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Assorted waste in cartons

Energy generation from solid waste

By Alfonso Navarro on Unsplash

Energy generation from solid waste

Compare IOA
Country
Vietnam
Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Infrastructure
Sub Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Waste Management
Indicative Return
Describes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
5% - 10% (in IRR)
Investment Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Long Term (10+ years)
Market Size
Describes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
USD 100 million - USD 1 billion
Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.
> USD 10 million
Direct Impact
Describes the primary SDG(s) the IOA addresses.
Sustainable Cities and Communities (SDG 11)
Indirect Impact
Describes the secondary SDG(s) the IOA addresses.
Affordable and Clean Energy (SDG 7) Reduced Inequalities (SDG 10)

Business Model Description

Invest in waste-to-energy plants to generate power for the State national grid and/or directly to industrial zones (B2B). The service price for solid waste treatment and the sales price of electricity is negotiated with local authorities. Flying ash from waste burning will be stabilized and buried; other solid, liquid, and gaseous wastes will be treated as per safety standards. Examples of companies active in this space are:

Everbright Waste to Energy plant: Launched in December 2018, the plant, Can Tho Waste Incineration Plant, has received and treated more than 400,000 tons of waste including domestic waste that has been buried in landfills, generating more than 113 million kWh of electricity for the national grid (21)

Soc Son Waste Power Plant was officially launched into operation. It has 3 incinerators with a capacity of 800 tons of waste per day and a generating capacity of 15MW (22)

Expected Impact

Waste electricity benefits communities and contributes to increasing electricity supply and reducing greenhouse gas emissions.

How is this information gathered?

Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.

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Disclaimer

UNDP, the Private Finance for the SDGs, and their affiliates (collectively “UNDP”) do not seek or solicit investment for programmes, projects, or opportunities described on this site (collectively “Programmes”) or any other Programmes, and nothing on this page should constitute a solicitation for investment. The actors listed on this site are not partners of UNDP, and their inclusion should not be construed as an endorsement or recommendation by UNDP for any relationship or investment.

The descriptions on this page are provided for informational purposes only. Only companies and enterprises that appear under the case study tab have been validated and vetted through UNDP programmes such as the Growth Stage Impact Ventures (GSIV), Business Call to Action (BCtA), or through other UN agencies. Even then, under no circumstances should their appearance on this website be construed as an endorsement for any relationship or investment. UNDP assumes no liability for investment losses directly or indirectly resulting from recommendations made, implied, or inferred by its research. Likewise, UNDP assumes no claim to investment gains directly or indirectly resulting from trading profits, investment management, or advisory fees obtained by following investment recommendations made, implied, or inferred by its research.

Investment involves risk, and all investments should be made with the supervision of a professional investment manager or advisor. The materials on the website are not an offer to sell or a solicitation of an offer to buy any investment, security, or commodity, nor shall any security be offered or sold to any person, in any jurisdiction in which such offer would be unlawful under the securities laws of such jurisdiction.

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Country & Regions

Explore the country and target locations of the investment opportunity.
Country
Vietnam
Region
  • Vietnam: Countrywide
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Sector Classification

Situate the investment opportunity within sustainability focused sector, subsector and industry classifications.
Sector

Infrastructure

Development needs
In 2018, 6.3% of the population in rural areas does not have access to sanitary water (1); 84.3% of solid waste from urban activities is collected and treated as per national standards, but this is mainly for landfills (2018), and the ratio is much lower in some regions (e.g. 63% in the Highlands) (2018) (2), social housing achieved 41.7% of the national target in 2020 (3)

Policy priority
as specified in the Socio-economic Development Strategy 2021-2030 of the Vietnam Communist Party, infrastructure development is one of the key strategic development pillars of the Vietnam government; the application of high and green technology and private sector participation is strongly encouraged by the government (4).

Gender inequalities and marginalization issues
Women account for half of the 64m population in rural areas (65% of Vietnam's total population) that suffers from underdeveloped infrastructure services, including pollution caused by solid waste, and unhygienic water supply (5, 6)

Investment opportunities introduction
Vietnam's waste management market was valued at USD 3.8 billion in 2020 (7), the potential of electricity generation from solid waste is estimated at 1,517 MW with an average power output of 10,617,740 GWh/year (8), and the investment demand in the water sector is estimated between $1.3 billion to $2.7 billion over the next 10 years (9).

