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Study on Private-Initiative Infrastructure Projects
in Developing Countries in FY2010
Study on the Smart Grid Project in Ho Chi Minh City,
the Socialist Republic of Vietnam
SUMMARY
March 2011
The Ministry of Economy, Trade and Industry
Prepared by:
Ernst & Young ShinNihon LLC
Japan External Trade Organization (JETRO)
Tokyo Electric Power Services Co., Ltd.
OPMAC Corporation
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Government of Vietnam(GOV) has also promoted the energy efficiency in parallel and the new energy
efficiency law including acceleration of the energy efficiency and support for the development of
renewable energy will be established on 1st of January in 2011.
Regarding renewable energy, wind power / biomass / geothermal / small hydropower / Solar are considered
as the renewable energy in Vietnam and the potential reported by IE is as follows.
Wind Power: 1,800 MWBiomass energy: more than 150 MWGeothermal energy: 340 MWSmall hydropower: 4,000 MWSolar energy: 45 KWh/m
2
Small hydropower has occurred damages by flood during typhoon etc, so that the additional construction
will be difficult by objections of inhabitants. The capacity of Biomass and Geo thermal energy is not so
large. Therefore, Wind and Solar power will be expected to cover the increasing consumption in Vietnam.
Especially in case of Solar energy, the generation capacity is around 3,300GW under assumption of
utilizing 1/10 land in Vietnam.
However, the Wind and Solar power are unstable due to the influence of weather condition, so that the
rising of end voltage and the fluctuation of frequency are occurred. This smart grid project with EnergyManagement System(EMS) can solve the problems.
In addition, the energy efficiency such as peak-cut and reduction of distribution loss can also contribute to
solve the shortage of power. So, it is necessary to advance the peak-cut and the reduction of distribution
loss by this smart grid project with Demand Response(DR) / Automated Meter Reading(AMR) and
Advanced Distribution Automation System(DAS).
It is important to improve the reliability of distribution network as policy of power sector. This smart grid
project using Advanced DAS can also improve the reliability of distribution network due to reduction of
outage duration.
2 Fundamental policy of this project
2.1 Fundamental policy
This project will be recommended to implement based on the following fundamental policy.
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Application of renewable energy such as Solar Power Solution for shortage of powerApplication of EMS to control switch of Solar power and Battery Solution for connecting to
distribution network
Peak-cut by DR Energy saving and efficiency
Reduction of distribution loss by DAS and AMR Energy saving and efficiencyImprovement of reliability (reduction of outage duration) by DAS High reliability for power
supply
2.2 Problems and the solution
As for promoting this project, the problems on Peak-cut by DR and Cost of solar power will be considered
and the following solutions will be proposed.
1) Peak-cut by DR
Peak-cut by DR are proposed as follows.
Large customer: Unimportant loads such as Air Conditioner(A/C) are switched off by DR.Normal customer: All of loads are switched off by DR.
Based upon customer survey, large customers may well accept the outage of unimportant load for short
duration (example: 30 minutes) due to no outage of important load.
Normal (Small) customers are under outage for short duration, so that the dissatisfactions in the
customers are concerned in spite of short outage. As for the solution, the customers can switch on by
manual operation while the outage by DR happens. However, if most of customers will switch on, the
effect of peak-cut decrease, so that incentive is needed to advance the effect. The following incentives
are considered as ideas.
If manual operation will be implemented in the state of peak-cut, the tariff becomes much higher.The cooperated customers can receive the privilege such as preferential tax or tariff.The cooperated customers can receive the citation as the cooperation.
There are the following benefits as customers of Peak-cut by DR.
Residential customer under the planned outage for Peak-cut can not recover the outage so far butthis proposed system can recover the power by the manual operation on condition that the customer
pays higher tariff.
Large customer stopped all of power under the planned outage so far but the outage by thisproposed system can be limited to unnecessary load such as A/C etc. Therefore, the important load
such as product facilities can keep the power even though the planned outage for Peak-cut will be
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implemented.
Regarding the peak-cut by DR, it is necessary to consider whether there are some problems for law in
Vietnam or not. According to Ministry of Industry and Trade(MOIT), there are no problems on lawfor the peak-cut but take care to cut off frequently because the National Diet will be possible to discuss
due to a lot of complaints of customers. Vietnam Electricity(EVN) has already cut off the customers on
each substation, so that we think this better outage procedure for each customer will be acceptable.
