Giz2011 en Exploring Biogas Market Opportunities Vietnam

7/30/2019 Giz2011 en Exploring Biogas Market Opportunities Vietnam

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EXPLORING BIOGAS MARKET

OPPORTUNITIES IN VIETNAM

www.renewables-made-in-germany.com


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EXPLORING BIOGAS MARKET

OPPORTUNITIES IN VIETNAM


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Authors

Nguyen Duc Cuong et al

November 2011

Editor

Deutsche Gesellschaft fr InternationaleZusammenarbeit (GIZ) GmbH

On behalf of the

German Federal Ministryof Economics and Technology (BMWi)

Contact

Deutsche Gesellschaft fr Internationale Zusammenarbeit (GIZ) GmbHPotsdamer Platz 10, 10785 Berlin, Germany

Fax: +49 (0)30 408 190 22 253

Email: [email protected]: www.giz.de/projektentwicklungsprogrammWeb: www.exportinitiative.bmwi.de

This report is part of the Project Development Programme (PDP) South-East Asia. PDP South-East Asia is implemented by the DeutscheGesellschaft fr Internationale Zusammenarbeit (GIZ) GmbH on behalf of the German Federal Ministry of Economics and Technology(BMWi) under the renewables Made in Germany initiative. More information about the PDP and about renewable energy markets in

South-East Asia: www.giz.de/projektentwicklungsprogramm

This publication, including all its information, is protected by copyright. GIZ cannot be liable for any material or immaterial damages causeddirectly indirectly by the use or disuse of parts. Any use that is not expressly permitted under copyright legislation requires the prior consentof GIZ.

All contents were created with the utmost care and in good faith. GIZ assumes no responsibility for the accuracy, timeliness, completeness orquality of the information provided.


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Exploring Biogas Market Opportunities in Vietnam I

Content

INTRODUCTION 1

1. REVIEW AND ANALYSIS OF THE ELECTRICITY INDUSTRY IN VIETNAM 3

1.1. Power need and growth rate for 2001-2010 3

1.2. Electricity pricing 7

1.3. Power production and potentials to 2020 (next 10 years) 10

1.4. Existing power sources and projection for the next 10 years 11

1.5. Electricity market actors 13

1.6. Roadmap for the competitive electricity market 13

1.7. Electrical grid 15

2. UNDERSTANDING AND ASSESSING THE BIOGAS ENERGY MARKET IN

VIETNAM 16

2.1. Biogas sources in Vietnam 16

2.1.1. Biogas from domestic animals wastes 162.1.2. Biogas from municipal wastes 182.1.3. Biogas production from waste treatment processes (solid and liquid wastes) in specific food, foodstuffand beverage industries 19

2.2. Use of biogas in Vietnam 22

2.3. Overview of biogas projects in Vietnam 272.3.1. Small sized household biogas projects 282.3.2. Medium and large sized biogas projects 29

2.4. Information about partnership in biogas development between Vietnam and foreign parties 332.4.1. Government and foreign organization funding for demonstration projects or policy making and marketpromotion; 332.4.2. Partnership type (ii) taking part in waste treatment methane collection projects; and (iii) provision ofequipment and technology. 36

2.5. Economics of biogas projects 372.5.1. Investment cost 37

2.6. Available biogas technologies in Vietnam 452.6.1. Popular technologies in Vietnam 45

2.7. Information about local companies that are potential candidates as partners with German firms in

biogas development 52

3. REVIEW, RESEARCH AND FORMATION OF THE LEGAL FRAMEWORK FOR

THE DEVELOPMENT OF RENEWABLE ENERGY/BIOGAS IN VIETNAM 53


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Exploring Biogas Market Opportunities in Vietnam II

3.1. Summary of legislative instruments focusing on renewable energy/biogas 53

3.2. Barriers to renewable energy development in general and biogas energy 58

3.3. Trends and pathways for institution, regulatory arrangements, economic arrangements and

frameworks for international cooperation in the biogas energy market 61

4. RECOMMENDATIONS FOR POTENTIAL PROJECTS IN THE BIOGAS

ENERGY TECHNOLOGY MARKET 65

4.1. Identifying the needs for specific technologies, services, products and opportunities for Vietnam

Germany partnership 65

4.2. Information about market entry opportunities and procedures for German companies interested in

doing business (import/export) or investment (getting license, partnership) in the field of biogas energy 67

4.3. Background information about relevant local institutions and contact information for German

companies reference also, information about the role and responsibility of different stakeholders andagencies in the biogas field 69

APPENDICES 75

Appendix 1. Industrial scale alcohol producers 75

Appendix 2. Industrial scale aquatic production and processing facilities 76

Appendix 3. Industrial scale sugar production and processing facilities 80


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Exploring Biogas Market Opportunities in Vietnam III

ministrey

List of Tables

Table 1.1. Gross capacity of power plants by 2010, by owners ................................................. 3Table 1.2. Electricity retail prices for 2011 ................................................................................ 8Table 1.3. Tariff with avoidable costs for 2011 ....................................................................... 10Table 2.1. Solid waste from domestic animals, 2010 ............................................................... 17Table 2.2. Methane amount from domestic animals wastes, 2010 ......................................... 17Table 2.3. Municipal waste generation in Vietnam, 2010 (million tons) ................................. 18Table 2.4. Theoretical gross biogas potentials, 2010 ............................................................... 21Table 2.5. Summary of expected electricity generation capacity from biogas and municipalwastes to be added to the grid (MW) ........................................................................................ 22Table 2.6. Gas consumption by system size ............................................................................. 24Table 2.7. Classification of biogas systems as recommended by local prestigious institutionsin terms of biogas technology ................................................................................................... 28Table 2.8. Medium and large sized biogas projects ................................................................. 31Table 2.9. Projects with a foreign partner in medium and large sized biogas collection ......... 36Table 2.17. Background information of potential investors and partners in biogas development.................................................................................................................................................. 52Table 3.1. Summary of legal frameworks conducive to renewable energy development in

Vietnam .................................................................................................................................... 54Table 3.2. Barriers and interpretation ....................................................................................... 58Table 3.3. The legal framework for the development of biogas/renewable energy ................. 62Table 4.1. Potentials and ability to develop biomass and biogas energy ................................. 67Table 4.2. Gross capacity of renewable electricity connected to the grid in use (MW) ........... 67


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Exploring Biogas Market Opportunities in Vietnam IV

List of Figures

Figure 1.1. Power need and growth rate, 2001-2010 ................................................................. 3Figure 1.2. Distribution of sources, by owner ............................................................................ 6Figure 1.3. Distribution of sources, by supply mode and fuel ................................................... 6Figure 1.4. Distribution of power sources by 2020 .................................................................. 12Figure 2.1. Current uses of biogas ............................................................................................ 24Figure 2.2. Biogas lamp (illustration) ....................................................................................... 25Figure 2.3. Biogas-fired power generating system ................................................................... 26Figure 2.4. KT 1 and KT2 models ............................................................................................ 28Figure 2.5. Energy Institutes floating cover biogas system .................................................... 46

Figure 2.6. Energy Institutes fixed dome cover biogas system ............................................... 46Figure 2.7. Can Tho Universitys biogas system design .......................................................... 47Figure 2.8. Biogas system, model KT-2 ................................................................................... 47Figure 2.9. VACVINAs biogas system ................................................................................... 48Figure 2.10. RDACs design .................................................................................................... 48Figure 2.11. Vinyl bag-typed biogas system ............................................................................ 49Figure 2.12. 5,000 m3 covered anaerobic lagoon in Thai Nguyen ........................................... 50Figure 2.13. UASB + SMAG anaerobic tank at Lam Son sugarcane plant, Thanh Hoa ......... 50Figure 2.14. EGSB and SAR_T anaerobic tank under construction in Quang Ngai ................ 51Figure 4.1. Balance of demand and supply of primary energy................................................. 66


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Exploring Biogas Market Opportunities in Vietnam V

Currency

1 USD = VND 20.83 (Sep 2011)1 EUR = VND 28.384 (Sep 2011)

Measurement

W Watt Wp Watt peak Wh Watt hourkW Kilowatt kWp Kilowatt peak kWh Kilowatt hourMW Megawatt MWp Megawatt peak MWh Megawatt hourGW Gigawatt GWp Gigawatt peak GWh Gigawatt hour


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Exploring Biogas Market Opportunities in Vietnam VI

List of Acronyms

ADB Asian Development Bank

BF Biofuel

BG BiogasCDM Clean Development Mechanism

CERs Certified Emission Reductions

EGSB Expansion Granular Sludge Bed Digester

EI Energy Institute

EU European Union

EVN Electricity of Vietnam Corporation

GDP Gross Domestic Product

GG Greenhouse gas

GW GigawattHCMC Ho Chi Minh City

HDPE High density Polyethylene

IPP Independent Power Producer

JICA Japan International Cooperation Agency

MARD Ministry of Agriculture and Rural Development

MoIT Ministry of Industry and Trade

MRD Mekong River Delta

MWe Megawatt electrical

N&RE New and renewable energyODA Official development aid

PDD Project design document

PPA Power purchase agreement

REAP New & Renewable Energy Action plan

toe Ton of oil equivalent

UASB Up flow Anaerobic Sludge Blanket

WB World Bank


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Exploring Biogas Market Opportunities in Vietnam 1

0.Introduction

Development goals and visions of Vietnams national electricity industry in the foreseeable

future are reflected in the Prime Ministers Decision 1208/Q-TTg, dated July 12, 2011, in approvalof the Master plan for the development of national electricity industry in Vietnam for 2011-2010 andvision to 2030, that available renewable energy sources in Vietnam will be prioritized and promotedto increase the proportion of power output from renewable energy from the current marginal level to5.6% and 9.4% in 2020 and 2030 respectively (by rated capacity and not including hydropowergeneration of 30 MW output or higher).

