Chapter 4 Construction of the Pilot System

4-1 Organizational framework As shown in the figure below, the DOI of Provincial People’s Committee will play a central role in

off-grid rural electrification. Off-grid projects will be initiated by local communities’ requests. Then, the DOI is supposed to undertake electrification planning, and authorizing such projects. As for detailed design, it is realistic that a design company or consultant is hired to carry it out.

Requests

Management instruction Maintenance instruction

District

Labor

Order Order

Village

Commune

Provincial People's Committee (PPC)

- Installation

Construction company & manufacturer

- Construction management

Dept of Industry (DOI) - Electrification plan - Financing - Supervision

Consultant - Detailed design - Cost estimate - Training

Figure 4-1-1 Organizations for implementing off-grid rural electrification projects

Based on the above, in the pilot project we set up an organizational structure, in which the DOI of

HoaBinh Province is the key organization for overall project management and Theu village is responsible for the management of the pilot system. We hired EDME, a consultant, HoaBinh Construction Company and Hydro Power Center to construct the pilot plant.

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Hoa BinhConstruction

Company

HoaBinh DOIApproval of

electrification plan

EDMEas Consultant

JICAStudy Team

LacSonDistrict andQuyHoaCommune

Explanation of plan

HPCas Manufacturer

Theu villageVillagers meeting

Figure 4-1-2 Relevant organizations in the pilot project

4-2 Application for Permission

The purpose of submitting a project plan to authorities is to aske thme to review whether or not the plan complies with technical standards and safety regulations. The DOI is the organization to review the plan, and the PPC issues a permission. A document that shows the technical specifications and design with detailed design drawings must be presented. Therefore, thorough technical assessment is required to prepare the application document. Since the pilot project is small-scale, the DOI suggested that the application document should be simple. In order to promote Village Hydro, it is expected that the application process is as simple as in this pilot project. The following information was presented in the application for permission:

Table 4-2-1 An example of construction plan application

Item Written contents (1) Project name JICA Rural Electrification Pilot Project (2) Description of the project Installation of Mai Theu hydropower station and distribution lines (3) Outline of the project Background information of this project and outline of electrification

- Power generation plan - Distribution plan - Facility specifications

(4) Description of facility design Design concept, construction and dimensions concerning the following facilities:

Headrace, Head tank, Penstock, Powerhouse, Tailrace, Distribution (5) Project implementation body (6) Design drawings

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4-3 Construction Schedule Most villages requiring Village Hydro are located in mountainous areas where it is difficult to

extend the grid. Therefore, transportation of materials and equipment to the site has a significant impact on the overall project schedule. Since in the pilot project we were able to transport materials and equipment by trucks all the way to the center of the village, we completed installation work in about 2 months as shown in Table 4-3-1. Usually it takes more than 2 months to manufacture a water turbine after its specification is decided. In this project, the water turbine manufacturer shipped the turbine in less than 2 months with special efforts. We planned the main workflow, material and equipment transport, powerhouse foundation, water turbine/generator installation and penstock construction. The shipment and installation of turbine was the critical factor for scheduling the entire works. We could meet the deadline by following the original construction schedule.

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Tabl

e 4-

3-1

Pilo

t pro

ject

tim

etab

le (A

ctua

l)

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4-4 Construction Cost The table below shows the construction cost of the pilot system. The power generation facility

accounts for 44% (civil work structure 26%, electrical and mechanical facility 18%) and the distribution facility accounts for 56%.

Table 4-4-1 Breakdown of construction cost

Mai-Theu Village Hydro Note

1. General Information (1) Output Capacity 9kW (2) Gross Head 60m (3) Design Flow 0.03m3/s (4) Length of Distribution Lin 2.8km

2. Estimated Demand (1) No.of Households 78 Households (2) Unit Demand 100W/HH

3. Construction Cost Specifications Cost(US$)

(1) Generation Cost 8,909

a. Civil Works 5,339 26% - Weir Renovated by villagers (0)

- Intake Renovated by villagers (0)

- Headrace Existing: Renovated by villagers (441)New: Brick masonry with mortar

- Head Tank Reinforced concrete (1,042)

- Penstock PVC pipe buried: φ200mm (2,860)L=180 m3 anchor blocks

- Power House Basement by reinforced concrete (657)Walls by brick masonry with mortarFiber cement roofing

- Tailrace Brick masonry with mortar (339)

b. Electric Mechanical 3,570 18%Turgo turbine, synchronous generator (3,430)Dummy load controllerCV-cable (140)

(2) Electric Grid Cost Single phase 220V 11,433 56% - Cables Al-PVC 35,50,70mm2, total L=2.8km (2,570) - Poles and construction 71 poles H-7.5m B,Ctype (8,340) - Others (523)

Total Cost 20,342 100%Profit Margin 1,118

VAT 1,073

Project Cost 22,533

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There are some significant differences in the construction cost breakdown, compared with the estimate shown in the MP study, due to the following reasons:

(1) In the civil works, the use of bricks in the new channels (headrace, spillway and tailrace) resulted

in an increase of construction cost from about $1 per meter to about $5 per meter, compared with no-lining channels. The total cost for building the channels went up by $920 (total length; 230 m).

(2) In the distribution facility construction, we used coreless aluminum insulated cables instead of steel-core cables, and transportation of materials by trucks was possible, which resulted in a cost reduction of $1,300, from $5,400 to $4,100, per kilometer.

4-5 Construction Management Major issues we experienced during the construction and actions we took to deal with the issues are

described below.

4-5-1 Work carried out by villagers The villagers offered to renovate existing irrigation channels and cut down trees along the route of

distribution lines. They did these tasks on a voluntary basis without asking any compensation. The villagers are skilled in stone cutting and masonry, and they have amazing civil work capabilities. We gave sacks of cement and asked them to carry out the renovation work. The work was completed remarkably. In the construction of new facilities by the construction company, some villagers were employed and participated in the construction.

Figure 4-5-1 Villagers’ work (left); village road and renovated channel (right)

4-5-2 Civil structure construction

The construction company completed the construction work on schedule. However, there were some issues that need improvement.

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（1） Chain of command Occasionally, workers were not instructed clearly on what they were asked to do or what changes

happened in the construction plan. The construction plan document including work procedures was prepared in details, but there was delay in delivering information to workers. This problem resulted in some incorrect dimensions of structures, water leakage, etc. In this project, this situation occurred due to tight construction schedule. It is desirable to designate a supervisor in each work area and to have meetings with workers before getting started to make the chain of command work well.

（2） Quality control There were some cases in which quality control was not adequate and redoing was required. For

example, mortar came off at some places in the channels. These cases occurred when there was no supervisor present at the work site. Supervisors are aware of quality control. It is necessary to have them present at the work site long enough to check the quality of construction works.

4-5-3 Electro-mechanical equipment installation （1） Transportation of turbine/generator

The weight of the packaged turbine and generator unit was 300 kg. About 20 villagers carried the unit to the powerhouse because there was only a footpath. Carrying such heavy equipment by human power on a slope may cause accidents. It is necessary to consider how to transport to the site before designing and manufacturing such equipment.

Figure 4-5-2 Carrying the turbine/generator unit

（2） Waterproofing of the dummy load The dummy load had a long heater section that was to be submerged in water. If the electrical

insulation of dummy load was insufficient, short-circuit accidents would occur. Such problems actually happened during the commissioning period. Insulation work was redone to protect the terminals of the dummy load from splashes.

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Taping

Water level

Figure 4-5-3 Setting the dummy load

（3） Control system and safety devices In the test operation, a trouble occurred in frequency adjustment due to faults of the dummy load

control board. After the board was replaced, the operation recovered and went well. Also, there was some uncertainty in the operation of the over-voltage relay and the frequency relay, probably because the relays were not adequately adjusted due to the short testing period in the workshop. We discussed with the manufacturer the adjustment of the relays, and tuned the setup.

Figure 4-5-4 Dummy load control board (left) and over-voltage relay (right)

Figure 4-5-5 Control panel - Outside (left) and inside (right)

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4-5-4 Distribution system construction The construction method of distribution system is basically the same as in the case of the grid extension.

Table 4-5-1 Distribution line construction procedure

No. Work item Remark 1．Material transportation Using village road

Arranging trucks Before

construction 2．Unloading and storage Storage space preparation

Pole erection 1．Transportation Using village road

Arranging carts and labor 2．Excavation of base 3．Pole installation 4．Filling concrete

5．Backfilling soil Cable installation

1．Transportation Using village road Arranging carts and labor

2．Attaching arms Technicians 3．Cable preparation 4．Cable drawing Technicians 5．Cable connection Technicians

Construction

6．Grounding Technicians

1．Inspection Measurement of grounding resistanceAfter construction 2．Test operation Measurement of voltage

Table 4-5-2 The components built for the pilot system

1.Civil works (1) Weir/Intake Existing irrigation system Stone masonry (renovated)

Total length: 897 m Existing: 812 m No-lining irrigation channel (renovated)

(2) Headrace

New: l=85 m, w=0.4 m, d=0.3 m Brick masonry and mortar (3) Head tank l=3.45 m, w=0.8 m, d=0.35-0.8 m Reinforced concrete Water depth=0.2-0.65 m(4) Penstock l=165 m, dia.=20 cm PVC-pipe thickness 9.6 mm and 5.9 mm (5) Anchor block l=1.15 m, w=1.5 m, h=0.9 m Reinforced concrete, 3units (6) Spillway l=80 m, w=0.6 m, d=0.4 m Brick masonry and mortar (7) Powerhouse Foundation

l=3.5 m, w=3.5 m, h=2.8 m l=3.5 m, w=3.5 m, t=0.2-0.3m

Brick masonry, Fiber-cement board roofing Reinforced concrete

(8)Tailrace l=65 m, w=0.4 m, d=0.3 m Brick masonry and mortar 2.Electro-Mechanical system (1) Turbine Turgo-impulse 1 nozzle, 1500 rpm, Direct drive (2) Generator Synchronous Single phase 12 kVA, 230 V, 1500 rpm (3) Control system Electronic load control Dummy load capacity =12 kW 3. Grid system (1) Transmission Total length: 2.8 km Insulated Aluminum cable

(2×70mm2, 2×50mm2, 2×35 mm2) (2) Electric pole Number of poles 71 Concrete pole h=7.5 m

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3．Pole transportation

(Store place - village road)

4．Excavation of hole 2．Pole shipping and discharging

(Store place)

1． Pole carrying in

(Transportation by truck)

5．Pole installation 6．Pole base（in rice field） 7．Arm attachment 8．Distribution line completion

Figure 4-5-6 Distribution line construction flow chart

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4-6 Test Operation Some problems occurred when we tested the plant operation. For each problem, we took appropriate

measures as described below.

4-6-1 Civil structures （1） Water flow speed into the head tank

The head tank is located about 50 centimeters lower than the end of headrace, and the entry to the tank slopes. Because of this, the water flow into the head tank is fast, and sand in the water does not settle. Therefore, we added a silt basin in the channel to remove sand, and put a small structure at the entry to slowdown the water flow in the tank to catch floating rubbish more easily.

（2） Preventing tiny rubbish from entering the water turbine The Turgo turbine has a nozzle (spear valve) to control the water volume. In the dry season when

the water flow is low, the nozzle opens just a little, which often causes clogging of particles, and decrease of power output. The original trash rack could not catch small rubbish. Therefore, we installed a wire mesh (2mm) to catch tiny particles, which works well now.