Key bottlenecks introduction
varied by investment but usually complex due to involvement with multiple partners and challenging negotiation with provincial authorities/ municipalities.

Sub Sector

Waste Management

Development need
Vietnam lacks the adequate capacity to process solid waste: 75 % of collected solid waste went into landfills in 2020 and 80% of this is not compliant with sanitary standards (TCVN 6696:2000 by STAMEQ); the rate of waste collection is only approximately 40% and 60-80% in rural and urban areas respectively (2)

Policy priority
Decision 491/QD-TTg/2018 set out objectives for waste management wherein, by 2025, 90% and 80% of solid waste in urban and rural areas, respectively, will be collected and treated as per environmental standards, and the rate of directly buried waste will be less than 30%; 80% of waste from industrial activities is recycled and processed. (10)

Gender and marginalization issues
over 30 m women in rural areas (16) are suffering from improper processing of solid waste and limited access to clean water. Over 50,000 women are working in waste management and suffering from polluted working conditions that cause dangerous diseases, like respiratory tract or gastrointestinal infections (2). About 50% of solid waste in rural areas is not treated (11)

Investment opportunities introduction
(a) Solutions for solid waste recycling, (b) Application of advanced technologies for processing solid waste before going to landfills (The current investment in technologies is of low level; waste processing equipment/ machine is generally outdated causing environmental pollution), (c) Waste-to-energy generation

Key bottlenecks introduction
the service cost for solid waste processing and land access is defined by the negotiations with the local governments (provincial and municipal).

Industry

Waste Management

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Pipeline Opportunity

Discover the investment opportunity and its corresponding business model.
Investment Opportunity Area

Energy generation from solid waste

Business Model

Invest in waste-to-energy plants to generate power for the State national grid and/or directly to industrial zones (B2B). The service price for solid waste treatment and the sales price of electricity is negotiated with local authorities. Flying ash from waste burning will be stabilized and buried; other solid, liquid, and gaseous wastes will be treated as per safety standards. Examples of companies active in this space are:

Everbright Waste to Energy plant: Launched in December 2018, the plant, Can Tho Waste Incineration Plant, has received and treated more than 400,000 tons of waste including domestic waste that has been buried in landfills, generating more than 113 million kWh of electricity for the national grid (21)

Soc Son Waste Power Plant was officially launched into operation. It has 3 incinerators with a capacity of 800 tons of waste per day and a generating capacity of 15MW (22)

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Business Case

Learn about the investment opportunity’s business metrics and market risks.

Market Size and Environment

Market Size (USD)
Describes the value in USD of a potential addressable market of the IOA.

USD 100 million - USD 1 billion

Critical IOA Unit
Describes a complementary market sizing measure exemplifying the opportunities with the IOA.

The total potential of waste-to-energy power is about 1,100 MW (8)

Vietnam's total installed power capacity is 76,620 MW (23). The national revenue of the power system is nearly USD 17b (24)

Indicative Return

IRR
Describes an expected annual rate of growth of the IOA investment.

5% - 10%

Investment rate of waste power plant for the period 2020-2030: $2,270/kW for landfill gas recovery technology, using internal combustion engines for power generation and $4,000/kW for incineration technology(5)

Feed-in Tariff waste electricity purchase price for 20 years (excluding VAT): 10.05 US cents/kWh for direct incineration technology and 7.28 US cents/kWh for technology to burn gas from landfills (5)

The ADB's average IRR of advanced municipal waste-to-energy projects is 15% (concessional financing) (25)

Investment Timeframe

Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.

Long Term (10+ years)

Due to a lack of specific guidelines for the implementation of the Planning Law, the additional new projects to the Power Development Plan are delayed. The procedures for investment in waste treatment are complicated and lengthy. E.g this process took the Nam Son plant (Hanoi) more than 3 years. (36)

Between investors, local municipalities, and the community, it takes time to negotiate and agree on the investment location due to concerns regarding the level of environmental pollution caused by the waste power plants.

This depends on size, construction scope, and technologies. Investors suggest the investment timeframe can be up to 10 years based on current market conditions. (26)

Ticket Size

Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.

> USD 10 million

Market Risks & Scale Obstacles

Capital - CapEx Intensive

The waste-to-energy plants require a high level of technology to not cause an unfavorable impact on the environment. As a result, the investment amount is intensive (more than USD/MW) (5)

Market - High Level of Competition

Bidding is required for participation in the waste electricity market. At the same time, the construction of a waste power plant requires to be compliant with several legal procedures which vary across municipalities.