The development strategy for renewable energy in Vietnam to 2030 and vision to 2050, as wellas the Master plan for the development of renewable energy in Vietnam for 2011-2020 and vision to2030 (drafts1), have also been conceived and are currently being reviewed by the Government. In thesedraft strategy and master plan for renewable energy, biogas energy of various sources are viewed as a

renewable energy of priority, as in addition to grid power production (about 439 MW), biogas electricitywill also be developed for off-grid residential areas (about 12,000 households) and use of heat generatedfrom biogas will be promoted for household cooking and agroforestry processing. About 10 million m 3of biogas instruments are expected to be developed in different types and sizes for power and heatgeneration as well as cogeneration.

Vietnam is a developing country with favorable geographic position and climate, whereeconomic activities rely heavily on agroforestry and animal husbandry. This is an advantage that givesVietnam access to bounteous renewable energy resources of massive reserves that can be effectivelyput to use to generate enough energy to meet local needs, as a replacement to fossil fuel whilecontributing to environmental protection at the same time (minimizing emission of greenhouse gas,

acid rain gases, dust and so on).The Project Development Programme (PDP) South-East Asia of the German Development

Cooperation Agency (GIZ), on behalf of the German Federal Ministry of Economics andTechnology (BMWi), aims to promote bilateral cooperation and experience exchange betweenVietnamese and German companies. This study is part of the PDP South-East Asia Project andits key purpose and focus is to capture an overview of the status and potentials of producingand utilizing biogas in Vietnam, as well as identify the opportunities and challenges to thedevelopment of a biogas technology market. To be specific:

Capturing an overview of Vietnams electricity industry

Understanding the biogas market in Vietnam Reviewing the available legal framework for renewable energy development in Vietnam

Making recommendations on the pathway for development of biogas energy technology andmarket.

This report has four parts:

Part 1. Overview of Vietnams electricity industry. This section takes a snapshot of currentpower consumption, power sources, needs and power sources development targets in Vietnam for thenext decade (to 2020). It then lists electricity prices by categories, including prices of micro-

1 Apr. 2011, the Ministry of Industry and Trade has submitted the draft to the Government for review and is awaitingapproval.


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hydropower ( 30 MW) and wind power sources. The roadmap for a competitive power market andentry in this market is also studied and documented.

Part 2. Understanding the biogas market in Vietnam. The discussion concentrates on theanalysis and assessment of the production and use of biogas as well as the status of previous and on-

going biogas projects. This is followed by a review of the efficiency and existing types of technologyin use. Finally, the section gives an update and consolidation of information on various businessactivities that are going on in the biogas field, followed by discussions on technology applicationpotentials.

Part 3. Review of the conducive legal framework for renewable energy development inVietnam. This part gives an outline of related legislative instruments including strategies, developmentplans and policies influencing the development of renewable energy/biogas energy. Opportunities andbarriers are also identified and explained.

Part 4. Recommendations on the future development of biogas energy technology and market.The need for biogas, potentials for technology development and the governments biogas-fire powergeneration ambitions are compiled and analyzed. Investment opportunities, market information andpotential partners for the development of a biogas market in Vietnam are also studied and discussed.

Despite huge efforts in gathering information and data about biogas in Vietnam asdemonstrated throughout the report, drawbacks in terms of data sources and expected information areunavoidable. Explanations for such shortcomings include: (i) additional funding for sampleverification and examination in the field and interviews is recommended, (ii) materials, data orstatistics about power sources, consumption levels, technologies are not readily available (noinstitutions are formally responsible for data collection, update and reporting); getting access to andcollecting information from reports and studies in this domain in Vietnam is now a challenge,

including even data from both local and international partners. As biogas projects are often small andmedium-sized enterprises (Groups B and C2 projects), they are only subject to sub-national(provincial) investment licensing. Consequently, it needs some time to get access to information fromprivate investors and local regulators, as hesitance sometimes exists in the discussion and informationproviding process.

2 Medium and small sized categories B, C or even below C projects, with total invested capital of less than VND 1,500billion (about US$ 73 million).


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1. Review and analysis of the electricity industry in Vietnam

1.1.Power need and growth rate for 2001-2010In the last decade (2001-2010), commercial electricity sales to economic sectors and

household use were on sustained increase at a high growth rate of about 14.5% on average.Commercial electricity sales volume increased from 31.1 billion kWh in 2001 to 99.1 billion kWh in2010, which is more than three times higher in just 10 years. Commercial power output in 2010 (99.1billion kWh) was 14.3% higher than in 2009 (a 2.5 times growth compared to GDP). The Figurebelow illustrates electricity need and growth in Vietnam between 2001 and 2010.

Figure 1.1. Power need and growth rate, 2001-2010

Statistics show that at the end of 2010 the total rated capacity of all power sources in Vietnamwas 21,542 MW, including 11,848 MW from EVN (55%) and 9,694 MW of non-EVN output (45%,including joint ventures between EVN and other partners). Details of power sources as of 2010, byowners, fuels and technologies are described in the following tables and figures.

Table 1.1. Gross capacity of power plants by 2010, by owners

No Power plant GeneratorsRated capacity

(MW)Owner

Gross capacity 21,541.5

I Hydropower 7,633

1 Sn La 1 400 EVN2 Ho Bnh 8 1920 EVN

3 Thc B 3 120 EVN

4 Tuyn Quang 3 342 EVN

5 Bn V 2 320 EVN

6 Qung Tr 2 64 EVN

7 A Vng 2 210 EVN

8 Ca t 2 97 JV with Vinaconex9 Vnh Sn 2 66 EVN

Nhu cu in 2001 - 2010

17.0%

15.5%

13.7%12.9%

14.4%

13.0% 12.8% 12.8%

14.3%

0

20,000

40,000

60,000

80,000

100,000

120,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Nhucuin(GWh)

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Tc

tng(%)

Nhu cu in

Tc tng

Power need for 2001-2010

Growthrate(%)

Powerdemand(GWh)


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(MW)Owner

10 Hinh River 2 70 EVN

11 Pleikrong 2 100 EVN

12 Ialy 4 720 EVN

13 S San 3 2 260 EVN

14 S San 4 3 360 EVN

15 KrongH'nag 2 64 Joint venture

16 Bun Tua Srah 2 86 EVN

17 Tranh River 2 1 95 EVN

18 Srepok 3 2 220 EVN

19 Srepok 4 2 80 EVN

20 Bun Kup 2 280 EVN

21 Hng in 2 54 Joint venture

22 Ba H River 2 220 EVN

23 Tr An 4 400 EVN

24 a Nhim 4 160 EVN

25 Thc M 2 150 Joint venture

26 Hm Thun 2 300 EVN

27 a Mi 2 175 EVN

28 i Ninh 2 300 EVN

IICoal-fired

thermoelectricity2,745

1 Ph Li 1 4 440 Joint venture

2 Ph Li 2 2 600 Joint venture

3 Ung B 2 105 EVN

4 Ung B extension 1 300 EVN

5 Ninh Bnh 4 100 Joint venture

6 Haiphong 2 600 EVN

7 Qung Ninh 2 600 EVN

IIIFuel oil-fired

thermoelectricity537

1 Thc 3 169.5 EVN

2 Cn Th 1 37.5 EVN

3 Mn 1 330 EVN

IVSteam turbines +

HRSG systems3,197


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(MW)Owner

1 B Ra 8GT+S9+S10 388 Joint venture

2 Ph M 21 4GT+ST23,26 949 EVN

3 Ph M 1 3GT+S14 1140 EVN

4 Ph M 4 2GT+ST3 468 EVN

5 Thc 4GT 102 EVN

6 Cn Th 4GT 150 EVN

V

Diesel-fired and

micro hydropower

plants

500 Private

VI Non-EVN 6,929.5

1 Nm Chin 2 32 Northwest PowerDevelopment JS Co.

2 Bn Cc 3 18Que Phong Hydropower JS

Co.

3 Na Dng 2 111 TKV

4 Cao Ngn 2 115 TKV

5 Cm Ph 2 600 TKV

6 Sn ng 2 220 TKV

7 Bnh in 2 44Binh Dien Hydropower JS

Co.8 Cn River 3 63

Geruco-Song ConHydropower JS Co.