Figure 4-6-1 A wire mesh at the head tank

（3） Maintenance of irrigation channels As a result of the renovation of existing irrigation channels, the ground is exposed at many places

without treatment. In the rainy season erosion may occur and cause blockage of the channels. We instructed the villagers to carry out frequent inspection of channels in the rainy season, especially after a heavy rain. They can repair channels in such occasions quite easily. Actually they repaired a channel quickly when a small landslide occurred and covered the channel with soil and rocks.

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4-6-2 Electro- mechanical equipment The controller and protective device are well designed and have no particular problems. However,

the low-frequency relay was frequently activated when the water flow was low. If the relay activation repeatedly occurs, the relay contact point may burn out. To prevent such fault, we changed the setup of the relay so that it can be temporarily turned off to allow continuous low voltage power supply in the dry season.

An auxiliary relay point

of contact is opened.

Figure 4-6-2 Low-frequency relay

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Chapter 5 Operation and Management of the Pilot System

5-1 Operation and Management Plan There are two aspects, financial side and technical side, in tasks that the villagers must to do to

manage the pilot system. And the timeframe of these tasks is varied, ranging from daily operation to ten-year maintenance. These are the tasks that the villagers have never experienced. They cannot perform them immediately, and therefore, they need to learn by going though sufficient training. This is the most important point that will lead Village Hydro to a success. The following figure illustrates the tasks to be carried out.

Organize CEU & Back stop

Frequency

Short Beginning Contract for electricity supply House connection Collection of connection fee

Daily Daily check & cleaning

User service Operation Operation record

Monthly Meter reading Equipment check Collection of electricity tariff Arrangement of record Salary payment Reserve fund

Every year Payment for checking Periodical checking

Parts replacement

Long term Payment for repair/checkOverhaul

Long Repair

Emergency Secure fund for emergency Measures against accident

Sound financial condition Sustainable operation

Organizational functionality

Financial work T

Sustainable management

Goal:

Organizational development

Training / Manual

echnical work

Figure 5-1-1 Operation and management plan

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5-2 Organizational Framework 5-2-1 Establishment of management group in the village－Community Electricity Unit

In off-grid rural electrification, power systems need to be operated independently by local people. For the smooth operation and management, it is important to make a consensus among the villagers beforehand.

Figure 5-2-1 Villagers meeting

As a result of villagers meeting at Theu village, they agreed to establish a special organization in the village for the management of Village Hydro in order to do its operation and maintenance including tariff collection and money management. Soon after the meeting, the Community Electricity Unit (CEU) was established. Its structure and responsibilities are as follows.

（Overall management, money management） （O&M of power station, operation record） （Meter reading, tariff collection ,book keeping）

Manager

Operator Operator

Assistant Assistant （Support operator’s work）

Figure 5-2-2 Responsibilities of CEU members

Normally, a CEU consists of one manager and two operators. In case of Theu, five members work

for the CEU. The manager is responsible for the overall management of CEU, especially financial management. The two operators work for the daily operation and maintenance (O&M) work of Village Hydro system and tariff collection. They live near the power station, so they can easily check the condition of power plant. The two assistants, on the other hand, live in two populate areas far from the power station, and they are mainly responsible for collecting electricity charges in their areas.

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5-2-2 Back-stop The trained CEU members conduct daily operation and maintenance work, tariff collection and

other management work. However, they cannot fix serious technical problems easily. They can only deal with unexpected troubles as long as support of outside experts is available. It is necessary to secure such technical backstop system for the sustainable operation of off-grid power system. In this pilot project, the following backstop system was arranged.

Fee

Support

Regional Support Organizations

HoaBinh Power Company LacSon Branch Office Lac Son Irrigation Office

Guidance & troubleshooting

Electricity Tariff payment

Manager / Operator

Community Electricity Unit

Theu Village

Electricity Users

Contractor： HoaBinh construction

Manufacturer:

Hydro Power center

Hoa Binh Province, LacSon District, Quy Hoa Commune

Technical service (Overhaul/Repair)

Supervise

Figure 5-2-3 External backstop system of CEU in Theu

If there occur serious troubles with the pilot system, the equipment manufacturer and construction

company will deal with them within the warranty period. When the warranty expires, they will do the service with fees. The irrigation office that belongs to the Department of Agriculture and Rural Development (DARD) of HoaBinh province and the Lac Son branch office of HoaBinh Power Company will be able to provide support to the CEU. The irrigation office can help the CEU in generator maintenance, and the LacSon branch office can help the CEU in distribution line maintenance. Also, the administration offices of HoaBinh province, LacSon district and Quy Hoa commune will support the CEU in organizational and financial management issues.

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5-3 Operation Daily start and stop of the plant is straightforward and should be done properly. Inappropriate

operation may result in damage to the plant. The current operators are trained and acquired necessary skills. We created Operation & Maintenance Manual (O&M Manual) in which system operation and troubleshooting are described. We request the operators to understand O&M Manual and to utilize it for their proper operation and maintenance. This manual is also very useful for their technical succession when new operators take over the duty.

5-3-1 Basic procedure of the operation （1） Operation procedure

Operation Procedure in the O&M Manual is made easy to understand for the villagers using many photos and illustrations. It contains start / stop operation, keeping right voltage and water pressure, and observation during the operation.

（2） Voltage stability The dummy load controller can control and sustain voltage within the range of 220 to 230V

automatically during the rainy season. But the low water flow in the dry season leads to low voltage situation, which is unavoidable. The low voltage operation causes to decrease the lifetime of fluorescent lights. Therefore, we instructed to keep the voltage above160V.

0V

230V

220V

160V

Ｖ

Voltage meter

Figure 5-3-1 Voltage meter

（3） Water pressure stability Water pressure should be kept at 6kg/cm2, which corresponds to 60m head, at all times. Operators

should keep the water level during the operation to follow the idea of “the water used is no more than the water flowed into head tank”. When the operators cannot meet this condition especially in the dry season, they should follow the direction at “6-1 Seasonal Operation”. When rubbish clogs in the needle nozzle of turbine, it blocks the water flow to the water turbine and reduces the power output. We suggested two measures to deal with this problem as follows:

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① Install wire mesh and remove sand and small particles from the waterway. ② When rubbish clogs in the needle nozzle, flush the clog away by opening the valve

for a few seconds. To conduct these measures quickly, operators should stay in the powerhouse during the

operation in the dry season.

6kg/cm2

Water pressure

Figure 5-3-2 Water pressure meter

（4） Slow shut down of valves When operators shut down water flow of the penstock, the spear valve or inlet valve should be shut

down slowly to prevent sudden pressure surge in the penstock. Quick shutdown can cause serious damages to the penstock. We explained this potential accident to the operators and instructed to close valves slowly.

Do not closequickly!

Valve clTime perio

(second)Pressure su

Surge againstatic pressu

osing time and impact shock d 5s 4s 3s 2s 1s

rge 4.4m 5.6m 7.6m 11.7m 25.6m

st re 7.3% 9.3% 12.7% 19.5% 42.7%

Figure 5-3-3 Quick closure of inlet valve

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5-3-2 CEU Networking The manager and operators of CEU have authorities and responsibilities. These are clearly

defined and described in the O&M Manual. The CEU can fulfill their duties with appropriate networking as shown below.

Figure 5-3-4 Network of CEU

5-3-3 Troubleshooting We pointed out underlying risks in plant operation, and described how to find causes and how to fix

problems in the O&M Manual. The operators are expected to properly and quickly deal with problems by referring to the O&M Manual. We categorized these troubles into two groups:

(1) troubles that can be fixed by the CEU (2) troubles that need experts to fix

Table 5-3-1 An example of troubleshooting manual

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5-4 Maintenance 5-4-1 Basic procedure of maintenance

Early detection of unusual system condition and proper treatment are very important for long-term stable operation. Therefore we set rules regarding the detail and frequency of inspection and periodic maintenance. Record sheets and check points concerning the inspection and periodic maintenance are described in the O&M Manual, so that the operators can recognize necessary maintenance items and avoid negligence of duties.

5-4-2 Maintenance work （1） Inspection of water turbine (runner / nozzle)

The runner of turbine will wear by sand contained in water. The operators should check the condition of runner periodically.

Check condition of runner Internal inspection of housing

Figure 5-4-1 Inspection of water turbine

（2） Change carbon brushes

Carbon brushes wear after long hours of operation, and they are required to be changed regularly. The operators went through on-the-job training to learn how to change carbon brushes.

②

①

Figure 5-4-2 Carbon brush replacement

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5-4-3 Support organizations It is ideal for Village Hydro to be operated and maintained by the villagers alone. But in case of

serious problems, the villager cannot repair and they need to call outside experts. It is dangerous for the villagers to try to fix all problems by themselves. In the pilot project, we organized a backstop system and instructed the villagers to contact outside organizations that are able to provide technical

Table 5-4-1 Support organizations

5-4-4 Consumables and spare parts There are some components in the turbine/generator unit and control panel that need to be

replaced periodically. We listed up such components and provided spares that are available in the market in Vietnam.

Table 5-4-2 Consumable parts

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Table 5-4-3 Spare parts provided

No Name of parts Place

1 Generator Carbon Brush Operator 6

2 Rectifier Operator 5

3 Bearing for water turbine Operator 1

4 Dummy load Operator 1 Set

Quantity

5-4-5 Safety The operators should understand and be aware of dangers. They should pay attention to signs of

dangers during operation, inspection and maintenance of the system.

Table 5-4-4 Safety tips

Make sure to keep a distance from circuits and networks in the powerhouse, distribution line and indoorwiring, or electric shock will occur!

Two or more operators should perform maintenance and it should occur only during the daytime.

Refrain from conducting maintenance work during the nighttime and bad weather.

Before electric maintenance, make sure to stop generator and electric switches.

Before water related work is performed, such as water turbine, make sure to stop the generator and toclose all gates. In addition, clear away water from the penstock.

During operation, keep away from any moving devices such as the turbine and generator.

Only authorized operators are should be allowed to climb the electric poles.

Never hold a long bar under or near the distribution line. Do not hang, or attach any objects to the electricpole or distribution wire.

DistributionLine

GeneralMatter

GeneratingUnit

Additionally, the operators should advise the villagers to use electricity safely.

Table 5-4-5 Safe usage of electricity

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5-5 Electricity Supply Contract 5-5-1 Ideas of the contract

In Village Hydro electrification, there are two parties involved; Community Electricity Unit as electricity supplier and villagers as electricity users. Although a Village Hydro system provides power supply to a small number of households, it is strongly recommended to have an electricity supply contract to avoid future problems caused from misunderstandings or ignorance. An electricity supply contract that defines the rights and responsibilities of the two parties needs to be signed. The idea of electricity supply contract is common in grid electrification and it is replicable in off-grid electrification. It is recommended to make a consensus on the terms and conditions of the contract in a

villagers meeting at the planning stage to process applications for power supply smoothly.（See the sample contract in the Management Manual）

Main responsibilities

Supplier

(CEU)

Install lead-in wire and watt-hour meter Generate and supply electricity to users Collect electricity charge (sell electricity) Maintain and manage related facilities

User (Villager)

Pay connection charge Use electricity Pay electricity charge（buy electricity）

Figure 5-5-1 Signing a contract

5-5-2 Main provisions in the contract （1） Connection fee－Article 2

Electricity users have to pay a connection fee to the CEU. The amount of connection fee depends on the necessary cable length. The lump sum payment is standard in Vietnam; however, there are many households that have difficulty in preparing such a large amount of money. In this contract, therefore, it is allowed to pay a connection fee by installment with an interest of 1% per month. The installment period can be as long as six months, so that most customers can afford a connection fee. More than 80% of households applied for the installment plan in the pilot project. This fact has revealed that installment plan is effective to increase the number of electrified households.

