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Energy Efficiency in The Food Processing and Garment Sector in Vietnam Nguyen Dang Anh Thi, November 2012

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Page 1: Energy Efficiency in The Food Processing and Garment ... · PDF fileEnergy Efficiency in The Food Processing and Garment Sector in ... Vietnam ’ emission ... There are about 2400

Energy Efficiency in The Food

Processing and Garment Sector

in Vietnam

Nguyen Dang Anh Thi, November 2012

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Agenda

Vietnam Energy Efficiency Outlook & Potential Energy Saving.

Energy consumption in food sector.

Energy consumption in garment sector.

Energy saving potential and business opportunities

Business opportunities in energy efficiency services

Business opportunities in energy efficiency products

Market entry strategy for German companies.

Case studies

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Vietnam’s Energy Efficiency Outlook

In 2011, total final energy consumption in Vietnam was about 85.6 billion kWh, increasing 400% compared to energy consumption in 2001.

Vietnam’ emission increased 376% from 5.8 million metric tons of carbon in 1990 to 27.8 tons in 2005, ranking first in CO2 emission worldwide between 1990 and 2005.

Energy consumption in Vietnam is forecast at 451TWh by 2030 of which energy consumption of industry sector accounts for more than 50%

In the last five years, Vietnam has started to import steam coal and oil products for its energy need. Continued GDP growth, increased foreign investment, and industrial growth are expected to triple energy demand in the next decade

In order to meet the growing power demands and to ensure a sustainable economic growth, Vietnam indeed needs to invest in energy efficiency.

The law on energy efficiency and conservation took effect in 2011 requiring major energy users to apply energy management systems => creating a concrete legal framework for energy efficiency and conservation activities.

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Nominal GDP(US$ billion) and Population (Million)

53

61

71

90

93

104

122

137

154

172

190

210

83

84 85

86

87

88

89

90

91

93

94

95

80

85

90

95

0

50

100

150

200

250

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

GDP

Population

Source: World Bank Economic Outlook Database

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Vietnam Energy Consumption vs. Other Asian

Source: Market Potential Energy In Southeast Asia, 2011, Roland Berger

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Vietnam’s Share of Energy Consumption by Sector

47% 47% 49% 53% 55%

30% 29% 27% 25% 23%

15% 17% 17% 16% 16%

0%

20%

40%

60%

80%

100%

2005 2010 2015 2020 2025

Agricutural

Commercal & Services

Residential & Others

Transportation

Industry

Source: APEC. Peer review on energy efficiency in Viet Nam, 2009

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Gross Industrial Output In Vietnam Industry

Source: Subtracted from Vietnam - Expanding Opportunities for Energy Efficiency. World Bank, 2010

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Potential Energy Saving By Sectors

Source: Statistics data from Vietnam National Energy Efficiency Program, 2000

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Energy Consumption in Food Processing Sector

Food sector overview

Vietnam’s food-processing industry comprises around 260 seafood-processing plants (mainly for export), 24 slaughter houses and meat-processing plants, 160 beverage plants, 65 fruit- and vegetable-processing plants, 27 plants manufacturing instant noodles and 23 confectionery manufacturers.

Common types of energy used in the sector is electricity and fuel, of which electricity is consumed the most.

Equipment that consumes much energy include: HVAC (heating, ventilation, and air conditioning), freezing machine, ice maker, cold storage, pumps, fans and other electrical motors.

A majority of Small to Medium Enterprises (SMEs) is using outdated and inefficient energy equipments, either the boiler, heater, refrigerator, or lighting system such as high-pressure mercury lamp, incandescent and T10 fluorescent light bulbs. Many steamers have leaking issue.

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Electricity 45%

Coal 21%

Oil 29%

Water 5%

Energy Consumption in Food Proceeding Sector Survey conducted for 60 food processing SMEs

Source: MEET-BIS

Energy Consumption in Food Processing Sector (cont.)

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Garment sector overview

Garment industry is a key sector and the largest employing sector.

There are about 2400 textile and garment manufactures in Vietnam that employs almost 2 million people, of which there are about 1500 garment companies.

Vietnam’s textile and garment industry earned about 15.6 billion US$ export turnover in 2011 and currently accounts for 2.5% of the total global garment market share and is the fifth largest textile and garment supplier in the world

Energy and water cost at Vietnamese garment companies is higher compared to other Asian countries. Energy cost to produce same products is 1.5-1.7 times higher than that in Thailand, China, Malaysia. Water amount used in dyeing is 3 times higher than that in Japans

Energy waste is up to 30% due to old technologies and outdated energy management systems. Approximately 50% of the equipment of garment industry of Vietnam has been used for over 20 years

Energy Consumption in Garment Sector

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Machinery; 62% Lighting; 22%

compressed air & fan system, 9%

Others; 7%

Energy Consumptions of Equipment in Garment Sector

Source: RCEE-NIRAS

Energy Consumption in Garment Sector (cont)

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Food Sector

Energy saving potential for food processing industry is up to 20%

EE motors and variable speed drive (VSD) are promising products.