9 S San 3A 2 108 Joint venture

10 Za Hng 2 30 Za Hung JS Co.

11 Bc Bnh 2 33Vietnam Power

Development JS Co.

12 a Dng 2 2 34Southern Hydropower JS

Co.

13 Cn n 2 78 Da River Co.

14 Srokphumieng 2 51 IDICO

15 Hip Phc 3 375 Foreign investors

16 Formosa 1 150 Foreign investors

17 Ph M 3 2GT+ST3 740 Foreign investors

18 Ph M 22 2GT+ST3 740 Foreign investors

19 Nhn Trch 1 2GT+ST3 465 PVN

20 Nhn Trch 2 1GT 250 PVN

21 C Mau 1 2GT+ST1 771 PVN

22 C Mau 2 2GT+ST4 771 PVN


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(MW)Owner

23 Amata 2 13.5 Foreign investors

24 Vedan 2 72 Foreign investors

25 Bourbon 2 24 Foreign investors

26Ph M ammoniumnitrate

1 21 PVN

27 Import from China 1000 Imported

Figure 1.2. Distribution of sources, by owner

Figure 1.3. Distribution of sources, by supply mode and fuel

By the latest update, the total added power capacity in 2010 was 2,546 MW. Thissupplementary output however was not available until the end of the year, and as a result, the actualconsumed output from added sourced in 2010 was modest.

Phn loi theo ch s hu

EVN

55%

T nhn2%

C phn11%

TKV

5%

NT nc ngoi10%

PVN11%

Nhp khu5%

Khc

1%

Phn loi theo loi hnh sn xut

Thuin38%

Nhit in chykh

2%

Nhit in than18%

Nhit in du3%

Turbine kh

32%

Nhp khu5%

Khc

2%

Hydropower38%

Others2%

Imported5%

Steamturbines

32%

Fuel gas-firedthermoelectricity

3%

Coal-firedthermoelectricity

18%

Gas-firedthermoelectricity

2%

Distribution by production mode

Distribution by owner

Foreigninvestors 10%

Others

1%

Imported

5%

Jointventures

11%Private

2%


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1.2.Electricity pricingIn the last four years, since the introduction of the Prime Minister Decision 26/2006/Q-TTg

in December 2006, setting the roadmap for marketization of electricity prices, the country has seenfive rounds of electricity price adjustment. The first round was on Jan. 1, 2007 when the averageelectricity price climbed to VND 842/kWh, 7.6% higher than 2006. From that point on, the electricityprices kept increasing over time by about 5%-10% each year. Typically, in the price rise spree ofMarch 1, 2011, the electricity prices saw the highest climb rate at 15.28% to reach VND 1,242/kWh,equivalent to 6 US cents by VCBs exchange rate of Sep. 30, 2011.

Instead of being traditionally adjusted once a year on March 1 every year, the Prime MinistersDecision 24/2011/Q-TTg of Apr. 15, 2011 now paves the way for electricity price changes every threemonths on average. Circular 31/2011/TT-BCT, dated Aug. 19, 2011 of the Ministry of Industry andTrade provides the guidelines on how electricity prices are changed based on the variance of three inputcomponents: (i) fuel costs, (ii) exchange rate, and (iii) the composition of power output transmitted on

the grid from different sources.

3

In addition, the directive also makes clear that this automatic pricingsystem from Sep. 1, 2011. The following section provides in brief information related to the PrimeMinisters Decision 24/2011/Q-TTg, Apr. 15, 2011 on market-based electricity pricing.

In case fuel costs and exchange rates at the calculating time deviate from the values used todetermine the current electricity prices and the composition of power output has changed compared tothe generation plan approved by the Ministry of Industry and Trade, causing sales prices at thecalculating time to be higher than the current levels by:

a) 5%, Vietnam Electricity may raise electricity prices by an equivalent margin once it hasapplied for such a raise and received approval of the Ministry of Industry and Trade;

b) more than 5%, Vietnam Electricity shall file a report to the Ministry of Industry and Trade

with a copy submitted to the Ministry of Finance for verification.After 15 business days since the Ministry of Industry and Trade reported to the Prime

Minister, whose reply is not received (or not yet received), Vietnam Electricity may automaticallychange electricity prices by a 5% limit.

Below is a list of current electricity prices for 2011.

3Changes in the distribution of power capacity can be explained by the increase of power output from coal, hydropower orgas and the cost differences of these electricity sources.


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Table 1.2. Electricity retail prices for 2011

Electricity retail prices for business uses

No Power supplyPrices

(VND/kWh)

Prices (US

cent/kWh)4

1 Power supply of 110 kV or higher voltagesa) Normal hours 1,043 5

b) Off-peak hours 646 3.1

c) Peak demand 1,862 8.94

2 Power supply of 22 kV to below 110 kV voltages

a) Normal hours 1,068 5.12



3 Power supply of 6 kV to below 22 kV voltages




4 Power supply of below 6 kV voltages




Electricity retail prices for irrigative water pumping

No Power supply Prices (VND/kWh) Prices (US cent/kWh)5

1 6 kV or higher voltagesa) Normal hours 956 4.6



2 Below 6 kVa) Normal hours 1,023 4.9



4 Vietcombank VND/USD exchange rate as of Sep. 30, 2011: USD 1 = VND 20,830.5 Vietcombank VND/USD exchange rate as of Sep. 30, 2011: USD 1 = VND 20,830.


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Electricity retail prices for public services

No Power supplyPrices

(VND/kWh)

Prices (US

cent/kWh)6

1Hospitals, daycare centers, nursery schools, primaryto high schools

a) Power supply of 6 kV or higher voltages 1,117 5.4

b) Power supply of below 6 kV voltages 1,192 5.7

2 Public lighting



3 Public services



Electricity retail prices for business uses:

No Power supply Prices (VND/kWh) Prices (US cent/kWh)7

1 22 kV or higher voltagesa) Normal hours 1,713 8.2b) Off-peak hours 968 4.6c) Peak demand 2,955 14.2

2 6 kV below 22 kVa) Normal hours 1,838 8.8b) Off-peak hours 1,093 5.2c) Peak demand 3,067 1.5

3 Below 6 kVa) Normal hours 1,862 8.9b) Off-peak hours 1,142 5.5c) Peak demand 3,193 15.3

Progressive electricity retail prices for household uses

No Monthly household consumptionPrices

(VND/kWh)

Prices (US

cent/kWh)8

1 50 kWh (poor and low income households) 993 4.82 0-100 kWh (middle income households) 1,242 5.93 101-105 kWh 1,304 6.3

4 151-200 kWh 1,651 7.95 201-300 kWh 1,788 8.66 301-400 kWh 1,912 9.27 401 kWh and above 1,962 9.4

Electricity retail prices for household use in rural areas, uplands and islands not covered by thenational power grid are approved by provincial level People's Committees, but not outside themaximum and minimum price range below:

6 Vietcombank VND/USD exchange rate as of Sep. 30, 2011: USD 1 = VND 20,830.7 Vietcombank VND/USD exchange rate as of Sep. 30, 2011: USD 1 = VND 20,830.8 Vietcombank VND/USD exchange rate as of Sep. 30, 2011: USD 1 = VND 20,830.


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a) Minimum price: VND 1,863/kWh (or 8.9 US cents/kWh)

b) Maximum price: VND 3,105/kWh (or 14.9 US cents/kWh).

Wind power tariff

Buyers are responsible to purchase the entire power output from wind power projects at theprice of VND 1,614/kWh at the point of delivery (exclusive of VAT; equivalent to 7.8 US cents/kWh).Power purchase prices are subject to changes of the VND/USD exchange rate.9

Tariff with avoidable costs for 2011 (attached to Decision 66/Q-TL, dated Dec. 31, 2010, of thehead of Electricity Regulation Administration).

Table 1.3. Tariff with avoidable costs for 2011

(VCB exchange rate as of Sep. 30, 2011: USD 1= VND 20,830)

Dry season Rainy season

Peak

demand

Normal

hours

Off-peak

hours

Peak

demand

Normal

hours

Off-peak

hours

Surplus

outputElectricity price

(VND/kWh)

North 603 590 561 529 498 484 242Central 573 567 563 481 468 460 230South 575 568 555 511 501 492 246

Rated price (for

all the 3 regions,

VND/kWh)

1,772

The average price with avoidable cost according to this list is VND 916/kWh (about 4.43 UScents/kWh). Nevertheless, this low price level can only be applicable to renewable energy projectsbeing micro hydropower plants with advantageous locations (proximity to roads and connectionnodes, and profuse water supply).

1.3.Power production and potentials to 2020 (next 10 years) For power production, the targets set in the master plan of electricity industry development for

2011-2020 and vision to 2030 are:

Sufficient supply to meet domestic need for electricity with generated and imported power

output by 2015 of about 194-210 billion kWh, and about 330-362 billion kWh by 2020; Priority given to the development of renewable energy sources for power production; and

increase of power output from these sources from a marginal level to 4.5% of the total poweroutput by 2020.