（2） Electricity tariff－Article 5

Regarding the electricity tariff, a monthly rate of 700VND per kWh based on the GOV guideline on the electricity tariff in rural areas was applied. However, in off-grid isolated power systems, this tariff usually results in insufficient income to cover operation and maintenance costs. Therefore, it is

necessary to mention the possibility of tariff increase in the contract.（See Article 7） In the pilot project, revision of tariff system was discussed and agreed in a villagers meeting a few months after the commissioning, because it was confirmed that the income based on the original tariff was far less

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than the necessary amount.

（3） Failure of payment－Article 6 We use the same provision as to failure of payment as in the contract of local power company.

Namely, if a customer fails to pay an electricity charge for more than one month after due date, electricity supply will be stopped. But the CEU should be flexible when applying this provision. Also, a fee of 25,000VND is required to reconnect the customer.

（4） Restriction of electricity usage－Article 8

Unlike the grid electrification, the power output varies with season in Village Hydro electrification. Therefore, there is high possibility that electricity usage will be restricted in the dry season when the power output decreases. Also, when the total demand for electricity grows in future and exceeds the power output, electricity usage will be restricted. Therefore, the possibility of power outage and restriction on power consumption was addressed in the contract.

5-5-3 Collection of electricity tariff Collection of electricity tariff is basically an operator’s job. In the pilot project, each operator or

assistant has his own area for which he is responsible. Every month he visits each customer to read meter, notify the bill, collects money and records the meter reading, power consumption and monthly charge in the record book. After collection, the manager checks the record book and the collected money.

Figure 5-5-2 Meter reading and book keeping

5-5-4 Connection fee and payment （1） Connection fee

Regarding the connection fee, the customers are divided into three groups depending on the necessary length of lead-in wire; short-, medium- and long-distance group. A one-time fee of 200,000VND, 250,000VND and 300,000VND is applied to each group respectively. Actual costs of materials and equipment necessary for connection are as follows:

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－Watt-hour meter, breaker Approximately total 80,000VND －Cable(lead-in wire) PVC-M2x1.5mm2 3,000VND/m We used good quality cables taking their safety, durability and long life into account. The estimated

total material cost of house connection with a length of 50 m is 230,000VND.

（2） Payment method and fund preparation

At the first stage of pilot project, 82% of the users（44 out of 54 households）chose the installment plan when signing the electricity supply contract in February 2004. Those households that selected the installment plan paid at least 50,000VND as first payment. Most households prepared the money for connection fee by selling agricultural products and livestock.

Table 5-5-1 Sales price of agriculture products and livestock at market（reference）

Chicken Pig Cassava Maize Rice Price (VND/kg) 25,000 13,000 1,300 2,200 3,500 Remarks 1.5-2.5kg in

weight 50-70kg in weight

Usually 10kg unit

5-6 Monthly Electricity Income and Its Management 5-6-1 Electricity tariff

（1） Electricity tariff in off-grid electrification A basic principle for setting the electricity tariff is “100% cost recovery” to secure enough cash flow

to cover the repayment and recurring costs. However, the target areas of off-grid electrification are underdeveloped rural areas where the economic conditions are severe. Therefore, it is unrealistic to ask the villagers to pay all costs. As a result, a substantial amount of subsidy would be unavoidable to offset the shortage of income, which may be well understood among the government officials concerned.

Since Village Hydro is supposed to be operated and managed by the local people, at least the

operation cost including the long-term maintenance cost should be covered by the electricity tariff income from users to achieve its long-term sustainability. Besides, in case of off-grid rural electrification, electricity tariff is not bound by the GOV guideline of 700VND per kWh, and can be set independently. In particular, the tariff system of Village Hydro must be well designed to secure revenue even in the dry season when the power output is low and the power consumption is small.

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＜Reference＞ According to the MOI, setting a new electricity tariff does not violate the GOV

guideline in case of off-grid electrification such as power supply by photovoltaic, microhydropower, wind power or diesel. Additionally, according to EVN, there is an example ofoff-grid electricity tariff of 3,000VND per kWh, which is applied in Phu Quoc island ofKienGiang province.

（2） Willingness to pay for electricity At the beginning of the pilot project, an interview survey was conducted as a part of baseline

household survey to analyze the villagers’ willingness to pay for the electricity from Village Hydro. The results showed that they were willing to pay, on average, 9,200VND per month. They were using 1.5 to 2 litters of kerosene, which costs around 5,000VND per litter, for lighting every month. Paying around 10,000VND per month for stable electricity supply was recognized reasonable and acceptable for them.

The villagers in Theu village understand well that they ought to bear the necessary costs to operate

and manage the pilot system to ensure power supply. Since they have recognized the benefits of electricity with stable voltage, it can be said that their willingness to pay has increased to more than 10,000VND per month.

5-6-2 Collected money management

In order to operate the pilot system for five to ten years, a long-term plan is required to secure enough money for long-term maintenance as well as for daily operation. The electricity output varies with season in case of Village Hydro, and so does the electricity tariff income. The CEU should keep this point in mind and manage collected money carefully.

（1） Estimation of expenses

1） Salary for CEU members It is reasonable to reduce salaries for the CEU members during the dry season, because the power

output is limited and the operation and maintenance work is not so difficult. We estimated that the total salaries for the CEU members would be 100,000 to 200,000VND per month in the dry season, and 200,000 to 250,000VND per month in the rainy season, taking local conditions into account.

2） Long-term maintenance cost

The CEU can undertake ordinary maintenance work such as greasing, changing spare parts, or cleaning of channels. However, complex repair or overhaul and technical inspection of equipment require outside expert’s support. To prepare for such events, some amount of money from the

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electricity tariff revenue must be retained as a reserve every month. A reference scenario of long-term maintenance is shown below.

?△Tim ing for m aintenance

10987654321Y ear

Expert inspection

R epair, if necessary

C heck w ithin

w arranty

A scenario of long-term m aintenance

?△Tim ing for m aintenance

10987654321Y ear

Expert inspection

R epair, if necessary

C heck w ithin

w arranty

A scenario of long-term m aintenance

In this scenario, we assumed that expert inspection and overhaul after five year operation would

cost 2,000,000VND, and repair cost for turbine/valve after seven to ten years would be 4,000,000VND. Therefore, a total of 6,000,000VND is required for 10 years. In other words, about 50,000VND, on average, should be retained as a reserve every month. However, this is an optimistic scenario. A monthly reserve of 60,000VND or more is recommendable. In addition, troubles may happen in the early stage when the reserved fund is not enough. To prepare for this, it is recommended to include an emergency fund of about 5,000,000VND in the project budget and to transfer the fund to the CEU.

In addition to the salary and reserve for maintenance, miscellaneous administration costs for

stationary, transportation, and telephone charge are necessary. The total of these costs would be less than 10,000VND per month.

（2） Estimation of income

We assumed that average electricity consumption per household would be 2kWh, mainly for lighting, per month during the dry season, and 5kWh per month during the rainy season. Applying the original tariff of 700VND per kWh and assuming 54 households as electricity users, we estimated the monthly income of CEU would be 75,600VND in the dry season, and 189,000 VND in the rainy season.

（3） Financial soundness According to the table below, which shows income and expenses, it is clear that the income is not

enough to cover the necessary expenses even in the rainy season, if the original tariff is applied. The CEU cannot continue operation and maintenance of the pilot system due to shortage of fund. It is urgent to raise the electricity tariff to improve the financial conditions. (See Section 6-5)

64

Table 5-6-1 Estimation of CEU income and expenses for a month（700VND/kWh）

Dry season (one month) Rainy season (one month) Expense ○Long term O&M cost 60,000VND 60,000VND

○Salary 150,000VND 200,000VND ○Administration 10,000VND 10,000VND （Total expenses） 220,000VND 270,000VNDIncome (Tariff revenue) (108kWh) 75,600VND (270kWh) 189,000VNDBalance ▲144,400VND ▲81,000VND

*Assuming 54 households

5-7 Training Plan 5-7-1 Contents of training

In order to achieve sustainable operation and management of the pilot system, it was required to provide good training to the CEU members so that they could undertake required tasks and deal with troubles correctly. There are technical tasks and managerial tasks that the CEU members should do. In this pilot project, we made them learn on a step-by-step basis by providing a serious of training sessions after the commissioning. OJT training and hands-on training were focused.

Table 5-7-1 Contents of training

Timing Technical contents Management contents At beginning -Operation of water turbine and generator

-Operation record -Maintenance of facilities -Lead in wiring

-Contract for electrification -Collection and record of connection fee -Maintenance of user record

After electrification

-The method of facilities inspection -Ways to cope with the shortage of the output by water shortage -Maintenance of channel in the rainy season-Failure diagnosis, the parts exchange method

-Collection of electricity tariff and record -Management of income -Financial prediction and reexamination of electricity tariff -Treatment of trouble

5-7-2 Training plan In this pilot project, training was carried out based on the technical training plan and the

management training plan that covered all required items. Especially, training after the seventh month from the start of operation was carried out with the Management Manual that covered operation, maintenance, organization and management as a teaching material. The manual, translated into Vietnamese, was prepared for developing village organizations that are responsible for managing off-grid systems. When a new off-grid electrification project is implemented, it can be used for training the villagers.

65

（1） Technical training plan

Timing Subjects Contents of training Beginning -Operation of water turbine

and generator -Lead in wiring

-Teach how to start and stop the generation by OJT after explanation of operation -Examine and discuss a way of electrification for remote households after checking the voltage at the distribution terminal and other conditions

Two month after electrification

-Water control for the dry season -Operation of water turbine and generator -Operation record -Channel maintenance and management

-Figure out the river water volume and the states of water usage during the dry season and confirm the water control for smooth power generation -Reconfirm the basic issues and past problems and modify and instruct for long-haul operation -Establish a system to record the state of operation in preparation of future monitoring -Confirm the channel conditions for operation and instruct how to take measures against troubles

Five months after electrification

-Ways to cope with the shortage of the output by water shortage -Operation of water turbine and generator -Channel maintenance and management during the rainy season

-Countermeasures were discussed through villagers’ meetings etc. against the shortage of the output by water shortage -Based on the operation record, confirm actually occurred problems and instruct countermeasures -Confirm the problems in channels in the rainy season and prepare for the measures and way for maintenance and management

Seven months after electrification

-Water control by regulating reservoirs -Failure diagnosis, the parts exchange method -Reconfirmation of technical training subjects

-The water control method for peak demand at the time of the shortage of the output was instructed -Based on the draft manual, ways to deal with troubles and exchange parts were given - Reconfirm the all of technical subjects

Nine months after electrification

-Planned power cut-off by dividing areas in turn -Final confirmation of technical training subjects

-As the last measure at the time of the shortage of the output, the switch for system division was installed and the method of planned power cut-off was taught -Based on the rural electrification manual, finally reconfirm the all of technical subjects

66

（2） Management training plan

Timing Subjects Contents of training Beginning -Idea of electricity supply

contract -Present and discuss user and supplier’s responsibilities and electricity usage based on the contract

Two months after electrification

-Signing contract -Collection of Connection fee（Pay by installment）and record -Collection of electricity tariff and record

-Conclude contract and collection of connection fee -Practice interest calculation in the case of installment payment using collection form of connection fee -Review how to read electricity consumption meter and keep record

Five months after electrification

-Collection of electricity tariff and keeping record of electricity users book -Management of collected money -Handling of payment failure -Review of financial management -Other management issue

-Check implemented work and modify the way of book recording if necessary -Check electricity users book and confirm if they reserve for future maintenance. -Case discussion, if any -Discuss how to review electricity tariff system based on financial estimation for a year -Case discussion

Seven months after electrification

-Review of implemented training in the past -Long-term sustainable operation

-Review training items with management manual (Making consensus on how to keep books, so that they can check each other) -Discuss problems of management work with their causes and solution. Based on discussion, examine what is necessary for long-term and sustainable operation（Mini-workshop）

Nine months after electrification

-Confirmation of organization and financial management work

-Check and confirm all the management work of CEU along the manual OJT. In particular, discuss and confirm key points of management work with manager.