Regarding the peak-cut by DR, there are no problems on law in Vietnam but the incentive shall be
considered in order to accelerate the energy efficiency.
2) Renewable energy such as Solar Cell
According to the International Forum on Wind Energy Development of Vietnam on 5/11/2009, Solar
Energy in Vietnam is 45 kWh / m2
, so that the conversion to kW is around 0.1 kW / m2
. The area of
Vietnam land is around 330,363 k m2
and the capability of power can be calculated as follows.
Assumption: 1/10 in land is available for installation of Solar Power.kW x 330,000 x 106 x 1/10 = 3,300 GW
The capability of solar power is huge and the solar is effective for solution on increasing peak load.
However, batteries shall be equipped in order to solve unstable generation problems influenced byweather condition etc, so that the cost becomes more expensive.
In case of Japan, the following support system on law has been carried out, so that the Solar Power
could be expanded up to 1.4GW in 2005 and will be anticipated to reach to 1428 GW in 2020.
Government support a part of the installation cost.Power companies have purchased with higher tariff (48 yen /kWh) for the Solar Power since
November in 2009. However, the increased expenses on power companies can add to the normal
tariff as green cost.
In case of Vietnam, the supporting money for renewable energy will be considered on new law of
energy efficiency which will be set up on 1st of January in 2011. However, the supporting money is
small and is limited, so that the solar power will not expand widely. In order to accelerate the
installation of solar power, not only is the cost decreased, but also the additional supporting money or
other regulation is needed.
When a lot of renewable plants will be connected to the distribution network in EVN, problems such as
voltage-drop / safety etc occur. The following solutions against the problems will be considered in this
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project and will be confirmed.
Solar cell with battery will be installed to 2 locations.
The reversed power and battery are monitored and controlled by EMS.EMS also monitors and controls the switch for the solar.
2.3 Advantages
There are mainly five economical benefits as follows.
A) Reduction of outage duration by DAS
B) Effective construction of Substations by DAS
C) Reduction for technical loss of MV line with improvement of load unbalance by DASNon-technical loss reduction by AMR including smart meter
D) Solution of power shortage by Solar power
E) Effective construction of Power Generators by DR
before the project(a)
after the project(b) (a)-(b)
A) Decrease of Power Failure373 min. 77 min.
-296min. 4.93 h
B) Improve of maximumaverage capacity rate of the
substation
75% 83% 8%
C) Decrease of loss(technical loss of MV line)(non-technical loss)
(1.72% (2.43%)
(1.16% 1.3%
-0.56% -1.13%
D) Solar Power Generation 57,200kWh/y 57,200 kWh/y
E) Demand Control by cuttingdemand caused by air-conditioners
255MW2 h40 days/y
255MW2 h40 days/y
3 Overview of this project
3.1 Fundamental idea of Project
The details of this project based on the fundamental policy are as follows.
1) Smart meter will be installed to all of customers in Phu Tho Power Company, so that AMR and DR can
be implemented.
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2) DR can control the following load.
Residential customer: All of loads are switched off during short duration (ex: 30 minutes).
Large customer: Unnecessary load except product line etc can be switched off.
3) Solar power system with battery as asset of EVN will be installed to 2 areas as pilot project and be
connected to MV distribution feeder directly. EMS in control center can monitor and control the reverse
current and the battery.
4) Servers and operator consoles for Advanced DAS with EMS are installed in Dispatch Center for existing
Supervisory Control and Data Acquisition(SCADA) and monitor / control 110kV primary substations
and distribution network in Phu Tho Power Company. Other servers for AMR, DR and EMS etc are
installed in Control Center of Phu Tho Power Company and are connected to the advanced DASthrough LAN and Fiber Optic communication network.
5) Automatic Load Break Switch(ALBS) for Over Head (OH)will be applied as new equipment.
Automatic Ring Main Unit(RMU) for Under Ground(UG) will be also installed as new facilities in
existing room. The existing RMU of manual type will be removed to other suitable feeder as manual
type.
6) Fiber Optic will be applied as backbone network of communication and ZigBee will be applied for last
one mile communication between Remote Terminal Unit(RTU) and customers for at least 10 years.
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3.2 Configuration of Project
The basic system configuration including all of projects is shown in the following figure.