9By Vietnamese laws, the currency used in purchase and sales agreements within the Vietnam territory must be the VND.Accordingly, this Decision must clearly note that the electricity purchase price is in VND and at VND 1,641/kWh (when theDecision was released, the VND/USD exchange rate was 1614 : 7.8 = 20692, or USD 1 = VND 20,692). Adjustment ofelectricity purchase prices by VND/USD exchange rates variance is good for investors. This can be interpreted as in caseelectricity from a wind power plant is bought after the Decision release date and the exchange rate is higher than the above

mentioned rate, the investors selling electricity to EVN may use the exchange rate at the time of sales to set the sales price inVND/kWh. For example, in June 2012, a wind power investor sells electricity to EVN. The exchange rate at that time isVND 22000 for one USD. The wind-propelled electricity price in the agreement will then be 22000 x 7.8 = VND 1,716/kWh,not VND 1,614/kWh as original specified in the Decision.


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Generated and imported power capacity by 2020 is expected to be about 330 billion kWh,including 19.6% of hydropower, 46.8% of coal-fired thermoelectricity, 24.0% of gas-firedthermoelectricity (with 4.0% of LNG fuel), 4.5% of power generated from renewable energies,2.1% of nuclear power and 3.0% of imported electricity.

1.4.Existing power sources and projection for the next 10 yearsAs discussed in section 1.1 on retrospective power demand (2001-2010), it is known that at

present (Dec. 31, 2010), the gross rated capacity of all power sources in Vietnam is 21,542 MW andthe usable capacity is 19,735 MW.

The electricity demand in Vietnam will increase by nearly 3.3 times in the next decade, from100.071 billion kWh in 2010 to 194 billion kWh by 2015 and 330 billion kWh by 2020.10 Tosufficiently meet the power need for development and at the same time, enlarge reserved sources fromthe existing levels, key perspectives in developing power sources in Vietnam in the future include:

Balanced development of source capacity in the North, Central and South regions;

Expansion of reserved sources by 6%-7%, taking into account the risk of delay in theconstruction of power plants, often for 1-2 years;

Estimation of coal supply capacity and potential development of natural gas mines;

Increasing the proportion of coal-fired thermoelectricity in the Central and South;

Maintaining coal-fired power sources at less than 60% of the total source capacity;

Development of micro hydroelectricity and power sources from renewable energies atappropriate proportions;

Early introduction of pumped-storage hydroelectricity in the South to level the leverage graphfor thermoelectricity sources;

Development of nuclear power plants to relieve over time the dependence on fossil fuels;

Sustained increase of electricity import from Laos, Cambodia and China;

Promotion of BOT, BOO projects.

With these perspectives in mind, a pathway for the development of power sources in Vietnamin the next decade has been drawn and elaborated upon (based on the Prime Ministers Decision1208/Q-TTg, July 21, 2011):

Development of biomass electricity generation and co-generation so that by 2020, this sourceprovides a gross capacity of about 500 MW;

Upgrading the total capacity of wind power from the currently marginal level to about 1,000MW by 2020;

Priority given to hydroelectric sources, especially multipurpose projects, including floodcontrol, water supply, power production; raising the capacity of hydroelectric sources from thecurrent 9,200 MW to 17,400 MW by 2020;

Research and development conducted to put pumped-storage hydropower plants in operation,in sync with the development pace of the overall power system to improve efficiency: by2020, pumped-storage hydroelectricity to yield a total capacity of 1,800 MW;

10The Prime Ministers Decision 1208/Q-TTg, July 21, 2011, approving the national electricity development master planfor 2011-2020 and vision to 2030.


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Natural gas-fired thermoelectricity: by 2020, power sources using natural gas fuels to have acapacity of about 10,400 MW;

Coal-fired thermoelectricity: the available domestic coal supply is to be brought into full usefor the development of thermoelectric plants, where use of locally made coal will be preferred

for the North; by 2020, the total coal-fired thermoelectricity capacity is to reach about 36,000MW.

Development of nuclear power plants to help stabilize power supply in the future when localprimary energy sources become depleted; putting the first nuclear power generator in Vietnamin operation in 2020;

Development of power plants using liquidated natural gas (LNG) to diversify fuel sources forpower generation and maintain power and fuel gas security; by 2020, power sources usingLNG to have a capacity of about 2,000 MW;

Distribution of power sources: by 2020, the gross capacity of all power plants is expected to

reach about 75,000 MW, including 23.1% of hydropower, 2.4% of pumped-storagehydroelectricity, 48.0% of coal-fired thermoelectricity, 16.5% of gas-fired thermoelectricity(with 2.6% of LNG fuel), 5.6% of power generated from renewable energies, 1.3% of nuclearpower and 3.1% of imported electricity. Details are illustrated in the Figure below.

Figure 1.4. Distribution of power sources by 2020

C cu Cng sut ngun n nm 2020

in Htnhn

1.3%NLTT

5.6%

in Nhpkhu3.1%

Thy in23.1%

Thy in

tch nng2.4%

Nhit inthan

48.0%

Nhit inkht16.5%

Hydropower23.1%

Pumped-storage

hydroelectricity2.4%

Renewableenergies

5.6%

Nuclearpower1.3%

Coal-firedthermoelectricity

48%

Gas-firedthermoelectricit

y

Distribution of power sources by 2020

Importedelectricity

3.1%


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1.5.Electricity market actorsEVN is owning the majority of power source capacity and controlling the entire process of

power transmission, system operation, distribution and retailing to end-users.

In power generation, EVN owns or is holding the control stake of over 70% of the grossnameplate capacity of the entire system. The remaining is owned by other state-run groups orlarge companies such as Vietnam Petroleum Group, Vietnam Coal and Minerals Group, DaRiver Co., among others, foreign investors (in BOT, IPP approaches) and local private sectorinvestors in the IPP format. These power plants sell electricity to EVN under a long-termpower purchase agreement (PPA).

However, in accordance with the approved pathway, the electricity market in Vietnam in thenear future will come into form and develop in three stages:

i) electricity generation market

ii) wholesale electricity market, and

iii) retail electricity market.

The competitive electricity generation market will have a sole buyer. Electricity generatingagencies will sell their capacity through PPAs and competitive offering on the spot market. EVN-affiliated electricity distributors will be formed and restructured as independent business units.

In the foreseeable future (see details in section 1.6 below), the competitive electricitygeneration market will run in line with the set pathway. Participants in this market will include:

Competitive power generation entities: power plants with rated capacity of over 30 MWconnected to the national grid (except for wind power plants, geothermal power plants);

The sole electricity dealer: EVNs electricity purchase and sales company;

Regulator of the electricity system and market: National electricity system regulation center;

Provider of power measurement data collection and management services: Informationtechnology center, Electricity Information and Telecoms Company;

Provider of electricity transmission services: National electricity transmission company.

1.6.Roadmap for the competitive electricity marketPursuant to the Prime Ministers Decision 26/2006/Q-TTg, Jan. 26, 2006, endorsing the

roadmap and conditions for the formation and development of various stages of the electricity market

in Vietnam, the electricity market will be established and developed through three stages. Stage 1 (2005-2014): competitive electricity generation market

Stage 2 (2015-2022): competitive wholesale electricity market

Stage 3 (after 2022): competitive retail electricity market.

Each stage will comprise of two phases: pilot and full-fledged markets, to be specific:


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a) Phase 1, stage 1: pilot competitive electricity generation market (2005-2008).

A competitive electricity generation market will be developed between different power plantsof Vietnam Electricity Group (EVN) to experiment competition in power generation with onesingle buyer. Power plants, electricity transmission companies and electricity distributors

affiliated to EVN will be restructured as independent business units. Independent power producers (IPPs) not affiliated to EVN will continue to sell electricity to

EVN through subscribed long-term power purchase agreements (PPAs).

At the end of the piloting phase, major power plants playing key roles in the existing powersystem belonging to EVN will be converted to IPPs as independent state-owned companies,while the remaining plants are converted to independent power producers in the form of joint-stock companies to prepare for a full-fledged competitive electricity generation market.

b) Phase 2, stage 1: full-fledged competitive electricity generation market (2009-2014).

The electricity generation market will be deemed full-fledged once the preconditions for this

phase are met. IPPs not owned by EVN will be allowed to offer to sell to get a full-fledged competitive

electricity generation market started (with one single buyer). Power generating entities willsell to the market through PPAs and competitive offers in the spot market in a two-spongedallocation scheme decided for each entity by the Electricity Regulation Administration.

c) Phase 1, stage 2: pilot competitive wholesale electricity market (2015-2016).

The wholesale electricity market will be piloted once the preconditions for this phase are met.

A number of distributors and major buyers are selected to pilot a competitive wholesaleelectricity market. Some new wholesalers will be formed to promote competition in the sales

and purchase of electricity. Existing electricity transmission companies will be merged to forma single national electricity transmission company under EVN. Distributors, system operatorsand market transaction operators will continue to work under EVN.

d) Phase 2, stage 2: full-fledged competitive wholesale electricity market (2017-2022).