5-7-3 Evaluation of training

Training after the start of operation was conducted from basics to more complex matters on a step-by-step basis. All necessary items to manage Village Hydro were transferred to the CEU through a total of four training periods.

（1） Technical training: Operation The turbine/generator unit and dummy load controller, both made in Vietnam, were easy to operate,

and the CEU members mastered basic operation skills quickly. More difficult thing was how to continue operation under the low water flow. We transferred such ideas as using a reservoir, voluntary restrictions, and planned power outage, to cope with the situation. The training about operation went smoothly, and the unmanned long operation has become possible in the rainy season when the amount of water is sufficient. Although any big troubles did not occur during the training period, we have

67

already pointed out potential problems to the CEU members and have provided guidance to them on how to utilize troubleshooting methods stated in the manual.

Technical training: Operation

Application Planned power cut-offWater control with reservoir

Long-hour operationBasics Basic operation Operation record

Operation start 2 month 5 month 7 month 9 month

-Ways to cope withthe power shortage

Figure 5-7-1 Accumulation of the know-how about operation

Figure 5-7-2 Technical training scenes

（2） Technical training: Maintenance

One of main objectives of maintenance training was to raise consciousness about maintenance among the CEU members. They started to learn about maintenance work and to keep the plant facilities clean and tidy. As to the maintenance of channels, they improved the structure and position of wire mesh and bar screen, which is a good example of their proactive attitude toward good maintenance. As a result, clogging at the spear valve of turbine decreased sharply. They check the conditions of un-lined channels after heavy rain, and undertake repair work quickly if they find damage to the channels.

68

Technical training: Maintenance

Application Failure diagnosis, parts replacement method Maintenance of channels

Inspection of equipmentBasics Lead-in wiring

Operation start 2 month 5 month 7 month 9 month

Figure 5-7-3 Accumulation of the know-how about maintenance

Figure 5-7-4 Training for drawing lead-in cables

（3） Management training For management training, tariff collection and the management of collected money are the main

topics. The CEU members learned seriously and mastered the procedure of tariff collection and established a good practice of money management through intensive management training.

Management training

Coping with troublesApplication Financial forecasting and revision of tariff

Maintenance of user record Collection and management of electricity tariff Collection and management of connection fee Signing contract

Basics Ideas on electricity supply contractOperation start 2 month 5 month 7 month 9 month

Figure 5-7-5 Accumulation of the know-how about management

69

Figure 5-7-6 Management training scenes

The CEU members are good at calculation with or without calculators. However, they sometimes

make mistakes in calculating power consumption data or electricity charges. This problem will be improved in the course of managing the pilot system. It is necessary to make sure that the manager checks the record book and the mount of money in hand regularly, and the operators have a common understanding about double-checking and implement a practice of cross-checking by peers.

70

Chapter 6 Monitoring Results and Evaluation

6-1 Seasonal Operation In the pilot project, it was difficult to secure sufficient water for power generation from January to

March 2004 due to a drought. The power output sometimes went down to only 1 kW during the period. Such a situation would happen again in the future. In order to cope with the low water flow in the dry season, we proposed and implemented some countermeasures.

6-1-1 Increasing supply capacity: A reservoir In order to increase the power output during the peak hours in the dry season, we decided to use an

existing storage pond (with an area of about 130m2) as a small reservoir (with an effective depth of 0.5m), and installed a 100-mm diameter steel pipe with a sluice valve underground to connect the pond and channel. From the reservoir, we can discharge water to the channel. Such storage ponds are common in the terraced rice field areas in the mountainous area. This idea can be an effective measure to cope with low water flow in the dry season.

go toHead tank

ChannelRoad

Pond

Discharge equipment

Figure 6-1-1 Storage pond as reservoir

71

0.7m

Rock masonry with mortar

Storage water level

Existing water level

Storage Depthd=0.5m

0.1m0.7m

0.9m

Existing ground level

Sluice valve φ100

Figure 6-1-2 Discharging equipment

The water flow during the drought was about 4 liters/s. This was only 40% of the assumed

minimum water volume (10 liters/s), and the output power dropped significantly due to low efficiency of the turbine. The reservoir can supply 10 liters per second to the channel during peak hours. This ensures a minimum output of about 3 kW for two hours to meet the electricity demand of whole village for lighting.

[Operation of the reservoir]

(1) Small volume of water (0.001m3/s) is always flowing into the reservoir.

0.001m3/s

0.5m

Water level

Water volume

Total 0.01m3/s

0.009m3/s

2hGeneration

22hrs Water storage

(2) From the reservoir, 0.01m3 of water is discharged for two hours.

(3) After two hours, the valve is closed. (4) The water level changes by 0.5 m.

72

Figure 6-1-3 Renovation of a storage pond into a reservoir

6-1-2 Supply restrictions: Planned power outage in rotation Another simple way to cope with voltage drop in the dry season is to restrict power consumption. A

voluntary action for load restriction so called “one lamp per household” was going in Theu in the dry season to reduce the total peak demand. In addition, we need to prepare more restrictive measures on power supply to deal with extreme power shortages.

The pilot system supplies power to 73 households as of September 2004. Since the number of users

increased as a result of the second stage house connection, the power supply during the next dry season is viewed more difficult than this year. Voluntary restrictions may be not enough. Therefore, we decided to implement planned power outage if severe low water conditions occur. We divided the village into two areas, and installed two cut-off switches at the Pole No. 4, a branching point in the distribution system, to disconnect the power to each area in turn.

73

Powerhouse

Switch B Switch A

No.451HH 28HH

G

Switch B off Switch A off

SunhThuSon

Thuc

Num

Nghia

Hien

Chun

Anh Suong

Tum

NuiThui

Phong

Sau

PhonAo

Oi

Han

Bui

Phuon

RetMinh

Danh

Bum

Thien

Sot

Lap

Hong

Chach

Ve Village

Sun

Thiu

Du

Hinh

Son

DinhLuong

Thu

Chun

Chuc

Huoc

Nhen

Nuon

Nghia

Hung

Thiem

LienSan

Dung

Quyet

Phien

Quang

Song

Don

Dien

Thon

Minh

Thien

Thuy

Vuong

Mun

Chien

Hoi

Chui

Tinh

Bum

Chin

Anh

Power Station

Mum

Nhun

Niet

KuongSchool

San

Tien

Dung

Theu Village distribution line layout

Introductory Remarks

TE1

Concrete pole

Support Wire

Low-voltage Power Cable

Pole Number

Households

N

40

52

33

West side East side

L3 = 366m

1

36

45

12

35

12-10

2

3

4

55

Chin

20

24

1818-1

35-2

Phuong

44

46

48

53

57

5656-1

7

34

3231 30

2928

27 26 2523

22 2119

17

16

15

14

13

12-1

12-212-312-4

12-512-6

12-712-8

12-9

11

10

9

8

65

37 38 3941

4243

47

49

50

51

54

35-1Luong

SunhThuSon

Thuc

Num

Nghia

Hien

Chun

Anh Suong

Tum

NuiThui

Phong

Sau

PhonAo

Oi

Han

Bui

Phuon

RetMinh

Bum

Thien

Sot

Lap

Hong

Chach

Ve Village

Sun

Thiu

Du

Hinh

Son

DinhLuong

Thu

Chun

Chuc

Huoc

Nhen

Nuon

Nghia

Hung

Thiem

LienSan

Dung

Quyet

Phien

Quang

Song

Don

Dien

Thon

Minh

Thien

Thuy

Vuong

Mun

Chien

Hoi

Chui

Tinh

Bum

Chin

Anh

Power Station

Mum

Nhun

Niet

KuongSchool

San

Tien

Dung

Theu Village distribution line layout

Introductory Remarks

TE1

Concrete pole

Support Wire

Low-voltage Power Cable

Pole Number

Households

N

40

52

33

West side East side

L3 = 366m

1

36

45

12

35

12-10

2

3

4

55

Chin

20

24

1818-1

35-2

Phuong

44

46

48

53

57

5656-1

7

34

3231 30

2928

27 26 2523

22 2119

17

16

15

14

13

12-1

12-212-312-4

12-512-6

12-712-8

12-9

11

10

9

8

65

37 38 3941

4243

47

49

50

51

54

35-1Luong

Danh

Power cut-off area

Power cut-off area

Figure 6-1-4 Idea of planned outage

Figure 6-1-5 Installation of cut-off switches

74

6-2 Power Generation Performance We measured the load and power output (load curve) to check the voltage stability against load

changes. We also collected data on the performance of control system, such as the voltage and frequency at start and stop, load increase and decrease, load shutdown, the power flow to the dummy load, etc.

6-2-1 Daily load curve -- There are two peaks in a daily load curve; Peak-A at 19:30 and Peak-B at 6:00. The villagers use

lights during the peak hours. -- The dummy load system works well to adjust the voltage and frequency to load changes. The

transient stability is good. Even in case of a large-scale (1kW) load fluctuation, the voltage fluctuation is only less than 15V.

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Date：2004.7.22(THU)17:54　　 ～2004.7.23(Fri)14:40 Temperature ： ２５．０℃

Humidity： ７８％

Sampling： １min

PeakＡ Generator outputstuck Dust?

Kettle(1kW:Son)

Load Curve

Dummy load ※

Generator Frequency

Generator Voltage

PeakＢ

Time

About 15V

※Calculated Value　　Generator output － Load Power

Figure 6-2-1 A daily load curve and generation (July 2004)

6-2-2 Dummy load control ①Before connecting to the village load, the voltage fluctuates to some extent right after the start of

generator. After adjusting the valve properly, the voltage and frequency are both stable.

②When turning up and down the generator by adjusting the valve, the voltage fluctuates but is kept within the range of 210 to 250V, which is good.

75

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Start spplying　Load

Open needle &confirm stability at

6kW(2/3output)

Start dummy load control

Generator Voltage

Generator Output

Generator Frequency

Load Power

Date ： 2004.7.23(Thu)　　　　 　 16:42～ Temperature： 27.0 ℃ Humidity ： 78％ Sampling interval：１sec

Open needle more and keep head tank water level

Needle Opening=3.0mm

Time

①

②

③

Figure 6-2-2 Dummy load control performance

6-2-3 Automatic shutdown

① After 25 minutes from closing the intake gate, the turbine stops automatically. ② Low voltage, under 160V, power supply during the automatic stop process continues for only

three minutes, which is within the tolerance level.

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10 minHead tank empty

Open intakegate

15 minStart voltage dropping

19 min 39secAutomatic load cutoff

25 min 13 secStop waterturbine

Generator Voltage

Gerenator Output

Load Power

Generator Frequency

　According to water decrease,generator output drop.

Date ： 2004.7.22(Thu)　　　　　　 16:11～ Tempreture ： 25.0 ℃ Humidity ： 78％ Sampling interval：30sec

Voltage Drop　　4 min39 sec

(W,VA)(V,Hz)

Contact off

②

Under 160Vabout 3 minutes

①

Stopwaterturbine

Lapsedtime

Figure 6-2-3 Automatic stop test

76

6-2-4 Load shutdown test A load shutdown test was conducted to confirm the safe and stable operation in case of sudden load

shutdown during the operation.