Control Center
110kV/15kV
Substation
Distributiion feeder
(Overhead)
Distributiion feeder
(Underground)
FCB
LBS
TRD
VS
VCB Road
Solar Power
RTU
Advanced DAS Server
Smart Meter
Switch
WHM
Comunication
AMR Server
Console
FCB
VSRMU
Battery
PCSPCS
RTU
Concentrator
Concentrator
M-RTU
FEP
Optical fiber
Network
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3.3 Project cost
The total amount of the project is around 42 MUS$ and the detail is explained as follows.
Scope Quantity
Cost
RemarksForeignMUS$
LocalMUS$
1. Advanced DAS /SCADA with EMSEVN HCMCControl Center
1 system 6.5 0.7 1. Advanced DAS with SCADA is installedin existing SCADA center and canimplement energy management ofdistribution feeder.(Solar Power)
2. AMR/DR is installed in Pho Tho PowerCompany and is connected to AdvancedDAS by data link of Fiber Optic
2. AMR / DRPhu Tho PowerCompany
1 system
3. Substation facilities 4 SS 1.2 0.2 0.3 MUS$ x 4 = 1.2 MUS$
1st
stage: 4 substations (110kV)2
ndstage: expand to 34 substations
4. New RMU 25 units 1.2 0.1 45 kUS$ x 25 = 1,125 kUS$ 1.2 MUS$
5.New OH DASequipment
86 units 1.3 0.1 15 kUS$ x 86 = 1,290 kUS$ 1.3 MUS$
6. Smart Meter,Single-phase,
Three phaseConcentrator
90,000 units
8,000 units196 units
17.0 1.0120US$ x 90,000 = 10.8 MUS$
700US$ x 8,000 = 5.6MUS$3,000US$196=0.6MUS$7. Solar Power 2 units 0.3 0.1 20kW: 0.15 MUS$
0.15 x 2 = 0.3 MUS$
8. Fiber Optic 0 0 0 Use existing Fiber Optic
9.Engineering Service 1 2.5 0.7 Including Training in Japan
Sub Total - (30.0) (2.9)
10.TAX 1 6.6 0.3 Sub Total x 20% x 10%
11.PhysicalContingency
1 1.5 0.1 5% x Sub Total
12.Price escalation 1 0.9 0.3 2.4% for Foreign8.4% for Local
Total 39.0 3.6
Exchange rate: $1 = 19,491VND = 80.89 yen (by Tokyo Mitsubishi UFJ bank 10/29 2010)
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3.4 Overview of preliminary economic analysis
The economical benefits of the project are summarized as follows.
Economic benefit Financial benefit
1.Decrease of Power Failure 53,512 US$/y 19,563 US$/y
2.Improve of maximum average capacityrate in the substation
0.939mil.US$/y Total 18.78MUS$:
20 years)
0.939mil.US$/y Total 18.78 MUS $:
20 years)
3.Decrease of loss(technical loss)(non-technical loss)
532,476 US$/y1,074,431 US$/y
532,476 US$/y1,074,431 US$/y
4.Solar Power Generation5,458 US$/y 5,458 US$/y
5.Peak Demand Control by cuttingdemand caused by air-conditioners
-711,713 US$/y6.885 MUS$/y
-711,713 US$/y2.470 MUS$/y
3.4.1 Financial Analysis
The Financial Internal Rate of Return(FIRR) of the project is of 6.90%.
FIRR Net Present Value (NPV) Discount rate=6.95%
Base case 6.90% -0.13 MUS$
Initial investment increases by 10% 6.53% -1.28 MUS$Operation & Maintenance(O&M) cost increases by10%
6.78% -0.51 MUS$
Unit price of power purchase decreases by 10% 6.51% -1.28 MUS$
3.4.2 Economic Analysis
The Economic Internal Rate of Return(EIRR) of the project is of 22.79%.
EIRR NPV
(Discount rate=10.0%)base case 22.79 % +30.35 MUS$
Initial investment increases by 10% 20.69% +27.43 MUS$
O&M cost increases by 10% 22.69% +30.09 MUS$
Construction cost of a new gas turbine power plantdecreases by 10%
20.90% +25.49 MUS$
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3.5 Environmental and social analysis
3.5.1Project impact on environmental and social aspects
Based on the JETRO Guidelines for Environmental and Social Consideration as of July 2009,
environmental and social assessment items have been examined in this study for the future scoping
conducted in feasibility studies and Environmental Impact Assessment(EIA) conducted at the stage of
project implementation. When examining project impact on environmental and social aspects, check
items in the Screening Format and the Environmental Checklist (6. Power Transmission and
Distribution Lines) of JICA Guidelines for Environmental and Social Consideration (April 2010) have
been referred.