The competitive wholesale electricity market will be deemed full-fledged once thepreconditions for this phase are met.

Existing EVN-attributed electricity distributors will be converted to independent companies(state-owned or joint-stock companies) to buy electricity directly from power generatingentities and in turn, power generating entities will also compete to sell electricity to thesebuyers. Wholesalers also participate in the competition to sell to distributors and major buyers.

) Phase 1, stage 3: pilot competitive retail electricity market (2022-2024).

The competitive retail electricity market will be piloted once the preconditions for this phaseare met.

A number of distribution grid areas of appropriate sizes will be selected for the pilot. Based onthe consumption level determined by the Electricity Regulation Administration, buyers mayselect power suppliers they see fit (electricity retailers). The electricity retailing function ofdistributors selected for the experiment will be separated from the distribution gridmanagement and operation function. Electricity retailers will compete to sell electricity toindividual end-users and buy electricity from wholesalers.

e) Phase 2, stage 3: full-fledged competitive retail electricity market (from 2024). Based on the consumption level determined by the Electricity Regulation Administration,

electricity users nationwide may select power suppliers they see fit (electricity retailers) or buy


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directly from the electricity market.

Entities and individuals meeting the requirements for power supply activities are allowed toform new electricity retailers to stay competitive in the retailing domain. These retailers maybuy electricity from power generating entities or the electricity market to sell retail to users.

1.7.Electrical gridThe existing electrical power transmission grid in Vietnam is running at 500 kV, 220 kV and

110/66 kV voltages. A 500 kV transmission line links the electrical system of the three regions (North,Central and South). 220 kV power lines now cover the entire country with a gross length of about8,500 km (as of 2010) and the total length of the 110/66 kV is about 12,500 km.

General assessments of the development of the electrical grid in Vietnam to 2010 indicate thatwhile the transmission grid has been extensively developed, only about 50% of the set targets havebeen achieved, where only 41% of the 500 kV grid and 50% of the 220 kV grid have been developed.Causes of the delay include: funding constraints, hindrances in site clearance, increasing materialcosts, poor contractors capacity and so on.

In the future (2011-2020), the local electrical power transmission grid will be furtherdeveloped to meet the needs of:

Having a reliable electrical grid for supply and transmission of electrical power and reductionof power loss in transmission;

Connecting electrical centers nationwide into an uniform electrical system;

Developing the 220 kV and 110 kV grids to meet transmission needs when different sourcesare put in use;

Designing an electrical grid scheme with high reserve level and flexibility to supply andtransmit electricity safely and reliably, meeting standard quality requirements (voltage andfrequency).


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2. Understanding and assessing the biogas energy market inVietnam

2.1.Biogas sources in Vietnam

Vietnam is a developing agricultural country, with a sustained high annual average GDPgrowth rate (of about 7%) for the last 10 years. Apart from achievements in living conditions andeconomic development, Vietnam is encountering various issues of energy supply and environmentalprotection amid the current climate change. Wastes and disposed of substances from households andthe processes of industry, agriculture, forestry production are emerging as a pressing concern thatneeds a harmonized and urgent response, both at the macro (policies, solutions etc.) and micro(technology, equipment etc.) levels, to efficiently tackle the sources of waste emission and solve theproblems of pollution, and at the same time generate energy for sustainable development.

One of the technologies that may serve to both aggressively tackle wastes to meetenvironmental standards and create energy sources in place of fossil fuels such as coal and oil, and hasbeen used in Vietnam as far back as in 1960 is the biogas technology.

With a conducive climate and as an agricultural country with high GDP growth, Vietnam hasa very diverse material source for biogas production, from domestic animals wastes, human wastes towastes from such industries as food, foodstuff and beverages processing. To be specific:

2.1.1.Biogas from domestic animals wastes

Domestic animals wastes (livestock, poultry excrements) are being used to produce biogas inVietnam. The biogas output depends on the number and type of domestic animals and ability to gatherwastes. In Vietnam, domestic animals with large numbers are pigs, cows and bulls, buffalos andpoultry such as chicken, ducks and so on. Other domestic animals like horses, goats, sheep, amongothers only take up a small share compared to the afore mentioned animals.

In 2010, there were about 27.4 million pigs, 5.9 million cows and bulls and 2.9 millionbuffalos, and some 300 million of various types of poultry.

Every year, the domestic animal herd discharges nearly 100 million of solid wastes, a coupleof hundreds of millions of liquid wastes and multiple millions of gaseous wastes. 11 Domestic animalswaste treatment is therefore receiving growing interest from public regulators, the civil communityand livestock farmers.

The total waste amount is estimated based on empirical data and actual measurement12,

compiled and illustrated in the following Table.

11The Ministry of Education and Training, Agriculture University No. 1, 2009, Report at the Workshop on breeding wastes:status and solutions, Hanoi, Nov. 26-27, 2009.12Energy Institute, 2005, Assessment of biogas energy potentials in Vietnam.


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Table 2.1. Solid waste from domestic animals, 2010

Livestock & poultryNumber(million)

Daily discharged wasteamount* (kg/animal/day)

Waste amount(million tons/year)

Buffalo 2.9 18-25 19-26(Average: 22.5)

Cow and bull 5.9 15-2032-43

(Average: 37.5)

Pig 27.4 1.2-4.012-40

(Average: 37.5)

Poultry 300 0.18-0.3419-37

(Average: 28)Total 82-145

Average 113.5Source: Statistics Yearbook 2010, (*) Animal Husbandry Administration, Netherlands Development Agency,

Apr. 2007, Training material ..., Studying team.

Biogas (with about 60% being methane) from domestic animals wastes can be gathered andused for energy generation with appropriate digester instruments and technology. The potential biogassources from domestic animals wastes are estimated based on domestic animal data in Table 2.1above (Statistics Yearbook 2010), and an experimental formula13 compiled and presented in thefollowing Table.

Table 2.2. Methane amount from domestic animals wastes, 2010

AnimalDaily gas volume*

(liter of gas/kg of fresh materials)Biogas output

(million m3/year)

Average biogas

output

(million m3

/year)

Percentage

(%)Buffalo 15-32 335-720 527.5 10.93

Cow andbull

15-32 562-1200 881 18.26

Pig 40-60 1500-2250 1875 38.87

Poultry 50-60 1400-1680 1540 31.94

Total 3797 - 5850 4823.5 100

Source: + (*) Animal Husbandry Administration, Netherlands Development Agency, Apr. 2007, Trainingmaterial ... Studying team (methane takes up 60% of the biogas share).

13The biogas potentials are reviewed by the methane output that can be generated in a year. The annual potential biogasoutput from breeding wastes is calculated using the following formula:Ki = Si x Ri x Ti x Ci x Hi

where,Ki potential biogas output from the ith wasteSi number of ith livestock headcountsCi Dry matter content (%) of ith materialHi gas generation efficiency of ith material based on dry matter content.

Ti byproducts that can be used for biogas productionRi annual manure discharge of a livestock individual. This parameter is identified through surveys or availabledata for the area. To estimate the potentials, an assumption used is 100% of input materials are collected. With existingtechnology level, up to 75% of input materials are digested and hence, Ti= 75%.

Ci and Hi are data specific to the target area and also verified in laboratories.


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As seen above, the current volume of animal husbandry waste in Vietnam may serve to createnearly 5 billion cubic meters of biogas a year if processed by different digesters. Biogas has a calorificvalue of about 20MJ/m3 and is a very good fuel for electricity generation or supply of heat for suchinternal production purposes as burning and drying in various industrial and agricultural processes or

sales of electricity to the national grid as well as to adjacent household energy users.2.1.2.Biogas from municipal wastes

In addition to domestic animals wastes, biogas can also be collected through urban wastetreatment. Municipal wastes in Vietnam may be grouped in four categories household, construction,industrial and medical wastes. Normally, human wastes include those emanating from individualhomes, commercial facilities, offices and market places.

The outstanding human wastes for each city may be calculated using the following formula:

MSW = P WGR 365 1000

where, MSW is the amount of municipal solid waste (tons/year), P is the citys population

(people), WGR is the per capita waste generation rate (kg/person/day), 365 is the number of days in ayear, and 1000 is the conversion factor from kilogram to ton.

According to the Vietnam Environmental Development 2004 report, generated waste in 2003was 12.8 million tons, 50% of which (6.4 million tons) from urban lives. The per capita wastegeneration rate is in this case 0.84 kg/person/day, and is expected to be 0.95 kg/person/day by 2010.Municipal waste volumes in Vietnams cities are described in the following Table.

Table 2.3. Municipal waste generation in Vietnam, 2010 (million tons)

City 2005 2010

All cities in Vietnam14 7.34 10.54

Hanoi15 1.15 2.01

HCMC 2.37 3.15

Haiphong 0.65 0.83

Da Nang 0.28 0.40

Can Tho 0.37 0.44

Municipal wastes may be used to generate electricity by landfill gas collection technologies(using a landfill to collect biogas as already done in HCMC, at Go Cat dumping ground, with a poweroutput of 2.4 MW).