① After 2.5 seconds from shutdown, the dummy load control started at the voltage of 270V. ② The maximum voltage and frequency were 340V and 65.8Hz. (a surge by 57% and 37%) ③ After the process of ① and ②, the values of voltage and frequency converge into an

appropriate level.

We can evaluate the dummy load control is functioning properly and has sufficient abilities for

Village Hydro operation

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Max.Voltage＝340V

Generator Voltage

Generator output

Generator current

Load PowerGenerator Frequency

Load cut off

Max.Frequency＝65.8Hz

After 2 min from load cutoff,dummy load start controling thegenerator voltage arround 270V

Both generator voltage andfrequency are converging.

Voltage Variation ∆Ｖ　　∆Ｖ＝(340-210)/230　　　＝57%

Frequency Variation ∆Ｆ

Date ： 2004.7.23(THU)　　　　　　 16:42～ Tempreture： 27.0 ℃ Humidity ： 78％ Sampling interval：0.1sec

Lapsedtime

①

③

②

Figure 6-2-4 Load shutdown test

6-3 Demand Analysis 6-3-1 Demand estimation

In Theu village, a certain amount of electricity demand already existed at the initial stage of the pilot project, because there were many households using Pico-hydro units with a number of electric appliances. Popular appliances were incandescence lights, fluorescent lights, TV sets, and electric fans. Average electricity demand per household at the initial stage was estimated to be about 40W based on the data of appliances. (See Table 6-3-1)

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Table 6-3-1 Estimated electricity demand per household in Theu (Current)

Electric appliance Power consumption

(W)

Unit Total capacity

(W)

Ownershipratio (%)

Simultaneous demand

coefficient (％)

Unit peak demand (W/HH)

Incandescent bulb 25 2 50 68 50 17.0 Fluorescent light 40 1 40 45 80 14.4 Television (B/W) 30 1 30 33 70 6.9

Television (Color) 60 1 60 5 70 2.1 Cassette recorder 10 1 10 20 10 0.2 Electric fan 50 1 50 32 10 1.6 Total 42.2

According to a load survey carried out in July 2004, the peak hours of electricity consumption were

from 6:00pm to 9:00pm, and the peak load reached 2.3kW, with 54 households, at around 8:00pm. This is the time zone that the villagers have dinner and do some work at home. The average demand per household, 42.6W (2,300W divided by 54), matches with the estimated unit demand shown in Table 6-3-1.

Fluorescent Lamp Incandescent bulb

Black & White TV Electric Fan

Figure 6-3-1 Major electric appliances used in Theu

78

Because of the low water flow in the dry season until late April, sometimes we had to stop the operation of the pilot system. However, mainly owing to the 15W-class efficient fluorescent lights, which were introduced to lower the electricity demand, the total load decreased and we could manage to supply power to the users. Long power outage did not happen.

The number of electricity users increased to 73 after the second-stage house connection, and,

moreover, the unit demand will gradually increase because many users will purchase TV sets and other appliances. For these reasons, securing stable power supply to meet the demand will become more difficult. Therefore, some measures, such as using a reservoir or planned outage, must be taken in the future.

Table 6-3-2 Plant operation data in September 2004

Item Data Note Operation days 30days 9/1～9/30 Operation hours 622 hours Average operation hours per day 20.7 hours/day Electricity consumption (whole village) 359kWh Unit electricity consumption per household 4.9kWh/month 73 households

6-3-2 Demand forecast Although the electricity demand growth was temporarily leveling off owing to the spread of

efficient fluorescent lights, the villagers want to use more electricity in the future. There is a developed market for electric appliances; and some wealthy households can afford them. The market price of major appliances is as follows:

Table 6-3-3 Market price of electric appliances

Electric appliance Capacity Price (VND) Incandescent lamp 25W,40W,60W,75W 2,000～6,000Fluorescent light 20W, 40W 30,000～40,000Black and white television (used) 40W － Color television (New) 40W 1,500,000～2,500,000Cassette recorder 10W 120,000Electric fan 50W 100,000Electric rice cooker 1000W 250,000Electric kettle 1200W 85,000

Note: Vo Market, Price Survey Data

Now electricity is available, many households wish to buy electric appliances. Theu is a village of

Muong people who generally live in large houses. Therefore, bright fluorescent lamps, bulb-type fluorescent lamps in particular, are becoming popular. There are 30 households that already have TV sets. In addition, 22 more households are considering buying TV sets. Thus, there will be a substantial

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demand increase. Lamps and TVs will account for a large part of future electricity demand increase. Table 6-3-4 shows an electricity demand projection for a few years ahead. This projection provides a good reference to other Village Hydro projects to be developed in the future.

Table 6-3-4 Electricity demand projection

Electric appliance Power consumption

(W)

Unit Total capacity

(W)

Ownershipratio (%)

Simultaneous demand

coefficient (％)

Unit peak demand (W/HH)

Incandescent bulb 25 1 25 80 50 10.0 Fluorescent light 20 2 40 70 80 22.4 Television (B/W) 30 1 30 60 70 12.6 Television (Color) 60 1 60 20 70 8.4 Cassette recorder 10 1 10 40 10 0.4 Electric fan 50 1 50 60 10 3.0 Total 56.8

6-4 Use of Electric Appliances

At the time of pilot system commissioning, 40W class bulbs that had been widely used in the village with Pico-hydro caused over-load to the pilot system. The introduction of efficient bulb-type fluorescent lights (14W class) was pursued to change the situation.

6-4-1 Differences between fluorescent and incandescent lamps The characteristics of incandescent lamps and fluorescent lamps used in the village are compared as

follows.

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Table 6-4-1 Comparison of lamps

Feature 14 W fluorescent light (Efficient type)

40W Incandescent lamp

Brightness Bright

Dim

Unit price 30,000 VND (in Hanoi) 5,000 VND Life About 6,000 hours About 1,000 hours Photo

The villagers had no experience of using bulb-type fluorescent lights before. Although their prices

are higher than bulbs, these lights are long-life and brighter. The villagers are interested in these lights, and will recognize the benefits of using such lights soon. Lights of this type will gradually spread in Theu. When we tested the fluorescent lamps, we found that they lighted if the voltage is above 160V.

Fluorescent lamp unit test（14W）

0.00

0.02

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160 170 180 190 200 210 220 230 240

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Figure 6-4-1 Results of testing two types of lamps

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6-4-2 Appropriate range of voltage Black and white TV sets were also widely used in Theu before the pilot project. We conducted a

performance test on TV sets by changing voltages, and found the following phenomena. It can be said that minimum voltage of 180V is necessary to operate those old TVs.

Table 6-4-2 Phenomena observed on black & white TVs

Voltage Phenomenon

100V～150 No picture, sound only

150V～180 Small picture

180V～ Full-size picture

From the above-mentioned result, we need to keep the voltage above 160V.

Table 6-4-3 Voltage range for electric appliances

Voltage Incandescent bulb Fluorescent light Black and white TV

160V180V

220V

100V

6-5 Tariff Collection and Money Management 6-5-1 Revision of electricity tariff

The original tariff, 700VND per kWh, was not appropriate to secure enough income, and therefore revised five months after the commissioning. An important point in electricity tariff setting is to make it simple. Having complicated tariff systems, seasonal tariffs for example, should be avoided, because that makes financial management difficult and leads to a lot of troubles and complaints on the user side. Even though the variation of electricity consumption with season is significant, a single tariff schedule should be developed. It is not appropriate to pursue balancing income and spending for each month. Rather, an approach of offsetting deficits in the dry season by surpluses in the rainy season is recommended.

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Regarding how to design the new electricity tariff, there were many possible approaches. One idea was to collect a fixed sum from each user. However, the villagers criticized the idea as unfair. Therefore, we decided to design the tariff based on the concept of “ the more you use, the more you pay”. A uniform raise of kWh rate is straightforward. However, in case of Theu, this method would result in large fluctuation of electricity income with season. The villagers would pay too much in the rainy season, and too little in the dry season. To improve the situation, we proposed a premium on the electricity rate for lower consumption part rather than a uniform rate increase. The new tariff approved at the villagers’ meeting is shown below. The tariff increase for lower consumption is higher, which aims to secure a certain amount of revenue even in the dry season.

Table 6-5-1 New electricity tariff

kWh 700VND/kWh(A)

Increased tariff (B)

Increase rate (B)÷(A) = (C)

5 3,500 5,800 166% 4 2,800 5,100 182% 3 2,100 4,400 210% 2 1,400 3,200 229% 1 700 2,000 286%

*700VND will be added to each kWh after5kWh.

Applying this new tariff to the financial evaluation shown in Table5-6-1, assuming the same

conditions of average consumption per household, 2kWh in the dry season and 5kWh in the rainy season, we can almost balance the annual income and spending. (See Table 6-5-2) Now the number of customers has increased to 73, the revenue is much larger than this estimation, which indicates a high possibility of achieving a sound financial situation. If there is still some deficits every month even with the new electricity tariff, the tariff system should be revised again.

Table 6-5-2 Estimation of CEU income and expenses for a month (New tariff)

Dry season (one month) Rainy season (one month) Expense ○Long term O & M cost 60,000VND 60,000VND

○Salary 150,000VND 200,000VND ○Administration 10,000VND 10,000VND （Total expenses） 220,000VND 270,000VNDIncome (Tariff revenue) (108kWh) 172,800VND (270kWh) 313,200VNDBalance ▲47,200VND 43,200VND

*Assuming 54 households

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6-5-2 Electricity consumption and villagers payment Electricity charges were collected based on the new tariff after June 2004. The data of September

2004 suggest that the power generation was stable during the month, and the villagers are getting used to electricity usage.

○Number of users：73 households ○Total electricity consumption：359kWh ○Total electricity tariff：406,100VND (including a receivable: 19,300VND) ○Average electricity consumption /HH：4.9kWh ○Average electricity tariff/HH：5,560VND

The graphs shown below are the distribution of electricity consumption and electricity charges in September. According to this, users mostly fall in the range of 3-4kWh and about 40% of households used less than 4kWh in a month. These households mainly use electricity for lights at night, and don’t have other electric appliances that consume more electricity. Additionally, the introduction of efficient bulb-type fluorescent lights lowered the power consumption. On the other hand, about 10% of users consumed more than 10kWh in a month. Those households used several lights, a TV, fan or electric kettle.

0%

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0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 0 5000 7000 10000 12000

(1) Electricity consumption (2) Villagers payment

Figure 6-5-1 Electricity usage in Theu village (September 2004)

There was no complaint for the new electricity tariff and most users paid on time. On-time payment rate was surprising 95%. Additionally, villager's willingness to pay for electricity can be estimated around 10,000VND per month, according to a household interview survey and comparison with kerosene price. Based on the facts and interviews, we can conclude that the villagers accepted the new electricity tariff system.

6-5-3 Collected money management by CEU

It is important to cover necessary expenses and to secure reserve for long-term maintenance from

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electricity tariff revenue, not depending on subsidy. The graph below shows how the CEU allocated the total income of 406,100VND.

(Receivable :19,300VND)

Expense breakdown

Reserve：166,100VND Salary:240,000VND 41% 59

Salary breakdown

（240,000VND）

Manager 20,000 Operator 1 60,000 Operator 2 60,000 Operator 3 60,000 Assistant 40,000

Figure 6-5-2 CEU expenses（Theu village, September 2004）

The CEU salary accounts for 60% of total spending. However, the balance was reserved for

long-term maintenance. It is recommended to keep at least 50,000VND as reserve every month for long-term maintenance. Of course, it is much desirable to put more money in reserve fund to prepare for financial difficulty in the dry season. The manager has been responsible for money management and keeping the account book. Additionally, village core members are supposed to check the account book periodically to prevent fraud.