The summarized results are as follows.
1) Sensitive Areas
None of the sensitive areas in the following table are found.
2) Sensitive Characteristics
The sensitive characteristics are not applied to the project.
3) Impacts on Environment
Impacts on environment caused by the project implementation have been analyzed, so that there are
slight affections but no problems due to the easy countermeasures.
3.5.2 Environmental Legal Framework and Application to the project
The Law on Environmental Protection (No.5212005/OH11) replaced the former law stipulated in 1993
and has been implemented since 2006. This law is the basis of EIA and of environmental protection in
Vietnam.
Based on the law, this project is estimated as follows.
1) Strategic Environmental Assessment(SEA )
SEA is not applicable to the Project.
2) EIA
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EIA will not be applicable to the Project.
3) Environmental Protection Commitment(EPC)
The Project Owners are required to elaborate the EPC when EIA is not required. They are allowed to
start their production and business activities after registering the EPC.
4 Implementing schedule
The tentative implementing schedules are estimated as shown in the following figure as Japanese ODA
loan based on experiences.
Implementing Schedule on Japanese ODA loan
Item 2011 2012 2013 2014 2015
Preparation
Basic design and EVNHCMC / JICA appraisal
Approval by GOJ / GOV
E/N, L/A
Selection of consultant
Engineering
Service
Detailed Design
Tendering StageSelection of Contractor
Construction
Design
Manufacturing
Installation and test
Commencement
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5 Feasibility study
5.1 Review on Availability of Finance
Export credit is considered as one of the finance method but Japanese ODA (Yen loan) is the best solution
in the analyzed finance method.
5.2 Feasibility for implementing project
The implementation of this project is feasible as follows.
This project corresponds to Vietnam policy to solve the shortage of power and the low reliability.This project also corresponds to the needs of EVN HCMC as implementing organization.According to economical analysis, FIRR is of6.90% and EIRR is of 22.79%.
(In case of Japanese ODA loan, there is grace periodof 10 years and the interest rate is low such as
1.2%.)
5.3 Necessary activities
It is necessary to carry out the following activities in Vietnam side in order to advance this project.
Support of Vietnam government to accelerate the application of renewable energyIncentive for customers to allow the outage for peak-cutRequest of Japanese government support for technology and finance from Vietnam government
6 Competitive ability of Japanese Company
6.1 DAS
Concerning reliability of power supply, higher technology has been already existed in Japan.
There is strong position compare with other countries.
Distribution network technology in Japan has progressed to solve a lot of subjects since 1960.
DAS was also same, it was kept progressing for improvement of supply reliability and efficiently operation
of equipment.
This DAS is applied voltage type. There is a few countries to apply this type, but this voltage type of DAS
should be definitely better technology than the others. The advantages are;
Judge and split for failure section can be applied without Central Processing Unit (CPU) and
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communication lines
System upgrade can be applied step by step, if necessary.Initial cost should be lower than current type which is introduced in Europe.
As of now, it is still continuing to progress for technical innovation by DAS business in Japan.
Combine advanced DAS core technology of Japan and inexpensive distribution network equipment which
made in China can create advantage of DAS.
6.2 AMR System
It is proud for higher reliability of power distribution monitoring technology which was grown in Japan.
Advanced AMR system has been already developed by Japanese companies based on existing highertechnology.
This advanced AMR system can realize two way communications with customers such as demand response
and control internal switch in smart meter as well as measure power consumption at the place from far
away.
Having proof experiment, corporate with NEDO and the state government of New Mexico, proof
experiment has already started that how much effect and influence will be occurred by realize real time
pricing and DR which are told difficult in Japan to test.
This core technology can be applied in this project as well, so that Japanese company can stand strong
position and develop lower cost compare with the other country.
6.3 EMS
It is proud for higher reliability of power distribution monitoring technology which was grown in Japan.
Advanced EMS has been already developed by Japanese companies based on existing higher technology.
This advanced EMS can corporate efficiently between many kind of power supply such as solar power and
wind power within smart grid and storage battery. And it is possible to be realized higher supply reliability
and distribution network operation.
Moreover, Curb on fluctuations equipment with storage battery which is used for to prevent influence from
sudden out put fluctuation of Photovoltaic (PV) system, has already developed by Japanese companies.
