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Vietnam Today

Huge energy demand increases localization problems

Released at: 16:18, 07/10/2015

Huge energy demand increases localization problems

Conference hears of efforts at electricity localization and the issues encountered.

by Minh Tuyet

Opinions have been expressed both in support of and against energy localization, Mr. Nguyen Duc Cuong, Director of the Center for Renewable Energy and Clean Development Mechanism under the Institute of Energy, told the APEC Workshop on Local Content Requirements (LCR) in Energy on October 7 in Hanoi. The event is organized by Department of Multilateral Trade Policy under Ministry of Industry and Trade and Asia-Pacific Economic Cooperation (APEC)

“Electricity demand is huge,” he said. In Vietnam when GDP  grows 1 per cent, electricity demand grows 2 per cent and so needs to develop to drive the economy forward. Hundreds of coal-fired power plants will be built in the future around Vietnam. “This will raise the problem of whether Vietnam should import technology from foreign investors,” he said.

There are several advantages in energy localization, he went on, one of which is that it ensures national security. LCR also motivates demand for domestic research and development in electricity equipment.

“Localization incentives are often given to mechanical industries as encouragement,” he said, and Vietnam can produce ancillary equipment, which accounts for 30-40 per cent of power consumption in coal-fired power plants. Localization also creates jobs.

International experts said that LCR has attracted more attention since the global financial crisis in 2008. They agreed that LCR had a positive impact on domestic development but it also has negative impacts. Competition between foreign and domestic firms, however, drives development and cuts production costs.

Localization encourages the development of domestic market but limits the participation of foreign enterprises, according to General Secretary, China Energy, at Storage Alliance, Tina Jing Zhang. Mr. Ronald Steenblik, Senior Trade Policy Analyst OECD Trade & Agriculture Directorate, suggested that localization requires a macro viewpoint.

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