KGGTF - Improving Readiness for Energy Efficiency Investment in Vietnam's Industries

Project Summary:

The objective of this grant is to support and build on the momentum created for industrial energy efficiency (EE) in Vietnam. To improve readiness for EE investment in Vietnam’s industries by demonstrating the viability of various industrial EE technologies and business models, and facilitating stakeholder engagement and knowledge sharing. Vietnam has experienced impressive economic growth and poverty reduction in the past 25 years. It has also proved to be one of the most energy intensive countries in East Asia with the country’s emissions expected to increase dramatically by 2030. To meet future energy demands, the country must focus on improving EE and defining it as the single lowest cost option to develop energy security. Achieving this will require durable programs and policies that focus on efficient energy technology. This KGGTF grant supports the demonstration and viability of industrial EE technologies and business models. This grant will further support the development of selected industrial EE projects and pilot suitable business models to attract the participation of industrial enterprises (IEs) and participating financial institutions (PFIs). This activity is expected to increase the efficiency of the EE sector in Vietnam through a cost-effective scale of EE by promoting a coordinated pipeline development mechanism, and technologies and business models applicable to Vietnam’s circumstances and market participation. Through the activities under this program, Vietnam will promote industrial EE to reduce its long-term dependence on imported fuels and exposure to volatile world market prices, therefore strengthening the country’s energy resilience. 

This grant is linked to Lending ($101,700,000)

List of Activities:

1. Viability demonstration of applicable EE technologies and business models - Generation of pipeline projects, Technical and business model studies for selected pipeline projects, Enhanced stakeholder engagement  
2. Stakeholder Engagement and Knowledge Sharing - Enhanced stakeholder engagement, Organized knowledge sharing events 
3. Catalyze ESCOs participation - A design note and business plan for several types of ESCOs, customized to address Vietnam’s needs and contexts

Outcomes:

Output 1:

• Generation of pipeline projects
• Technical and business model studies for selected pipeline projects 
• Enhanced stakeholder engagement

Output 2:

• Enhanced stakeholder engagement
• Organized knowledge sharing events

Output 3:

• A design note and business plan for several types of ESCOs, customized to address Vietnam’s needs and contexts

Outcomes:

• Improved efficiency: The proposed activities will contribute to increasing the efficiency of the EE sector in Vietnam through a cost-effective scale up of EE by promoting a coordinated pipeline development mechanism, applicable technologies/business model applicable to Vietnam’s circumstance, and market participation. These measures will reduce the risks of EE projects for not meeting the financial hurdle and increase the overall efficiency of the sector.  
• Greater resilience:  The Bank’s Low Carbon Study has demonstrated that Vietnam could save up to 11 GW of new generation capacity by 2030 if comprehensive demand-side EE investments are carried out. Helping Vietnam promote industrial EE will reduce the country’s long-term dependency on imported fuels and its exposure to volatile world market prices, therefore enhancing country’s energy resilience.  
• Increased competitiveness: EE improvement will work as a hedge that contributes to dampening tariff fluctuations for industrial consumers, thereby providing increased security on long-term energy costs. A greener trend for industry development is important to attract investments and will contribute to country’s competitiveness. 

Collaboration with K-Partners and Others:

• The Ministry of Trade, Industry and Energy of Korea (MOTIE)
• Korea Energy Agency (KEA), the key institution in implementing relevant policies and ESCO businesses
• Large industrial companies like Samsung, Hyundai and POSCO
• Other in-country donors such as USAID, GIZ, EU, DANIDA