6-6 Villager’s Perception－Interview survey results After the commissioning of pilot system, the power supply to 54 households started in mid January

in 2004. We secured a long monitoring period to have enough time for training the CEU members. At the same time, we continued monitoring to examine how they used electricity and how they felt about their life with electricity. Ten target households were selected from various groups with different income profiles, four households from the high-income group, three from the medium-income group and three from the low-income group. The monitoring survey was conducted based on interviews and questionnaires.

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Table 6-6-1 Monitoring survey subjects

First monitoring Second monitoring Third monitoring Time after commissioning

After 1 month After 4 months After 6 months

Timing February 2004 May 2004 July 2004

Season Dry season Intermediate Rainy season

Survey subjects Electric appliance usage, activities under lighting, comment on restriction of usage, connection fee payment, etc

Electric appliance usage, comment on efficient lights, comment on restriction of usage and extra payment, etc.

Electric appliance usage, new purchase of electric appliance, comment on new tariff, evaluation of Village Hydro, etc.

6-6-1 First monitoring

（1） Electric appliance usage As the month of February was in the middle of dry season, the power output was limited due to low

water flow. Therefore, each household was asked to use only one light. And electricity supply was only possible for a few hours. Since the introduction of efficient lights had not started yet, every household used incandescent lamps of 25W or larger. (See Table 6-6-2) Estimated average electricity consumption per household per month was about 3kWh based on the interview survey at the ten sample households.

Table 6-6-2 Electric light usage in sample households

Capacity of light 25W 40W 60W 75W Percentage 50% 30% 10% 10%

（2） Restriction of power consumption

Despite restricted electricity usage, all the sample households (including seven Pico-hydro users) expressed their willingness to use electricity supplied from the pilot system. This was because the power supply by the pilot system was stable, and they could enjoy brighter lighting than that by Pico-hydro generators. Another reason was safety. The villagers had a clear understanding that it was difficult to generate power in the dry season from their experience of using Pico-hydro generators, which made them accept the restriction of power consumption.

Table 6-6-3 Benefits from Village Hydro

Benefit Stable supply

Safety Easy usage Reasonable tariff

Saving energy expense

Percentage 90% 40% 0% 0% 0%

＊ Some households chose multiple answers.

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（3） Activities under lighting As the power supply at dinnertime was available almost everyday, the villagers enjoyed having

meals, domestic work, and studying under lighting. Thus, they benefited from the power supply albeit short supply hours.

Table 6-6-4 Activities under lighting

Activity Having meal

Domestic work

Study Others

Percentage 80% 90% 30% 10%

＊Some households chose multiple answers.

（4） Connection fee payment

Connection charge is user’s responsibility. In this pilot project, payment by installment was allowed. Many households that cannot afford connection charges with a lump sum payment could apply for electricity supply by taking advantage of the payment by installment. Among the ten sample households, only two households paid connection charges in cash and eight households chose the installment plan. How they prepared the money for connection charge is shown below.

Table 6-6-5 Preparation for connection fee

Preparation Method

Selling chicken

Selling pig

Selling cassava

Selling dog

From savings

Percentage 30% 20% 30% 10% 10%

6-6-2 Second monitoring

（1） Electric appliance usage In order to cope with the power output decrease, efficient fluorescent lights were made available at a

discount price. This was done as an experiment. As a result, villagers highly evaluated the lights and wanted to use them for their advantages of brightness and low power consumption. As of May 2004, the rainy season just started and the restriction of electricity usage was already lifted. As for the sample households, they were using a few electric lights including the efficient lights for two to five hours per day. However, they seemed limiting the use of TVs and fans. Estimated average electricity consumption of a household was about 3kWh per month, based on interviews of sample households.

Table 6-6-6 Electricity consumption of sample households（May 2004）

Consumption (one month)

0~2kWh 2~4kWh 4~6kWh More than 6kWh

Percentage 40% 20% 10% 30%

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（2） Restriction of usage and additional payment It seemed difficult to operate and manage the pilot system with the original electricity tariff of

700VND per kWh, because the income was far less than the required spending. As for this, when interviewing the sample households, all of them agreed to pay additional charges to make up the shortages of income even under the condition of restricted electricity usage. In particular, eight sample households answered they could pay 10,000 VND for their monthly charges.

6-6-3 Third monitoring

（1） Electric appliance usage In the middle of the rainy season, the power output increased with high water flow. Supply hours

were longer than before. According to this, they could use electric appliances without restriction. However, some households were using TVs and fans with Pico-hydro generators to save money. The average electricity consumption of sample households was 3.4kWh in a month based on the records of meter reading.

Table 6-6-7 Electricity consumption of sample households（July 2004）

Consumption (one month)

0~2kWh 2~4kWh 4~6kWh More than 6kWh

Percentage 34% 22% 34% 10%

＊One household had no data because of meter trouble.

（2） New electricity tariff

All the households paid electricity charges of June 2004 based on the new electricity tariff on time. They commented that their charges based on the new tariff, 4,400VND on average, were affordable. Electricity charges were cheaper than kerosene costs, because they used to consume 1.5 to 2 litters of kerosene and spend 7,500 to 10,000VND every month. It was easy to prepare cash by selling agricultural products or chickens to pay electricity charges.

（3） Purchase of electric appliances

A few sample households bought electric appliances (a cassette recorder or a fan) before the power supply and waited for the electricity to come. However, they said that in general rural villagers would buy expensive goods like electric appliances just before the Tet holiday season, the busiest time for shopping in a year. Among the sample households, three of them were planning to buy color TVs for the Tet holidays of 2005. Thus, purchase of electric appliances did not take place very much during the rainy season even though they could use electricity without restriction. The demand for electricity will grow after the Tet holidays.

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（4） Satisfaction with Village Hydro In summary, the sample households were all satisfied with the power supply by the pilot system and

wanted to use it continuously. They commented that stable power supply was the main reason for their satisfaction, saying they enjoyed “continuous power supply at night”, “bright lights” and “sufficient power supply to use a TV and fan”. It was confirmed that the pilot system was highly appreciated by the villagers because they benefited from the good quality of electricity supply. Because of this, they accepted the seasonal restriction of electricity usage and raise of electricity tariff.

Table 6-6-8 Reason for their satisfaction

Satisfactory point Stable supply

Supply hours

Safety Others

Percentage 100% 40% 20% 0%

＊Some households chose multiple answers.

6-7 Economic Evaluation

The load factor of power station is not high in case of off-grid rural electrification because the power usage is limited to the morning and evening time. In addition, setting the electricity tariff high is difficult because off-grid rural electrification targets low-income people. Therefore, off-grid rural electrification projects cannot provide opportunities for high return on investment. As for the pilot system in Theu village, the minimum requirement is to cover all the operating costs by tariff revenue. Making profit is not expected. Table 6-7-1 shows the evaluation of Financial Internal Rate of Return (FIRR) based on a cash flow analysis for 10 years, with an assumption that a 90% subsidy is given to the construction cost. Even with such extreme conditions the FIRR is only 1.7%, which means that attracting commercial investors to off-grid projects is really difficult.

On the other hand, it is possible to evaluate the social benefits associated with the power supply in

addition to the electricity tariff income. In other words, there are many social benefits that the villagers can enjoy such as brighter lighting, work efficiency at night, or better conditions for study, etc. from the stable power supply. It is possible to take these factors into account in economic evaluation of development projects. When the GOV plans village level micro hydro development projects, it is reasonable to use the index of Economic Internal Rate of Return (EIRR) in which such associated social benefits can be included. Although the positive social impacts should be analyzed carefully, we can assume quite roughly that the value of social benefits as 20,000VND, twice as much as the villagers’ willingness to pay, per household per month in the rainy season and 10,000VND in the dry season. With these assumptions, Table 6-7-2 shows that the result of preliminary analysis on the EIRR of Theu pilot project, which is more than 30%. This result implies the viability of off-grid rural electrification projects as public investment.

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Table 6-7-1 Economic evaluation result―FIRR - Subsidy rate 90％

Micro Hydro Plant Capacity 9 kWTotal Investment $22,500

$22500=348million VND($1=15500VND) 0 1 2 3 4 5 6 7 8 9 10Initial connected households 70Investment (million VND) -348Subsidy ratioSubsidy (million VND) 313.2

Connected households 70 73 76 79 82 86 90 94 98 102Monthly demand (kWh) in rainy season /HH 4.8 5.0 5.3 5.6 5.8 6.1 6.4 6.8 7.1 7.Monthly demand (kWh) in dry season /HH 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1Yearly demand (kWh) 3276 3557 3856 4175 4516 4937 5387 5869 6383 6933

Electricity sales revenue in rainy season 3.7 3.8 4.0 4.1 4.3 4.5 4.7 4.9 5.1 5.3Electricity sales revenue in dry season 2.0 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9Yearly Total income 5.7 5.9 6.2 6.4 6.6 7.0 7.3 7.6 7.9 8.3

Long term maintenance cost 0.0 0.0 0.0 0.0 2.0 0.0 0.0 0.0 4.0 0.0Salary in rainy season and administrative cost 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.Salary in dry season and administrative cost 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0Total costs 2.5 2.5 2.5 2.5 4.5 2.5 2.5 2.5 6.5 2.5

Financial Net cash flow 3.2 3.5 3.7 3.9 2.2 4.5 4.8 5.2 1.5 5.8

FIRR 1.7%

90%

-34.8

4

5

(Pre-condition)

Capital investment $22,500 (348 million VND) Subsidy 90% Plant life 10 years Electricity demand per household

160Wh/day/HH in year 1 <Rainy reason 6months> 70Wh/day/HH in year 1 <Dry reason 6months> 5% increase per year

Number of connected households

70 households in year 1 5% increase per year

$130（2 million VND） System check (all parts) cost in year 5

Cash out

Long term maintenance cost

$260（4milliomVND） Repair of turbine runner in year 7 to 9

Administrative costs

$16/month<Rainy reason> (0.25 million VND) $10/month<Dry reason> (0.16 million VND)

Operator’s salary and miscellaneous costs

Cash In

Tariff revenue Based on new tariff system in Theu (See Table6-5-1)

4.8kWh/month/HH in year 1 <Rainy reason> (160Wh×30days＝5kWh) 2.1kWh/month/HH in year 1 <Dry reason> (70Wh×30days＝2kWh)

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Table 6-7-2 Economic evaluation result―EIRR - Subsidy rate 90％

Micro Hydro Plant Capacity 9 kWTotal Investment $22,500

$22500=348million VND($1=15500VND) 0 1 2 3 4 5 6 7 8 9 10Initial connected households 70Investment (million VND) -348Subsidy ratioSubsidy (million VND) 313.2

Connected households 70 73 76 79 82 86 90 94 98 102Monthly demand (kWh) in rainy season /HH 4.8 5.0 5.3 5.6 5.8 6.1 6.4 6.8 7.1 7.Monthly demand (kWh) in dry season /HH 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1Yearly demand (kWh) 3276 3557 3856 4175 4516 4937 5387 5869 6383 6933

Electricity sales revenue in rainy season 8.4 8.8 9.1 9.5 9.8 10.3 10.8 11.3 11.8 12.2Electricity sales revenue in dry season 4.2 4.4 4.6 4.7 4.9 5.2 5.4 5.6 5.9 6.1Yearly Total income 12.6 13.1 13.7 14.2 14.8 15.5 16.2 16.9 17.6 18.4

Long term maintenance cost 0.0 0.0 0.0 0.0 2.0 0.0 0.0 0.0 4.0 0.0Salary in rainy season and administrative cost 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5Salary in dry season and administrative cost 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0Total costs 2.5 2.5 2.5 2.5 4.5 2.5 2.5 2.5 6.5 2.5

Financial Net cash flow 10.1 10.7 11.2 11.8 10.3 13.0 13.7 14.5 11.2 15.9

EIRR 30.2%

90%

-34.8

4

(Pre-condition)

Capital investment $22,500 (348 million VND) Subsidy 90% Plant life 10 years Electricity demand per household

160Wh/day/HH in year 1 <Rainy reason 6months> 70Wh/day/HH in year 1 <Dry reason 6months> 5% increase per year

Number of connected households

70 households in year 1 5% increase per year

$130（2 million VND） System check (all parts) cost in year 5

Cash out

Long term maintenance cost

$260（4milliomVND） Repair of turbine runner in year 7 to 9

Administrative costs

$16/month<Rainy reason> (0.25 million VND) $10/month<Dry reason> (0.16 million VND)

Operator’s salary and miscellaneous costs

Cash In

Benefits 20,000/month/HH <Rainy reason> 10,000/month/HH <Dry reason>

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6-8 Financing 6-8-1 The 135Program

The Program on the Socio-economic Development in Mountainous, Deep-lying and Remote Communes with Special Difficulties, the 135 Program in short, is one of major government programs for poverty alleviation. This program is called after its decision number, Decision No.135/QD-TTg of 1998, and targeting ethnic minority communes mostly located in mountainous or border areas. The number of target communes was increased to 2,235 in 2000. Most of the target communes of this JICA study are eligible for this program. Small-scale infrastructure development projects such as road improvement, school or irrigation system development have been carried out under this program.