Relating this technology, proof experiment which will be understood effect and influence on distribution
network in Miyakojima island by install PV system, has already started by independent type of distribution
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network in Miyakojima of The Okinawa Electric Power Company, Inc.
This technology can be applied in this project as well, so that Japanese company can stand strong position
and develop lower cost compare with the other country.
6.4 Solar Power
Temperature of HCMC is very hot, so that the panel of crystal silicon type with high efficiency can not be
applied to HCMC even though Japanese company has excellent competence. The panel of silicon
amorphous type is proposed in this report due to high temperature characteristics and low cost but other
foreign manufactures can make easily. In order to get higher power in the same space, hybrid type of
crystal silicon and silicon amorphous will be recommendable in detail design. In this case, Japanese
company can be applied with high competence.
As for battery, Lithium Ion battery is recommended in this report and the development has been carried out
in many countries. Japan also has developed as Japanese government projects, so that the high capacity
type for storage of power will be able to get high competence.
Furthermore, Japanese company has high competence for the inverter for solar and battery due to high
efficiency, high characteristics and familiarity to DAS.
6.5 Integrated System
Under becoming aggressively for activity on smart grid, government of every country and every standard
party also aggressively involve toadvance standardization of equipments.
In Japan, ministry of economy, trade & industry put target to standardize in international and selected 7
Project and 26 items as important items to keep strong position of Japanese companies.
They proposed to IEC etc. and put target to be established within three years.
There are 7projects as shown below.
1) Wide-Area Situational Awareness (WASA)
2) Storage battery for distribution network
3) Control of distribution network
4) DR
5) Storage battery for consumer side
6) Electric Vehicle (EV)
7) Advanced Metering Infrastructure (AMI)
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There is all necessity technology in these projects as below.
1) DAS2) DR network
3) Wide access communication for meters
4) Short distance communication for meters
5) Optimized management for storage battery for distribution
After fix international standard, Japanese companies can be stronger position for cost competitiveness.
In case that this proposed smart grid will be applied to Vietnam, the system and communication network
can be applied to future technology such as Home Automation (HA), battery by EVetc, so that Japanesecompany can keep the high competence as the supplier of the system and communication network.
7 Schedule to realize this project and the objection
7.1 Detail schedule to realize the project
It is necessary to implement the following activities up to starting this project by Japanese ODA loan.
Request of this project (from Vietnam to Japanese Government): the first half in 2011Implementation of Special Assistance for Project Formation (SAPROF) by JICA Grant: in 2011E/N, L/A between Vietnam and Japanese government: the first half in 2012
After L/A, the project such as selection of consultant etc will be implemented.
7.2 Objection and the solution
The priority of Vietnam for the smart grid project is lower than the current investment such as power
generation, construction of transmission line / substation and construction of distribution feeder, so that the
investment will be limited.
In case of EVN HCMC, the income is around 800 MUS$ in 2009. The investment of this project is around
40 MUS$ which is not so large as Japan but the project costmeans around 5% of the incomeas EVN
HCMC, so that long term to realize this project will be needed due to other high priority projects. This is
normal case for new project because client does not feel the convenience and necessity due to no
experience.
In order to overcome this blockade, the support of Japanese government such as Demonstration test project
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supported by NEDO is needed to apply for the model area as pilot project.
After the pilot project, EVN can understand the necessity and feel the benefits, so that the system using
Japanese excellent technology can be expanded to other areas of EVN HCMC and other cities. Moreover,this system will be expected to expandto other Asian countries and become de-facto standard.
Korea has already applied DAS project in Hai Phong as Grant and AMR project in Hanoi as also Grant. As
for Solar system, Energy Assistance France and Schneider have applied the Build, Operate and Transfer
(BOT) pilot project to Quang Binh province in central Vietnam. Competition between foreign countries and
Japan are very hard but these competitive countries proposed single function as one of smart grid system.
Japan can propose all of functions in smart grid project based on a lot of experience and excellent
technology, so that the effect for energy efficiency in Vietnam becomes much better.
In order to keep the highest position in smart grid system, it is important to obtain the initiative with high
speed. Therefore, Japanese support (ex: Demonstration test project supported by NEDO) shall be quickly
applied for Vietnam as pilot project.
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8 Map of project area in survey country
Project area: Phu Tho Power Company (District10 and 11) of EVN HCMC
Scale: 1:42,000
Dist10 and11,Project areain HCM city