As seen in the above Table, by 2010, municipal solid waste accumulated from all Vietnamcities will be about 10 million tons. The five largest cities in Vietnam (Hanoi, HCMC, Haiphong, DaNang and Can Tho) account for 67.6% of that amount (6.7 million tons). Aware of this, in the near-term future, the government will focus on using these municipal waste sources for electricityproduction.16

14The per capita waste generation rate for all municipal areas was 0.9 kg/person/day in 2005 and 0.95 kg/person/day in 2010.

15 Waste generated in 2010 was attributed to the new Hanoi area.16 Source: http://www.xaluan.com/modules.php?name=News&file=article&sid=306212, 11th Southern urban area andindustrial zone environment Conference, 2011, Nov. 4, 2011, in Binh Duong.


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It is very difficult to estimate the power output generated from burning methane collectedfrom landfills, since it depends on the specific technology, landfill techniques used, composition,physical properties (types and sizes of wastes, water contents and specific weight), and chemicalproperties of the wastes (vaporizing composition, fixed carbon content, carbon and nitrogen contents,

calorific value and some other chemical components). Even so, the volume of methane collected fromone ton of waste a year using a normal landfill technology may still be roughly calculated at 15-25liters of gas/kg of waste a year or 100 tons of waste (with 50%-60% organic matters) may generate 1-1.5 MWh of electrical power.17

2.1.3.Biogas production from waste treatment processes (solid and liquid wastes) in specificfood, foodstuff and beverage industries

Another considerable useful biogas source is from waste treatment processes in specific food,foodstuff and beverage industries.

From cassava starch plants: Vietnam cassava production output in 2010 was about 8.5million tons. About 30% of this amount was processed in major facilities. In recent years, Vietnamscassava processing capacity has seen impressive improvements. A large number of cassava isprocessing projects being built and developed. There are now about 60 cassava starch processingplants of industrial scale in operation with an yearly gross capacity of more than 0.5 million tons ofcassava starch, consuming nearly 2.5 million tons of fresh cassava or 21% of the total cassava output.This is double the number of plants and three times the capacity from five years ago (see a list ofmajor plants in Appendix 1).

Cassava processing discharges a huge volume of liquid and solid wastes. Management oftheses wastes is compulsory and must be strictly controlled to uphold environmental standards. Todate, some plants have or are going to install methane collection systems in their production chain.

When this is done, the collected methane gas will be used for generation of energy such as being fuelfor industrial kilns to provide heat for product drying and electricity generation (see more informationon the Intimex project in Thanh Chuong district, Nghe An, Green Fields project in Quang Nam andother cassava starch plants in the section below).

From alcohol and beverage factories: Similar to cassava starch processing plants, theproduction and brewing of alcohol and beverages discharge a large amount of solid and liquid wastes.In addition to the imperative requirement for a concentrated waste treatment facility, combinedproduction of biogas has also been considered by the factories (see more information about beerbreweries in Appendix 2).

From aquatic products (shrimp, fish etc.) processing plants: Enormous liquid and solid

amounts of wastes from aquatic products processing needs to be managed. A number of integratedaquatic products processing projects adopting the Clean Development Mechanism (CDM) are beingreviewed in aquatic products processing centers in Mekong River Delta provinces, for example theCDM project for development of aquaculture sewage treatment and biogas collection for electricitygeneration (Hoai Nam Hoai Bac Ltd. Co., HCMC, as the owner) was recently commenced on Dec. 24,2010, at Thuan An 1 aquaculture processing plant in Chau Phu district, An Giang province. This is thefirst CDM project in the field in the Mekong River Delta and also the first in 9 aquaculture plantwastewater treatment and biogas collection for electricity generation projects in An Giang province inphase I (2011-2012), to be followed in phase II with 12 similar projects in the remaining aquaticproducts processing plants in the province. The total power generating capacity from these 21 CDM

17 Source: http://urbanindia.nic.in/publicinfo/swm/chap15.pdf, Energy Recover from Municipal Solid Waste


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projects at aquatic products processing plants in An Giang province is approximately 25 MW, orequivalent to 1,177,900 tons of carbon (CO2) a year.

18 A list of typical aquatic products processingplants is provided in Appendix 3.

From milk processing plants: This is a similar case to cassava starch plants and aquatic

products processing plants. A list of typical milk producers is given in Appendix 4.From sugar plants: Sugarcane molasses are produced in sugar plants. One ton of sugarcane

can produce 0.04 tons of molasses. With 9.4 million tons of sugarcane processed in sugar plants in2005, 0.376 million tons of molasses were produced. In accordance with the master plan for thesugarcane industry in Vietnam by 2010 and vision to 2020, the gross volume of sugarcane beingprocessed will increase to 14.7 million tons (105,000 tons of sugarcane a day) by 2010. The amount ofsugarcane molasses produced by sugar plants will be 0.588 million tons at that time. A list of typicalsugar producers is provided in Appendix 5.

A biogas energy market in Vietnam in the near future is apparently feasible in some key areasdiscussed above, with varying technologies and scales. Below is a summary of biogas energy fromwastes potentialsin Vietnams.19

18 Source: http://hoainamhoaibac.com/Dich-Vu/Du-an-Xu-Ly-Nuoc-Thai-Thuy-San-Thu-Hoi-Biogas-Theo-Co-Che-Phat-Trien-Sach-CDM.html19 The biogas potentials are estimated based on assessments of the potential annual biogas output. The annual potential biogasoutput from various types of input materials is calculated using the following general formula: Ki = Si x Ri x Ti x Ci x Hi;where:

i ith input materialKi potential biogas output from ith materialSi number of livestock headcounts or annual amount of ith wasteRi the ratio between byproducts and main products of ith materialCi dry matter content ith materialHi gas generation efficiency of ith material based on dry matter content.Ti byproducts that can be used for biogas productionFor human, animal and poultry feces, Ri is the amount of excrement an individual discharges in a year.

Ti is a parameter identified based on survey of different uses of a specific byproduct, e.g. as fuel, animal feed,manure etc. In addition, it also depends on transport, storage and technology conditions. To estimate the potentials, anassumption used is 100% of input materials are collected. With existing technology level, up to 75% of input materials aredigested and hence, Ti= 75%.Ci and Hi are data specific to the target area and also verified in laboratories (conducted by the Energy Institute).


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Table 2.4. Theoretical gross biogas potentials, 2010

Material sourcePotential

(million m3)

Tons of oil equivalent

(million toe)

Percentage

(%)

1. Wastes from food and food crop processing20

- Cassava starch processing 314.3- Beverage production 95.6

- Aquaculture processing 314.3

- Milk, sugar and other foodsprocessing

345.9

Subtotal 1 1070.1 0.53505 14.1

2. From domestic animals wastes

- Buffalo 527.5

- Cow and bull 881

- Pig 1875

- Poultry 1540

Subtotal 2 4823.5 2.41175 63.7

3. From municipal wastes 1675.0 0.8375 22.1

TOTAL (1+2+3) 7568.6 3.7843 100.0

Of the overall collectible biogas potentials, biogas output from domestic animals wastes hasthe highest share, at about 63.7%, followed by municipal wastes at 22.1%, and about 15% of theremaining from the processing industry.

Farm-based agricultural production has been recently taking shape and developed as theanimal husbandry farms are growing in number and the environment concern has become more

pressing. The question is how the production pattern can be modified to allow both development offarming and best use of local available material sources, without hurting the environment. In industrialscale animal husbandry farms, waste treatment using a biogas system is a good option.

In addition to using different biogas technologies in domestic animals waste treatment, thistechnology also has a clear potential in municipal waste treatment (primarily in major cities likeHanoi, HCMC, Da Nang, Can Tho, Haiphong etc.), waste treatment in aquatic products processing,animal feed production, sugar making, cassava starch production, food and beverage production andothers. These are also potential areas for use of methane collection technology in waste treatment atmedium, large and mega industrial scales.

Of course, to develop biogas technologies, apart from the availability of technology andbusinesses needs (meeting the requirements on emission to the surrounding environment), a veryimportant factor to take into consideration is the markets for the products (electricity, heat, greenhousegas abatement certificates). For the time being, the government and relevant ministries have beenworking out strategies and policies to promote green development, low-carbon technologies and inparticular, finalizing a framework pathway for the development of renewable energy in Vietnam in thenear future.

As discussed above, in light of increasing energy demand in Vietnam and limited local energysupply capacity (coal for electricity production likely to be imported from after 2015), whereas thepotential for biogas sources in Vietnam is enormous, coupled with very high demand for electrical

20 Rough estimates only, since no official data or controlled tests were available or done.


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power and heat for production, the opportunity of using available biogas resources for electricitygeneration and co-generation (CHP) is very real, both in terms of technology and economic andenvironmental considerations. In such context, the Prime Minister Decision 1208, approving the 7thmaster scheme for electricity development (2011-2020, vision to 2030) will be the foundation for

biomass/biogas energy development in Vietnam. A plan associated with biogas development is beingdrafted with goals and schedules summarized in the following table.