As for executing this program, the CEMA that is in charge of ethnic minority affairs is responsible

for setting the framework of program, and the MPI and MOF are responsible for budget allocation and administration. Though actual project implementation is delegated to the PPC, each commune has the right to decide its own project and to submit a request to the authorities. Additionally, there are local project management organizations in districts and communes, District Project Management

Board－DPMU and Commune Project Management Board－CPMU. These organizations are established to mobilize local leaders for the smooth implementation and management of the 135 Program. Thus, it is one of features of the 135 Program to give respect to local people’s initiatives and involvement in development projects. Therefore, the 135 Program is recognized as one of the most important schemes for rural development.

Annual budget that can be allocated to each commune is up to 500 million VND（about $32,000）and eight project categories are specified under the 135 Program. With these conditions, each commune can develop a plan for its project within the budget. Although the 135 Program that started in 1998 has been used mainly for improving roads or irrigation facilities, development of hydropower generation or extending the grid is also possible.

According to the MPI, the Program will focus on more difficult remote areas in the second phase of

the 135 Program that starts from 2005. Additionally, communes that have developed their centers will shift their focus on outlying villages or enhancement of public facilities for life improvement. The MPI says that off-grid hydropower development like Village Hydro is one of the most recommendable projects under the above-mentioned conditions. CEMA also shows a similar view. CEMA has a strong interest in utilizing local energy resources to improve educational environment in the remote communes of ethnic minorities. They consider the introduction of photovoltaic systems to public facilities in the remote communes where there is no hydropower potential.

The 135 Program ideally fits the development of Village Hydro, with its objectives of poverty

alleviation and life improvement, its budget scale, and its emphasis on local people’s initiatives and

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participation. So far, there have been few off-grid rural electrification projects under the Program. When developing Village Hydro, the 135 Program should be considered as a first choice of financing source.

Table 6-8-1 Infrastructure projects by the 135 Program (2002)

Category

Total number of projects :

5,090

Percentage in total

investment Road 1,685 38.9% School 1,605 26.6% Irrigation 708 15.7% Clean water 591 5.8% Electricity 336 8.3% Clinic 60 1.2% Market 57 0.8% Others 48 2.7%

Source：MPI data ( October 2004)

Table 6-8-2 Application for funding from the 135 Program（case of project in 2005）

Timing Activity

① Decision of development field by commune and request to district

② Through district, request goes up to related department of PPC（Electricity→DOI）

May 2004

③ Examination of request by DOI（Site survey, if necessary） →Submit examination result to DPI

June to August ④ Examination of feasibility of investment by DPI→Report to PPC

September to October

⑤ Project approval by PPC

⑥ Consultant selection by commune （Consultant will submit investment report to DPI）

⑦ Examination of investment report and approval by DPI

October to November

⑧ Detail design/Cost estimation/Construction planning by Consultant → Submit to DOI

December ⑨ Examination of documents and construction approval by DOI

After January 2005

⑩ Project start

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6-8-2 Rural Area Renewable Energy Facility The World Bank (WB) in cooperation with the MOI has established a special fund to accelerate

rural electrification by renewable energy. This is called “Rural Area Renewable Energy Facility

（RARE）”, which was proposed in the preceding project formation study; Renewable Energy Action Plan（REAP）. The WB and MOI are going to develop approximately 20 off-grid electrification pilot projects with the RARE funds. In principle, it is possible to use the RARE fund for a Village Hydro development as long as the requesting village formally applies for the fund. However, the RARE fund is not a grant but a subsidy up to 80% of construction costs.

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Chapter 7 Overall Evaluation and Recommendations

In this study, the main objective was to demonstrate the sustainability of off-grid micro hydropower (Village Hydro) by installing a pilot plant in a typical remote village in the northern mountainous region of Vietnam. One important issue was to check whether or not appropriate technologies were used in the generation system and the total investment cost was within the targeted amount. Another issue was to confirm that the villagers mastered the operation and maintenance of the generation system. Furthermore, we provided training to off-grid system planners working for provincial governments and prepared Village Hydro manuals in order to accelerate Village Hydro development under their initiative. In particular, we would like to emphasize that we successfully developed good management practices such as contracting, tariff setting and collection, and cash flow management through dialogue with the villagers, which were all viewed difficult to implement in remote areas. This is a remarkable achievement and can be applied in many rural development projects in Vietnam.

In this chapter, the outputs of the Village Hydro pilot project were summarized and the necessary

measures for promoting Village Hydro development were discussed. Provincial People’s Committee (PPC) is supposed to play a key role in promoting off-grid rural electrification. It is strongly expected that the following discussions make clear the underlying problems and give the right direction to the state government as well as provincial authorities.

7-1 Overall Evaluation of Pilot Project

The construction work of Village Hydro pilot plant in Theu Village started in late November 2003 and proceeded without delay due to good weather and the cooperation of villagers. In late December, the pilot system was completed except for the grid and started test operation. The total investment was $23,000, which was in the target range. The unit construction cost of $2,000 per kW is difficult to achieve in Japan due to complicated design requirements, but is quite normal in developing countries. This is attributed to the design policy of using Vietnamese materials and generation system (turbine, generator and controller) and using the exiting irrigation system as a part of the generation system.

The pilot plant is functioning well as designed. Its voltage (220V) and frequency (50Hz) are stable.

This is due to the good performance of the dummy-load control system, which is the first commercial unit produced in Vietnam and has been working without any problems. The turbine and generator are also made in Vietnam and performing well. The fact that we installed the pilot Village Hydro plant, following the design concept of Village Hydro, with 100% Vietnamese technology, and cleared the

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cost target and achieved stable operation suggests the good potential of dissemination, suggests high potential of spreading this technology in northern Vietnam.

Naturally, we experienced some problems during this project such as power shortage due to limited

water flow in the dry season. This problem almost always happens in case of off-grid hydropower development. How to resolve this issue, choosing maximum water flow and output, would be an important matter in improving the utilization factor of power station and return on investment. In the pilot project, we installed an underground pipe to connect a pond to the water channel in order to use the pond as a small reservoir. This idea may be applied in other cases as well.

Many people commented that the long-term management was more difficult than plant construction

in case of Village Hydro. We, therefore, organized villagers’ meetings to make a consensus on collaboration with our team and establishing an autonomous management group before the start of construction, which was a first step toward management system development. When the pilot plant began test operation, we started a serious of training courses to make operators master necessary skills. This pilot plant is equipped with an automatic control system that makes the operators easy to learn how to run the power system. They only need to adjust the water pipe valves. Even the village operators who do not have appropriate educational background can quickly master necessary skills.

The management team consists one manager, two operators and two assistants. They are required to

perform operation, contracting, house connection, fee collection, bookkeeping and money management. They have no background for these jobs and need an extended period to learn. In this study, intensive training was conducted from time to time during the six-month monitoring period. In particular, electricity tariff was an important topic, because the government has regulated the tariff to be less than 700VND per kWh in remote areas. However, in off-grid systems it is allowed to set a different tariff. In this project we raised the tariff based on the estimated revenue and expenses, which shows a good example for follow-on projects. The most important point is to operate the power station without operational subsidy. Therefore, it was necessary to reduce the salary of operators and to raise the tariff in order to balance the cash flow. Another important issue was preparation for unexpected failure of the plant. We asked the management team to put some money as reserve for repair every month. Also, an emergency fund would be a good idea to cope with this problem. Thus, the lessons learned in this pilot study must be taken into account in many ways when follow-on projects are to be undertaken. In short, this project achieved a good management system that can be used as a good example for future. Our invaluable experience was accumulated in the manuals and also the counterparts gained a lot of knowledge.

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Const./Ope.

Financing

Planning

Site survey

Implementation

Knowledge Base

Training

Manuals

Model Plan

Management

Tech and money

This project

Figure 7-1-1 Accumulation of pilot project know-how

7-2 Toward the Goal of Village Electrification

From now on, the Vietnamese counterpart must develop many sites under their initiative using the

output of this study. The table below summarizes the required tasks.

Table 7-2-1 Necessary activities for future project implementation

Item Organization, related issues

Site survey

Work to evaluate water flow, head, distance from demand center, geography. Commune provides site data. The DOI or consultant undertakes site survey for more information.

Planning The DOI or consultant is responsible for planning using the manuals. The 135 Program must be taken into account for financing.

Financing First priority is to apply for the 135 Program. Also, the Rural Area Renewable Energy Facility can be used (maximum 80% subsidy), albeit complex procedure.

Construction Local contractor can do the construction work. Appropriate machinery and equipment can be procured in the local market.

Training It is essential to build a good management system. The manuals are good reference. Support from local authorities is necessary.

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The basic workflow is shown below. First, the request for development is conveyed from the commune to the DOI. Then, the DOI conduct site survey and draws up a basic plan. If the plan is approved for implementation, the DOI secure necessary funds and make arrangements for construction and management. This is a typical workflow.

・Site survey

・Planning

・Financing

・FS

・Supervising

・Guidance

・Construction

・Guidance

・Request

District

Manufacturer

Contractor

PPC (DOI)

Consultant Commune

Figure 7-2-1 Typical workflow of Village Hydro project implementation

More detailed analyses on problems and resolutions are presented below.

7-2-1 Issues of project implementation

（1） Request for development

Mgmt Const. Financing Project formulation Request

Request for development Priority B JICA outputs Video creation on Village Hydro for gaining awareness It is required to do more for receiving publicity on off-grid micro hydro.

So far, only few un-electrified villages formally requested off-grid development, although they have strong needs for electricity. Therefore, it is necessary to generate awareness among village people on off-grid electrification methods such as Village Hydro. Receiving greater publicity would be an important first step.

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（2） Project formulation

Mgmt ConstFinancing Project formulation Request

Project formulation Priority A JICA outputs Basic design, tech transfer to the DOI, prepared manuals It is most important to conduct training targeting the DOI staff in northern VN.

There are few organizations in Vietnam that can develop project plans of Village Hydro at present.

It is, therefore, required that the DOI evaluate the hydropower potential of candidate sites and formulates basic plans by themselves. The DOI must have professional knowledge and skill to do this. It is important to note that without appropriate project formulation it is impossible to mobilize related organizations toward development. Compared with grid extension, which can be done easily based on manuals, Village Hydro development requires more complicated site-specific work.

