Mr. Chu Ba Thi, Senior Energy Expert, The World Bank in Vietnam.
In addition to financial constraints, Mr. Thi pointed out limited awareness about energy efficiency and the risks involved in these investments. This lack of understanding is a barrier that often keeps energy savings from being a priority for enterprises. He also noted that current energy prices do not accurately reflect actual costs, and the limited incentives for energy efficiency in policy further delay the adoption of energy-saving initiatives in industrial enterprises.
To improve energy efficiency in the industrial sector in the coming period, it is necessary to implement mechanisms that promote solutions and remove difficulties for enterprises, especially financial mechanisms, to help enterprises, particularly those in the industrial sector, be more confident and proactive in investing in energy-saving technologies.
Overcoming Challenges
According to Mr. Trinh Quoc Vu, reducing energy intensity and achieving sustainable industrial development hinges on businesses saving energy (TKNL). Over the years, the Ministry of Industry and Trade (MOIT) has actively implemented several programs to promote energy efficiency and conservation usage in the industrial sector. One such initiative is capital support for energy-saving projects through financial institutions, which has garnered significant interest from businesses.
A prominent example is the energy-saving investment loan program, part of the "Vietnam Scaling Up Energy Efficiency Project (VSUEE)," funded by the Green Climate Fund (GCF). The MOIT, in collaboration with the World Bank (WB), manages this project, which offers access to a Risk Sharing Facility (RSF) valued at $75 million, provided by the GCF.
The VSUEE project has a total budget of USD 11.3 million, equivalent to approximately VND 252 billion. It includes Component 1 - Operation of the Risk Sharing Facility (RSF), and Component 2 - Technical Support. Additionally, the Green Climate Fund (GCF) provides a repayable loan of USD 75 million to establish the RSF, aiming to offer credit guarantees for energy-saving investment projects in Vietnam through the Risk Sharing Facility Management Unit (PIE). The guaranteed amount will be used to cover unpayable projects that are confirmed by PIE to be eligible for reimbursement. Through the RSF guarantees, industrial enterprises can be granted up to 50% of the loan value for investments in technological improvements that reduce energy consumption. |
Mr. Chu Ba Thi, Senior Energy Specialist at the World Bank, highlighted that the VSUEE project represents an innovative combination of technical assistance and a risk-sharing mechanism, implemented for the first time in Vietnam. The goal is to mobilize private-sector finance under favorable lending conditions.
"We hope to pilot a credit guarantee mechanism for energy-saving investments, addressing barriers and regulatory hurdles to accessing commercial capital. This will incentivize businesses, commercial banks, and other stakeholders to develop and invest in energy-saving projects, further fostering the energy efficiency investment market," said Mr. Chu Ba Thi.
Ms. Ngo Thu Ha, CEO of SHB (Saigon – Hanoi Commercial Joint Stock Bank), which manages the RSF under the VSUEE project, noted that the initiative aims to support enterprises in accessing loans from commercial banks for upgrading technologies and improving energy efficiency in production.
Through these favorable loan conditions, businesses will have more opportunities to enhance their financial capacity and adopt modern energy-saving technologies. This will help them reduce production costs, improve economic efficiency, and boost competitiveness—especially important as global markets increasingly emphasize resource efficiency. Without adopting such technologies, Vietnamese goods risk becoming less competitive if traditional production methods persist.
Additionally, optimizing energy use benefits not only businesses but also contributes significantly to broader national goals, such as reducing emissions across the economy.
"The GCF's support capital along with the RSF's guarantee mechanism, which is being implemented for the first time in Vietnam, will open up a promising solution for the future of energy efficiency projects in particular and energy security issues in general in Vietnam. This is an opportunity for enterprises to receive funding from commercial banks to research and invest in technological innovation, improving energy efficiency in the production process" - Ms. Ngo Thu ha, General Director of Saigon-Hanoi Commercial Joint Stock Bank.
Interest in Energy Savings from Businesses
The cement industry, one of the largest consumers of coal and electricity, has the potential to improve energy efficiency significantly. Waste heat generated during production is partially reused for drying raw materials and coal; however, much of it is still released into the environment. As a result, energy consumption per unit of cement in Vietnam remains high.
In this sector, waste heat recovery technology has proven highly effective. It not only reduces dust emissions and heat loss but also generates up to 30% of the electricity used in cement plants.
On September 20, 2024, the Prime Minister signed Decision No. 101/QD-TTg, issuing the List of Key Energy Users for 2023. Accordingly, the total number of key energy users across the country in 2023 is 3,491 facilities, including 2,864 industrial establishments, 18 agricultural production establishments, 70 transportation units, and 539 construction projects. |
Currently, only a few plants in Vietnam, such as Tan Thang Cement, have adopted this technology. Tan Thang Cement has implemented a waste-heat power generation system under a BOT model, aiming to maximize resource and energy savings while minimizing emissions to enhance competitiveness.
Mr. Nguyen Xuan Hung, Head of Technology at Tan Thang Cement, noted: “Our plant’s total electricity consumption ranges from 23-25 MW/h, with the waste-heat power generation system producing 7 MW/h, saving up to 30% of our total electricity use. This project leverages excess heat to save fuel, reduce dust emissions, and make production more environmentally friendly.”
Similarly, Nam Dinh Granite Tile Joint Stock Company (VID) has applied energy-saving solutions to reduce production costs and increase competitiveness. Some of the solutions include investing in a new kiln technology line, recovering waste heat for drying kilns, improving internal management, and utilizing natural light.
Mr. Nguyen Kim Tuc, General Director of VID, emphasized that in the building materials industry, especially in the production of large tiles and granite, energy cost makes up a significant portion of product costs. Therefore, focusing on energy savings in equipment, technology, and operations is a top priority for VID. The company is always ready to invest in optimal conditions to achieve energy efficiency and environmental protection.
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"The company has planned to invest in new production facilities and choose to invest in the most energy-saving equipment. Currently, the plant uses 0.95kg of gas/m2 of burnt bricks, in the coming time, we will strive to reduce to less than 0.5kg but still ensure product quality. Raising the factory capacity from 4 million to 20-25 million m2 of bricks/year" - Mr. Nguyen Kim Tuc, General Director of VID.
The economic benefits of energy-saving measures are evident. Beyond that, investing in energy-efficient systems helps businesses reduce emissions, aligning their operations with environmental goals. Favorable loans and financing are a major boost, encouraging companies to boldly adopt transformative solutions
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