CDM Feasibility Study for the Introduction of High-Efficiency Electric Transformers in the Electric Transmission & Distribution Grid of Ho Chi Minh City

Global Environment Centre Foundation(GEC)

Reports of CDM/JI Feasibility Studies

Title of Feasibility Study (FS)CDM Feasibility Study for the Introduction of High-Efficiency Electric Transformers in the Electric Transmission & Distribution Grid of Ho Chi Minh City
FYFY 2008
Main Implementing EntityMitsubishi UFJ Securities CO., Ltd.
FS Partner(s)Energy Conservation Center of Ho Chi Minh City (ECC); and Hitachi Metals Ltd.
Location of Project ActivityViet Nam (Ho Chi Minh City)
Summary of FS ReportSummary (PDF290KB)
Description of Project ActivityThe purpose of the project activity is to improve efficiency of the distribution grid of Ho Chi Minh City by cooperating with Ho Chi Minh Power Company (HCMPC). The project activity shall contribute to the reduction of greenhouse gas emissions and improvement of living condition as well as safety. The Project yields an average yearly emission reduction of 3,213 tonnes CO2 equivalent (tCO2e). This Study also examined that the effect of potential reduction is expected to reach the dozens of times the project level when it is developed into comprehensive framework by Vietnam Electricity (EVN). The Project is a co-benefiting type project. In addition to the CDM aspect of reducing greenhouse gas emissions by promoting rehabilitation of existing transmission and distribution grid, it improves living environment and safety which are currently deemed problematic in Ho Chi Minh City. Moreover, the Project contributes to actual increase in electricity supply through energy efficiency improvement without any construction of new power plants or rehabilitation. The Project is effective in preventing environmental degradation associated with construction of new power plants as well as preventing increase in fossil fuel consumption.
Targeted GHGCO2
Category of Project ActivityOthers (Energy Efficiency)
Duration of Project Activity/ Crediting Period2009-2010 / 2010-2016
Baseline Scenario (including Methodology to be applied)According to the methodology used, project boundary is the place where transformers introduced in the project activity are installed during the crediting period. In the project activity, it is the transmission and distribution grid of HCMPC.
The baseline scenario is identified as the following in accordance with the newest version of "Combined tool to identify baseline scenario and demonstrate additionality".
  • Continuation of current practice. Replacement or installation of transformers with the most commonly used transformers in the geographical region where the project activity is implemented
  • Replacement or installation of transformers as per new performance levels enforced by regulation;
Demonstration of AdditionalityTechnological barrier
    Vietnam has yet to supply or produce amorphous core or amorphous metal raw materials. There is no market including imports for amorphous transformers. When implemented, the Project is the first-of-its-kind and requires technology transfer from abroad.
Investment barrier
    The IRR without CER revenues is calculated at 6.84%. The IRR will rise to 7.73%, 8.16% and 8.59% when the CER price is set at 10 USD, 15 USD and 20 USD respectively. The payback period is estimated as 16 years. These values are below the 12% interest rate of Vietnam and do not provide any financial incentives towards project implementation.
Barrier due to prevailing practice
    Transformer producers in Vietnam design and manufacture standard transformers according to each client's specification. Although the quality of the core material varies according to the level of client's request, almost all are silicon steel plates. Production lines using silicon steel plates have been installed at production plants. For this reason, rearrangement of the lines is required for the introduction of the new core. Silicon steel transformers meet the current regulations as well as the standard requirements of each power distribution company. It is not an accepted practice in Vietnam to produce and sell amorphous transformer that require even higher standards.

Through the barrier analysis conducted as above, additionality of the project activity is justified.
Estimation of GHG Emission Reductions3,213tCO2/7 years
Monitoring Plan (including Methodology to be applied)The methodology requires the following two items to be monitored to confirm applicability.
  • Type of transformer, capacity, transformation rate and load-loss rate (W) of high efficiency transformers installed in the Project.
  • Record of transformer installation by type in the 5 recent years.
The methodology also requires the following four items to be monitored to calculate project emissions.
  • Load loss rate and No-load loss rate of high efficiency transformers installed in the Project.
  • Details (date of installation, location, technical data) of high efficiency transformers installed in the Project.
  • Annual blackout rate
  • Number of transformer units installed in the Project.
Environmental Impact AnalysisThe National Resources and Environment Research Programmed (NRERP) introduced the Environmental Impact Assessment (EIA) system in 1984 which requires the submission of an EIA for development projects in need of a license. The Project does not require development license and therefore is not subject to EIA requirements.
Issues and Tasks for Project MaterialisationRemaining issues towards project implementation are the collection of detailed data using actual equipment and the problem with regards to the bidding system of the electricity supplier that emphasizes initial cost. Further coordination is required after the completion of the Study.
Also, the initial stage of technology transfer has been completed during the Study and the rough designing of the equipment and rough cost estimation have been carried out by the transformer producer. However, in order to bring the Project to the next stage, it is necessary to build up the technology and know-how through (1) production of test machine and testing/analysis, (2) production of the standard machine and testing/analysis and (3) installation on the transmission line and testing/analysis. The sales channel of amorphous core in Asia has already been established and the core supplier in place of Hitachi Metals will provide technical support when Project is implemented in the future. The cores supplier already provides similar technical support to other developing countries, such as China and Thailand and there seems to be no significant barrier in technology transfer.
Co-benefits EffectsThe electricity loss reduced by the Project is 183,111(W) and when converted into heat value, it is 5,489,862,129 (BTUISO). When the exhaust heat is converted into petroleum, it becomes a large value of 218,032 tons. It is necessary to consider replacing the index of co-benefit type project effect with such a quantified index