Table 2.5. Summary of expected electricity generation capacity from biogas and municipalwastes to be added to the grid (MW)

21

2011-2020 2021-20302011-2030

Total renewable energy 3,606 9,588 13,194

Municipal wastes (landfill and direct incinerationtechnologies) + other biogas 174 265 439

Biomass (solid) 355 1,500 1,855Other renewable energies 3,077 7,823 10,900

2.2.Use of biogas in VietnamBiogas technologies were first used in Vietnam in early years of the 1960s. The development

process of biogas and its application may be summarized as below:

First phase (phase I), 1960-1975: primitive stage, mostly research for adaptability andapplicability; the results however were less than expected. Some tiny scale facilities werebuilt, scattering in various provinces, with little efficiency. By early 1970, research was almost

forgotten.

Phase II (1976-1980): after 1975, biogas regained attention in light of the mineral oil crisis andsocial development needs. The Energy Institute, Ministry of Electricity and Coal, was asked toinitiate the Use of biogas in Vietnam project, and later in 1977, the project for Researchand development of methane fermentation tanks. Ever since, biogas was made a formal partof the national research agenda. In addition to the Energy Institute, some other researchinstitutions have also been interested in biogas, including the Soil and Fertilizers ResearchInstitute, Animal Husbandry Institute, HCMC Agriculture and Forestry University, Can ThoUniversity, among others.

Phase III (1981-1990): through two 5-year plans of 1981-1985 and 1986-1990, biogas was aregular top priority in a new national energy program, which was Program 52C, under theauspices of the Ministry of Higher Education. Many biogas studies were very successful andmore agencies and universities joined the research along with the Energy Institute. Majorprojects were found in Ho Chi Minh City with 700 projects, Dong Nai with 468 projects, HauGiang with 240 projects, as there were about 2,000 small sized facilities of 2-10 m 3 and a fewlarger facilities of 100-200 m3 volume using normal and simple anaerobic fermentationtechnology.

Phase IV (1991-2002): when Program 52C was terminated, no national focal agencies seemed

21N.D. Cuong, 2011, Energy Institute, proposal of Master plan for renewable energy development in Vietnam by 2020 andvision to 2030.


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to pay attention to biogas. The Energy Institute continued its own researches as part ofministerial and corporate level projects. The researches mostly focused on improvement oftype NL-5 fixed dome cover facilities, experiment of a number of new models, the digestionprocess of plant materials, diversifying use of gases and so on. In this period, biogas strongly

developed in rural water and sanitation projects, gardening programs etc. In March 2002, theMinistry of Agriculture and Rural Development released industry grade standards for smallsized biogas projects.

Phase V (2003 to present): this is the time of strongest biogas development in all areas ofagriculture, industry and urban contexts, and with all sizes from small to medium and large.The Energy Institute is still the lead agency in biogas research and development. By far, therehave been over 200,000 projects under construction, 60% of which using the EnergyInstitutes model, followed by other models from Can Tho University, HCMC Agriculture andForestry University and others. These are however all small-sized biogas projects, mostlysuitable for households raising pigs. The size of biogas digester varies within 5-25 m3.

As for medium and larger sized biogas projects, there are now two main demonstratedtechnologies: UASB systems and covered anaerobic ponds. Application however remains small scaledand little.

A survey on users of biogas22 indicates two key purposes of using biogas: (i) for heating (withdominantly over 90% of produced biogas), and (ii) for electricity generation based on internalcombustion generators available in the market with modified carburetors. Only one single large sizedpower generating facility of 2.4 MW was installed in Go Cat dumping ground.

Heating use includes household cooking, lighting and sometimes keeping warm. Biogas usageis illustrated in the following Figure.

22Energy Institute, 2005, and T. V. Dung, H. V. Hung et al, 2007-2008, Biogas user survey.


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Figure 2.1. Current uses of biogas

(i)Use of biogas for heating

Cooking is the most common form of biogas use for heating. Biogas cookers are made locallyor imported from China. A few biogas development companies or LPG cooker dealers import spareparts from China or LPG cooker manufacturers to build modified biogas cookers.

Experiments show that locally made single stoves consume 0.22-0.40 m3 of biogas per hourwhile twin imported or modified LPG-based cookers consumes about 0.30-0.70 m3 of biogas per hour.The per capita household need of gas, given the long tradition of cooking and other daily uses of ruraldwellers in Vietnam, is estimated at about 0.15-0.30 m3 of biogas/person/day. A 6-member householdtherefore needs at least 0.9-1.8 m3 of biogas a day and hence a facility of 5 m3 and above capacity anda livestock herd of 6-10 pigs or 2 buffalos or cows (see details in the Table below).

Table 2.6. Gas consumption by system size23

Unit: m3 biogas/m3 of system size

System size

Biogas use 5 > 5-10 >10-15 >15

Consumption 0.19 0.10 0.15 0.80

Source: Energy Institute, Biogas user survey, 2005.

The second biogas heat use is for lighting using network lamps. These network lamps areimported from China and consume about 0.07-0.10 m3 of biogas per hour. Network lamps also requirea minimum gas pressure of a 200-700 mm water column; the higher the pressure the brighter thelamps. Households using biogas for lighting are still few in numbers, accounting for only about 2% ofthe households having biogas installations (by Biogas user survey report, 2005, Energy Institute). Lowuse of biogas for lighting may be explained by the availability of grid power and lamps imported from

23Biogas user survey report, 2005, Energy Institute.

Biogas

HeatingSmall-sized power

generation

Biogas-firedgenerator

Cooking Lighting Keepingwarm


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China often have poor quality. Lamp spare parts such as mantles, honeycomb filters and so on are notreadily available in the market.

Figure 2.2. Biogas lamp (illustration)

Other uses in heating include boiling water sing China imported water heaters or modifiedLPG cookers. This use is also very low, at less than 1%. Use of biogas for business and householdproduction purposes such as animal husbandry, handicraft and processing is not yet common since thegas supply from small sized facilities is often only enough for cooking, and for production purposes,facilities of larger sizes will be needed depending on types of use and gas consumption. Also

according to the Biogas user survey 2005 of the Energy Institute, biogas use for production purposeslike making pig feed, rice noodle and pancakes in rural areas takes up about 6% of all uses byhouseholds having a biogas facility.

Some other biogas uses such as for keeping piglets, small chickens warm in winter, runningfreezers, maintenance of fruits and cereals, and incubating poultry eggs have only been restricted toresearch, experiment or demonstration, and not yet replicated.

(ii) Use of biogas for electricity generation

Use of biogas for electricity generation has been in existence in recent years, though still atsmall scales.

The Energy Institute, HCMC Technology University and Da Nang Technology University aresome of the most successful names in building small sized biogas-fired generators of 0.5-20 kW.These researching efforts however have been just limited to modification of gasoline or diesel-fueled4-stroke engines for biogas compatibility, and not creation of machines running directly on biogas.The advantage of modified engines is reasonable costs, not too sophisticated modification andinstallation, and users familiarity with these machines from previous uses. The weakness of thesemachines is that they do not have a gas filter while biogas is a mixture of steam saturated gases andsuch gases as H2S and NOx may easily combine with water to turn into acids causing corrosion tometal parts of the generators, reducing the equipments life longevity. The efficiency of thesemachines is also not very high (20%-25%), and they need gas bags to stabilize gas pressure while in

operation.


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While the biogas supply is available, use of biogas for electricity generation at household scaleremains very low, with only about 500 out of a total of 200,000 biogas facilities installed. Below aresome biogas-based models for farm-scale power generators in Southern provinces.

A farm-scale biogas generator has five key components: 1) the biogas facility, 2) gas filtersystem, 3) gas bag to stabilize gas pressure while the generator is running, 4) generator, and 5) controlsystem.

Biogas generated in the biogas forming instrument is routed through a filter to removeunwanted gases before the cleaned gas is led to the pressure stabilizing gas bag and subsequently thegenerator.

Figure 2.3. Biogas-fired power generating system

Studies by the Energy Institute indicate that gasoline or diesel-fired 4-stroke engines can all bemodified to run on biogas. A gasoline generator modified to run on biogas or as a hybrid unitconsumes 0.6-0.7 m3 of biogas for 1 kWh or power generated. Capacity need of a farm is often 8-20kW. The most common power generators today are those within the capacity range of 2.2-20 KW andcapable of running 6-10 hours a day. Therefore, biogas instruments of 30-200 m3 capacity or higherwill be suitable for power generation. As the electrical power generated by biogas-based machines arealternating currents, it can be connected directly to the distribution system of the regular power grid orused in an independent distribution system.


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Box 1. Use of biogas highly efficient for breeders24

Use of biogas energy: As part of events in the lead up to the World Intellectual Property Daythis year, Dong Nai Department of Science and Technology visited the model biogas energy facilityusing pig manure at Mr. Pham Van Ngus Dong Tam ranch (Bach Lam 1 village, Gia Tan 2 commune,Thong Nhat district). Ngu told the visitors that he used biogas to run a generator and thus saved up toVND 7-8 million a month of electricity bill for the farm, while also having sufficient, if not abundant,heat for other uses. More important, this helps prevent pollution since it absorbs the massive amountof pig manure generated in the ranch.