Table 7-2-2 Comparison of grid extension and Village Hydro development

Grid extension Village Hydro development

Responsible Organization

EVN or Power Company is responsible from the planning stage.

EVN or Power Company is not responsible. PPC should play a key role.

Commune

Grid extension is well known andeasily agreed.

If grid extension is desired, Village Hydro might be opposed.

Technical complexity

Standardized and easy for planning Professional knowledge is necessary for planning

Experts Consultants

Many experts/organizations that have know-how on grid extension.

Few experts/organizations that have know-how on Village Hydro

It is, therefore, extremely important to develop the capacity of DOI by providing appropriate

training on micro hydropower design and management. Unfortunately, there have been no such efforts

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ever. Village Hydro projects have been halted largely due to lack of knowledge and experience of the DOI. Therefore, if the GOV seriously wants to implement many Village Hydro projects, the first priority issue is the capacity building of the DOI. For this purpose, the manuals developed in this study can be used as materials for training.

There may be another idea to employ outside consultants for project formulation. However, their

assignment period may be limited and collecting information widely from un-electrified villages would be difficult. They will come up with very few project ideas. On the other hand, the DOI can persistently undertake site survey and project formulation. The DOI will be more efficient in planning Village Hydro schemes. It is recommended to utilize the potential capabilities of DOI to the fullest extent in Village Hydro development by conducting appropriate capacity building.

（3） Financial planning

In Vietnam, there are financing programs suitable for Village Hydro development already; the 135

Program of GOV that is designed for infrastructure development in remote communes, and the Rural Area Renewable Energy Facility that is funded by the World Bank and now managed by the Ministry of Industry. In particular, the 135 Program has been playing a key role for the development of road or irrigation facilities for many years. Village Hydro is a small-scale rural development project and fit the objective and conditions of the 135 Program. Therefore, it is recommended to develop many examples of Village Hydro by using the 135 Program. These efforts help spread the financing idea of Village Hydro. On the other hand, the RARE program has not been utilized because local people’s awareness is limited and it requires applicants to go through more complicated procedure. It is recommended to modify the rules and regulations of RARE so that villagers can utilize RARE more easily.

Financial planning Priority B JICA outputs Assessment of available financing programs such as the 135

Program and MOI’s Rural Area Renewable Energy Facility (RARE) More projects under the 135 Program and improvement of RARE procedure

Mgmt. Const. Financing Project formulation Request

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（4） Construction

Mgmt. Const. Financing Project formulation Request

Construction Priority B JICA outputs Detail design, domestic manufacturer, and local contractor Improvement of technical capacity of domestic companies

Ideally, Village Hydro should be constructed with domestic technology. Using domestic technology

is good for long-term maintenance. Detail planning of construction work is to be done by consultants or local contractors. From our experience, we can say that experienced contractors can do these tasks correctly. The DOI examine the plan and give approval. Also, the DOI, on behalf of local community, is supposed to supervise the construction work until completion.

（5） Management

Mgmt. Const. Financing Project formulation Request

Management Priority A JICA outputs Establishment of village org. practical training, manuals It is important to set guidelines for village organization and tariff system

To establish an autonomous management organization is one of the most important tasks after the

completion of Village Hydro plant. If there are no capable organizations to operate and maintain Village Hydro in the village, the plant will stop soon due to technical or financial problems. Such a tragedy that will evoke criticism about Village Hydro should be avoided. Therefore, intensive training targeting villagers is essential to achieving a good management system. Necessary costs for the training should be included in the project budget.

Also, the GOV is recommended to set clear guidelines regarding the management system

development in off-grid electrification projects including tariff system and money management. The

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GOV should ensure that adequate training be performed after the completion of off-grid power stations. It is also expected that the DOI continue to monitor Village Hydro sites and give appropriate suggestions and guidance to avoid problems. Furthermore, developing a backstop system to help villagers is required.

7-2-2 Action Plan

Based on the results of this study, we recommend, for promoting off-grid rural electrification by

micro hydropower, that the GOV and PPC should consider the following issues, make a concrete action plan and take necessary measures following the action plan. We would like to emphasize that financial issues are not ranked at the top of list. Rather, more important thing is how to develop people and prepare conditions under which they can work hard to achieve the goal of sustainable off-grid rural electrification.

Priority Issues

Priority A

Capacity building of the DOI of northern mountainous region Framework development for village level management organization Guideline for organization, training, tariff, etc. Enforcement of guideline

Priority B

Generating publicity in remote areas by providing information Collaboration with the 135 Program, improvement of RARE scheme Improvement of technology and quality of domestic companies

（1） Capacity building

The MOI has clear understanding about the necessity of capacity building of provincial DOI staff regarding off-grid electrification planning. The MOI expressed their intension to focus on the capacity building issue and to draw up a comprehensive training program. They are now undertaking a study on off-grid renewable electricity under the System Efficiency Improvement, Equalization and Renewable Energy Project that is funded by the World Bank. In the study, they are going to develop a few off-grid power stations as pilots. After finishing site surveys, they will start the construction of pilot plants in 2005 or 2006. Thus, the MOI has full-time capable staff to work for off-grid rural electrification. Besides overseeing the study, they can undertake various activities including planning and executing the training for DOI staff. This is a big advantage in providing comprehensive training to DOI staff. Without such staff, it would be difficult to implement the training program.

With the MOI and World Bank, we have been exchanging opinions and information since the

inception of this study. Therefore, both MOI and WB know very well about this study and the pilot

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system in Theu village. In particular, the MOI together with EVN have strong interest in the management of off-grid system. They say that the management is the most difficult part of off-grid development, and that the management practice developed in Theu is quite impressive and a good example for future projects that will follow. They are going to utilize the management model of Theu pilot system for their own off-grid projects.

In Vietnam, it seems difficult for a provincial government to exchange information with other

provinces. Therefore, the achievements of this study will be only available in HoaBinh Province and cannot be made available to other provinces. We provided basic information to the participant came from provinces in northern Vietnam when we held workshops in Hanoi, but the time was limited and only basic information was provided. At the workshops we presented design and construction of the pilot plant, and did not elaborate the management system. There were some requests from the participants that they wanted to do their own pilot projects in their province. The request for more pilot projects and OJT training are understandable.

In this study, the feasibility of Village Hydro was demonstrated. In many remote villages in northern

Vietnam, Village Hydro can be a viable option. However, there is a risk of people being ignorant about Village Hydro and not taking the initiative for new development. To avoid this situation and stimulate Village Hydro development in many areas, the MOI is expected to work with the DOI of northern provinces, and start basic training of DOI staff. In October 2004, the MOI requested JICA to continue cooperation and asked for the continued assistance on capacity building and additional pilot projects.

At this stage, the MOI should show its leadership. It is a good timing for the MOI to study and

digest the outputs of this study, and to transplant them into DOI staff and also those who are going to develop their own Village Hydro power plants. We have completed some instruction materials such as the movie of pilot system construction (VCD), a set of Design Manual and Management Manual, so that the MOI can start the technology transfer of Village Hydro. JICA, on the other hand, should consider extending this study into the next phase, human resource development, keeping good relationship with the MOI and WB. In particular, sending experts on the development of management system for off-grid electrification, which is strongly requested by the MOI and provinces, would be most effective. In order to help JICA go into the next phase, the MOI needs to draw up a comprehensive capacity building program and show what they expect from JICA.

（2） Guideline for off-grid management system It is needless to say that providing adequate training to the villagers regarding the management

system of power plants, how to conduct operation and maintenance both technically and financially, during the development of off-grid power stations is extremely important. The MOI should make this point clear. Until now, there have been no good examples of off-grid management system, which

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resulted in no progress in off-grid rural electrification. Setting electricity tariff and management of income are more difficult than plant operation. However, there are no organizations or consultants that can provide adequate training on these issues to the people in remote areas. Consultants that specialize in social development or rural development are suitable for this kind of work. It is clear and urgent in Vietnam that those consultants be developed and an appropriate environment for their work be prepared. First of all, the MOI should establish clear rules and guidelines that show what should be done to develop a management system in case of off-grid rural electrification. The accumulated data on the development of management system in Theu village will provide invaluable inputs.

For example, it is important for MOI to state clearly that the regulated tariff of 700VND/kWh in

rural areas does not necessarily apply to off-grid projects. Most people in remote areas are not aware that they can set up a new tariff in case of off-grid rural electrification. Also, it is necessary to decide a standard form of electricity supply contract and to establish a rule for reserve fund for long-term maintenance. All these issues must be decided and made public by a decree. The MOI collaborating with the DOI of provinces should develop consultants that are capable of providing training to the villagers on in-village management mechanism and oversee the work of consultants carefully. Developing a pilot plant in each province would be ideal to develop the consultants by OJT. At least, the MOI and WB should focus on the development of in-village management system in their pilot projects. JICA can support the MOI by providing the data, documents, photos and videos of the pilot project in Theu village.

（3） Dissemination of Village Hydro The first step of rural development is a villagers’ strong request. The villagers should be committed

to developing a micro hydropower station and managing it for a long time. However, they can hardly obtain knowledge on how to realize their desire. Leaders in remote villages have regular contacts with the administration offices of communes and districts. They know well about the 135 Program. If they get know the process of Village Hydro development by the 135 Program, they will start to seriously consider developing a Village Hydro in their villages with a clear vision. The 135 Program will strongly support off-grid micro hydro development because the second phase of the program is going to focus on those projects that can improve the living standard of rural people. Providing accurate information on Village Hydro to the village leaders is very important now .

For this purpose, JICA created a VCD on the pilot project in Theu village with Vietnamese narration.

It will be very effective if a copy of this VCD is given as a reference to each province, district and organization that is working for rural development. In addition, undertaking more pilot projects would be desirable as a means of accelerating off-grid rural electrification on an OJT basis. JICA that aims at poverty alleviation and rural development can also contribute to dissemination of Village Hydro by providing adequate information to provinces and districts through its own channels.

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（4） Arrangement for financing To secure enough capital is an important and often difficult task in developing an off-grid rural

electrification project. In this study, we affirmed that the 135 Program could be used for financing small-scale Village Hydro projects. The ceiling of project budget is about $32,000. Thus, there is already an appropriate financing scheme for off-grid rural electrification in Vietnam. It is possible to start developing many Village Hydro projects without worrying about financing. To take advantage of this situation, the MOI is recommended to prepare a list of feasible rural electrification projects and discuss financing with the MPI, which is responsible for implementation of the 135 Program. The MPI commented that off-grid micro hydropower development was one of the focused areas that the program was aiming at. The 135 Program is well known and highly admired in remote areas. If there is a good example of off-grid micro hydropower development that is financed by the 135 Program, Village Hydro development will spread quickly.

On the other hand, the MOI has established, with the assistance from the WB, the RARE fund for

promoting rural electrification by renewable energy. The fund is still at an experimental stage, and going to finance some pilot rural electrification projects of the MOI. The fund will be reviewed after the pilot projects and improved to effectively finance future projects that are to be requested by remote communes. It seems difficult for the WB, as a banking institution, to give grants to development projects. Although the WB has grant funds such as the GEF, their nature is lending money. As a result, they tend to develop procedures based on providing loans to customers, which is quite different from the 135 Program, which is a grant program. In general, off-grid rural electrification projects have extremely low rate of return and, therefore, are not viable if repayment of capital is required. Involvement of private investors would be impractical. With these points in mind, the MOI is recommended to discuss the improvement of RARE fund with the WB with an aim of facilitating the co-existence of RARE with the 135 Program.

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