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The pilot Voluntary agreement on energy efficiency and ESCO model in Vietnam


On January 6th 2017, the workshop on Introduction of the pilot Voluntary agreement on energy efficiency and ESCO model in Vietnam was organized by the General Directorate of Energy in Phu Quoc city, Kien Giang province.

On January 6th 2017, the workshop on Introduction of the pilot Voluntary agreement on energy efficiency and ESCO model in Vietnam was organized by the General Directorate of Energy in Phu Quoc city, Kien Giang province. 

Participants of the workshop were representatives of the General Directorate of Energy - the Ministry of Industry and Trade (MOIT), the Clean Production and Energy Efficiency (CPEE) Project, the World Bank,  energy service companies, large energy-consuming enterprises, the local consultant and energy efficiency-related associations. 

Mr. Trinh Quoc Vu, Director of the Department of Science Technology and Energy Efficiency - MOIT 

The CPEE Project, which is sponsored by the World Bank and Global Environment Fund (GEF), has been implemented since 2011 under the MOIT's management. 

In the framework of the CPEE Project, the MOIT deploys the pilot Voluntary agreement (VA) program and disseminates the energy service company (ESCO) model in Vietnam. 

The VA program and ESCO model aim at promoting energy-saving activities in the industry in Vietnam; helping enterprises improve their energy efficiency, reduce production costs, improve their competitiveness and abide by legal provisions. 

The VA program 

Joining the VA program, enterprises commit to fulfilling their goal of  reduction of energy consumption in production processes on the basis of the MOIT's support. The VA program is deployed on the national scale. Industrial enterprises, large energy-consuming enterprises, enterprises having aspiration of making and implementation of the long-term and sustainable plan on energy efficiency in the production are both entitled to join the VA program. 

Enterprises participating in the VA program shall receive the MOIT's certificate and trophy if they carry out energy efficiency solutions well. Additionally, they shall be entitled to image promotion in events organized by the MOIT, training course participation in order to improve their energy efficiency-related  awareness and capacity. Especially, they shall enjoy the free first  energy audit helping them evaluate their energy usage situation, determine energy efficiency solutions then make plan on implementation of such solutions.

The VA program lasts for 10 years including 2 years being the duration of the pilot one. After the pilot VA program ends, the MOIT shall evaluate its implementation and amend contents of agreements before scaling up the VA program in the future. 

The ESCO model 

An ESCO is a commercial business providing a broad range of energy solutions including designs and implementation of energy savings projects, retrofitting, energy conservation, energy infrastructure outsourcing, power generation and energy supply, and risk management in order to help customers improve energy efficiency. 

An ESCO shall provide use Energy Performance Contract (EPC) to provide services to customers. 

Subjects appropriate to ESCO project implementation are public lighting systems managed by the local government; administrative agencies, non-business agencies, state budget beneficiaries; industrial manufacturers, service suppliers. 

An ESCO plays an important role in the process of carrying out energy efficiency solutions. Deploying the ESCO model, enterprises are able to reach "green" solutions or entitled to equipment and technology renewal with the lowest initial investment costs and maximum efficiency. The ESCO solution also helps enterprises participate in national or international energy efficiency projects and contribute to environmental protection and climate change prevention. 

According to the statistics, there are about 100 energy efficiency service suppliers and energy efficiency consulting firms. However, the number of enterprises following the ESCO model is limited due to the lack of financial assistance mechanism for ESCO project development and implementation and no legal provision on mandatory energy efficiency investment. In addition, the distrust of customers and risks of energy efficiency  projects restrict the deployment of EPC projects in recent years. 

Participants of the workshop came to an agreement that state management agencies played an important role in scaling up the ESCO model in Vietnam. Besides, it was necessary to promote the dissemination of the ESCO model and EPC projects. 

Mr. Nguyen Dinh Hiep, Vice Chairman of the Vietnam Energy Conservation and Energy Efficiency Association (VECEA) said that with a view to promoting the ESCO model in the future, the MOIT had to improve ESCO model promotion policies; develop sustainable financial mechanism; develop the financial integration between enterprises, ESCOs and financial institutions; make local energy efficiency consulting firms/ energy efficiency service suppliers entitled to financial autonomy and organizing more training courses to improve their capacity. 

Ngoc Diep 


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