The market size for EE lighting and EE equipment such as freezing machine, ice making machine, boiler…; insulation materials; inverter; heat pump; solar water heater are expected to be high.

Garment Sector

Energy saving potential for garment industry is up to 30%

Energy cost accounts for 10-15% of production cost whereas energy waste is up 20-32% due to old technologies and outdated energy management systems.

EE motors and variable speed drives are promising products as SMEs are willing to invest.

The sewing saver also has a lot of potential

Energy Saving Potential & Business Opportunity

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Capacity building on energy efficiency

ISO50001’s related services

Energy audit

Energy management system

software & hardware

ESCO business:

such as steam supply service with boiler using biomass

Financial services

Business Opportunity in Energy Efficiency Services

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Fluorescent lamps

Energy saving

Ventilation Fans

Energy saving

up to

Electricity management system

Energy saving

up to

Inverter

Energy saving

Source: Meet-Bis

Business Opportunity in Energy Efficiency Products

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Sewsaver

Energy saving

up to

Heat pump

Fuel saving

Solar Water Heater

Energy saving

up to

fuel saving to

Boiler System

Source: Meet-Bis

Business Opportunity in Energy Efficiency Products (cont.)

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Initiate pilot projects

Implement pilot projects with food processing or garment SMEs to demonstrate the energy reduction potential for EE products

Move towards an integrated value chain approach

Demand identification: undertake auditing & energy consulting services

Sales of products (core business): provide customized solutions

Evaluation & Investment: build up own internal financing capabilities

Delivery & Installation: improve and upgrade existing technical skills and capabilities

Long term O&M: conduct regular technical reviews to optimize solutions and establish long-term relationships with clients

Strategy for German companies to approach potential enterprises in Food and Garment sectors

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Develop innovative financing vehicles for EE projects

Meet regularly with the banking community to build up their technical expertise in EE project financing.

Increase awareness of EE and enhance professionalism of the industry

Initiate collaboration with governments to organize conferences and industry events to share best practices and exchange positive experiences.

Train sales staff at local dealers on technical features of EE projects

Strategy for German companies to approach potential enterprises in Food and Garment sectors (cont.)

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Company Overview

Hung Long Garment & Services (Hung Long) was established in 2001 with 540 workers for the start. Over 10 years of operation and development, Hung Long now has over 2400 workers with 29 production lines in 10 factories. Its products are mainly exported to USA (70%), Europe (10%), Japan (5%), Korea (5%), and others (10%)

The company’s power consumption is very large, about 270,000 kWh/month , in which lighting systems consumes the most with more than 5400 kinds of bulbs

Energy Saving at Hung Long

Installed 500 power-saving devices for sewing machine system, saving 12.5% on energy cost

Installed condensate recovery pump in the boiler, saving 25% on fuel costs

Case Study: Energy Saving at Hung Long Garment & Service JSC

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Energy Saving at Hung Long (cont.)

Installed elevator system integrated inverter that helps to reduce energy costs by 15% for the elevator system

Invested in 2900 sets of T8 fluorescent lamps with electronic ballasts, saving 18% energy costs for lighting.

Replaced 900 sets of T10 to T5, saving 25% energy cost for lighting

Outputs from Applying Energy Efficiency

Total energy cost reduces 21%, from $180,000/year to $142,000/year

From electrical energy saving: reduced 100 CO2e /year

From fuel energy saving: reduced 250 CO2e /year

Case Study: Energy Saving at Hung Long Garment & Service JSC (Cont.)

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Company Overview

Founded in 1999, Investment Commerce Fisheries Corporation (Incomfish) specializes in frozen seafood processing with a designed capacity of 15,000 MT a year. Its products are mainly exported to USA, Europe, and Japan

Equipment used in Incomfish

Three IQF lines with a combined capacity of 1,250 kg/hour

Two Contact Freezers with a total capacity of 1,500 kg/batch

Three Air-Blast Freezers with a capacity of 375 kg/bach/each

An Air Blasting Freezer with a capacity of 2,500 kg/batch

A Refrigeration system with a capacity of 3.7 Million kCal/hour

Two Boilers with a total capacity of 1,000 kg/hour

Two Power Generators with a total capacity of 2,500 KVA and other equipments

Case Study: Energy Saving at Investment Commerce Fisheries Corporation

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Energy Saving at Incomfish

Installed 2 inverters for two water cooling pumps => energy saving of 12,000 kWh/year (energy saving 27%).

Installed 2 inverters and 4 motor soft starters for 6 water pumps => energy saving of 13,500 kWh/year (energy saving 41%).

Installed 2 inverters for 4 condenser fans => energy saving of 89,100 kWh/year (energy saving 30%).

Installed solar water heater for the water supplied to the boiler => DO saving of 4%, pay back in 1.2 years.

Other energy saving solutions applied: used T8 Fluorescent lamps with electronic ballasts to replace Incandescent and Halogen lamps, better demand side management etc.

Case Study: Energy Saving at Investment Commerce Fisheries Corporation (Cont.)