The biogas system operator at Dong Tam ranch described the process as follows: When thebiogas tank is filled with pig manure, gases are created from the pig manure in a anaerobicenvironment and are led into two vinyl containers, each 10 meters in length and 1.5 meters indiameter. A modified diesel-fired engine, with the injection nozzle replaced with a spark plug and theair filter replaced with a carburetor (where the biogas fills up before being injected to the combustion

chamber). When the engine is started, a 12 V battery activates the IC unit, which creates electricity forthe spark plug to ignite and burn the biogas inside the combustion chamber, moving the piston non-stop. When the running engine is hooked up with an alternator, the more the valve is open, the morebiogas will flow in, powering up the engine and generating up to a 220 V electrical current. As this is adiesel type engine, it needs a liquid cooling system while it runs.

Ngu added that using biogas is not only environment-friendly and cost-efficient but also giveshim more freedom in household and production activities.

With his 2,000-plus pig count ranch, Ngu is among the pioneers in using biogas for electricitygeneration in Dong Nai province.

2.3.Overview of biogas projects in VietnamBased on the sizes in capacity of biogas equipment and users, on-going biogas projects in

Vietnam may be grouped in two categories: (i) small sized, fit for breeding households, and (ii)medium and large sized, fit for concentrated pig farm and production waste treatment. Current size-based classification often focuses on the volume of the digester tank. By the Ministry of Agricultureand Rural Developments standard 10 TCN 97 102:2006, for small sized biogas instruments, onlybiogas systems with digester tank volume of 40 m3 are accounted for. Below is some referenceinformation on how biogas systems are classified in China or recommendations of some local

prestigious institutions in terms of biogas technology.

24Source: dongnai.gov.vn


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Table 2.7. Classification of biogas systems as recommended by local prestigious institutions in

terms of biogas technology

Origin Size Total volume (m3) Volume of one

tank (m3)

China

Large 1000 500

Medium 100 - 1000 100 - 500

Small (household) < 100 < 100

Biogas Technology Center(BTC)

Large 100 100

Small (household) < 100

< 100

Biogas component, QSEAPproject

Large > 1000

Medium > 50 1000

Small (household) 50

If classified as above mentioned, biogas projects in Vietnam with updated status to date maybe described as follows (section 2.3.1).

2.3.1.Small sized household biogas projects

The project supporting the biogas program for animal husbandry in Vietnam started in 2003.This is the largest scale and coverage in the field, with financial support from the Netherlandsgovernment and the Animal Husbandry Administration, Ministry of Agriculture and Rural

Development as the focal agency. The project has two stages. In Stage I, the project is underway in 12selected provinces aiming to build 12,000 small-household biogas systems with input materials ofanimal husbandry wastes (pig manure). The technology used in this project includes fixed dome coverbiogas systems, KT1 and KT2 models (see Figure 2.4 below).

Figure 2.4. KT 1 and KT2 models25

KT1 model

251. Inlet tank, 2. Inlet hose, 3. Digester tank, 4. Gas collecting hose, 5. Outlet hose, 6. Pressure regulator tank.


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KT2 model

At the end of phase I in 2005, 18,000 systems were built. In the transitional period in 2006, theproject coverage was expanded to 20 provinces and 9,600 more systems were developed, raising thetotal to 27,600 facilities. The total project investment is USD 9,194,076, including 57.3% ofbeneficiary contribution, 39.2% of ODA fund and 3.5% of provincial level counterpart fund. The

project has been successful owing to two essential factors: (i) management, and (ii) quality assuredconstruction work for every system. The project has a central office based in Hanoi and 20 provincialoffices in participating provinces.

Phase II continued from 2006 to the end of 2011. The overall goal of the project in this phaseis to develop a sustainable, market-oriented biogas sector. Project objectives include:

Existence in 50 out of 64 province and cities in the country;

Development of about 150,000 biogas systems.

In addition to this biogas project applicable to breeding households as mentioned above, there

are also some parallel projects of similar nature but with smaller scales (mostly focusing on specificlocations such as districts, communes or residential areas). These projects are also often public privatepartnerships, meaning a part of the cost is covered by public or corporate funding (mostly in terms oftechnology, training and technical transfer, with some material and supply support, about 305-50%),and the remaining to be covered by household pocket money. Apart from the funding from relevantministries and agencies, these efforts are mostly supported through target programs or annualresearches of the line agencies, such as the Ministry of Industry and Trades national target programfor energy saving and efficiency, the Ministry of Agriculture and Rural Developments water andsanitation program, among others.

2.3.2.Medium and large sized biogas projects

There are currently about 20 completed, on-going or planned for medium to large sizedprojects for biogas collection from waste treatment (in animal husbandry, forestry-agriculture-aquaculture production etc.). Information about some of these projects has been recently mustered andsummarized in the following section and Table 2.8.

Green Field Joint-stock Co. based in Quang Nam province has engaged in a project to produce65% of methane gas from the waste treatment process of the biofuel workshop (making ethanol fromcassava) with a capacity of 100,000-120,000 m3 a day, to collect methane for electricity generation.The project cost is estimated at about USD 5.3 million (not including equipment transportation cost).

Recently, to alleviate serious pollution from the stench of wastewater, FOCOCEV CassavaStarch Joint-stock Co. (Hinh River district, Phu Yen province) resorted to the anaerobic wastewatertreatment technology. In the process, organic matters digested by microorganisms help reduce


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pollution while creating biogas. This biogas is recovered and burned in boilers in place of the plantsanthracite coal energy supply.

Methane collection for electricity generation in aquaculture production is an approach beingaimed at by Clean Development Mechanism (CDM) investors. The CDM biogas collection from

aquaculture production wastewater treatment project initiated by the HCMC-based Hoai Nam HoaiBac Ltd. Co. commenced on Dec. 24, 2010 at Thuan An 1 Aquatic Products Processing Plant, ChauPhu District, An Giang province. This is the first CDM project in the field in the Mekong River Delta,and also the first of 9 wastewater treatment projects in different aquaculture plants in the area forelectricity generating biogas collection in An Giang province (phase 1 expected to commence from2011), with a phase 2 consisting of 12 similar projects in the remaining aquaculture plants in theprovince. The estimated gross power capacity from the 21 CDM projects in aquaculture plant in AnGiang province is about 25 MW, equivalent to a cut-down of 1,177,900 tons of carbon (CO2) a year.The German national electricity group also promised to buy all Certified Emission Reductions (CERs)these CDM projects obtain from aquatic waste treatment in An Giang province once the power

generating systems are in operation.26Also in An Giang province, there is another CDM project for pig farm wastewater treatment

(each farm with 50 pigs or more), for a total of 37 farms and a pig herd of nearly 6,000 individuals.Each of these farms is a sub-project that collects gas from pig breeding wastes for heating fuels andelectricity generation used right in the farm. The Swedish Energy Institute supported the project,pledging to buy CERs from the project at the initial ask price of USD 10/ton of CO2. The project costis about VND 150 billion from An Giang provincial PC, Hoai Nam Hoai Bac Ltd. Co. and SwedishEnergy Institute. The generated energy in the form of biogas will be used as fuel and provided free ofcharge to farm owners, and the electricity generated from the biogas will be sold to farm owners atlower prices than EVNs levels. The project is estimated to cut 37,000 tons of CO2 emission a year and

produce a power capacity of 14,500 kWh a day.In addition to CDM projects in aquaculture, there is another CDM project in An Giang using

the Low temperature conversion (LTC) waste treatment technology. The 25 MW capacity power plantuses input materials being human waste of about 300 tons a day, with CO 2 volume equivalent toaquatic CDM projects in the province. The project is expected to commence after 2012 and, followingtwo years of construction, start operation to effectively solve the waste puzzle in Chau Doc, Chau Phuand Tinh Bien areas of An Giang province. The project has a total investment fund of about USD 200million, or VND 3,926 billion. It is financed by the German MBM financial group and counterpartfund from Hoai Nam Hoai Bac Ltd. Co. (HCMC), as a co-owner of the project. The German nationalelectricity group has also agreed to buy the entire CERs acquired by this project.

26Source: This information is readily available in various websites in Vietnam.


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Table 2.8. Medium and large sized biogas projects

Area of

operation

Company, location Capacity Technology

used

Estimated

time

Livestock

and poultrybreeding

1. Thai Duong Imported

Pig Breed JS Co.Location: Lng, Nghan

Processing 150,000

m3

of wastewater aday to collectmethane

Covered lagoon 2007

2. Pig farmLocation: Yn bnhLng Sn, Ho bnh

Processing 1,500 m3of wastewater a dayto collect methane

Covered lagoon 2007

3. Pig farmLocation: an hoiLocation: an phng,Hanoi

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