Business - Supply Chain Constraints

Waste in Vietnam is not sorted properly at sources, causing operational deficiencies (the calorific value of waste used for power generation must be 110 kcal/kg or more). In addition, the factory may not have enough waste volume to run at full capacity (8)
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Impact Case

Read about impact metrics and social and environmental risks of the investment opportunity.

Sustainable Development Need

Approximately 75% of solid waste collected throughout the country is treated under the landfill method, of which about 80% is sanitarily disqualified, causing harm to the environment (2). Only 13% of waste is burned to recover energy (27).

Waste management is an important area contributing to the mitigation of greenhouse gas emissions (GHG), identified by the National Contribution Self-determined Country (NDC) of Vietnam.

Gender & Marginalisation

Domestic waste landfills are often located on the periphery of the city, and directly affect poor communities, resulting in the loss of alot of arable lands, along with air and water pollution.

Expected Development Outcome

Compared to the landfill method, waste electricity helps to reduce the volume of waste by 90-95%; power supply reduces greenhouse gas emissions; proper waste disposal reduces water pollution and bad odour. (27)

Gender & Marginalisation

Communities living near garbage power plants are less exposed to environmental pollution impacts resulting from landfilling (if the waste-to-energy solution is not applied). (27)

Primary SDGs addressed

Sustainable Cities and Communities (SDG 11)
11 - Sustainable Cities and Communities

11.6.1 Proportion of municipal solid waste collected and managed in controlled facilities out of total municipal waste generated, by cities

Current Value

Across Vietnam, there are more than 660 landfill sites, 69% (456 landfills) of which are unsanitary. More specifically, out of 98 centralized landfills operating in major cities, only 17 are sanitary. (28)

Target Value

By 2030, the percentage of urban domestic solid waste collected and treated up to the prescribed standards and standards is 95% (1)

Secondary SDGs addressed

Affordable and Clean Energy (SDG 7)
7 - Affordable and Clean Energy
Reduced Inequalities (SDG 10)
10 - Reduced Inequalities

Directly impacted stakeholders

People

People living around the landfills benefit from lesser air and water pollution.

Gender inequality and/or marginalization

Women who are working at the waste concentration sites will benefit from health improvement due to the application of environmentally friendly waste management practices at the sites.

Planet

Environment benefits from improvement in the surroundings of locations where solid waste processing facilities are located. The planet will gain from a decrease in GHG emissions resulting from the reduction in waste generation.

Corporates

The investment can contribute to helping other industrial businesses to process their solid waste from industrial activities.

Public sector

Reduce the budget burden of the municipal governments to invest in a waste treatment system.

Indirectly impacted stakeholders

People

People who sort waste at the collection sites and those who work in the existing landfills gain from improved working conditions in jobs in waste-to-energy plants.

Planet

Animals, both on land and in water, benefit from reduced hazards to their health by consuming waste, microplastics, and the like, in contaminated water.

Corporates

The power industry has alternative power sources with lower greenhouse gas emissions than existing coal-based power.

Public sector

Reduction in the Government's burden for protecting the environment in terms of biosecurity and food security.

Outcome Risks

A high rate of fly ash due to the use of the wrong technology and/or the fly ash landfill is not satisfactory for technical requirements.

Groundwater may get contaminated due to leakage of improperly treated waste, and harmful emissions may result due to operational management mistakes.

Dioxin formed during combustion may be above the allowable level if the right combustion technology is not applied in the beginning.

Gender inequality and/or marginalization risk: Investment risks will directly affect the people in areas where the plant is located, especially where there are a high number of vulnerable people.

Impact Risks

Air and water pollution is persistent due to inappropriate technology investment and/or improper operation.

Waste electricity investment is not attractive for scaleup because 3R classification and operation system (reduce, reuse, recycle) for household waste is not implemented efficiently.

Gender inequality and/or marginalization risk: If waste treatment does not meet the technical standards satisfactorily, the lives of vulnerable communities in the area will be adversely affected.

Impact Classification

C—Contribute to Solutions

What

Building a waste-to-energy plant to address environmental issues of the current burial and incineration methods, and increase the power supply of the national grid.

Who

People living near unsanitary land impacted by landfills benefit from improved living conditions.

Risk

Operational violation of technical regulations can pollute the environment and affect the people living around it.

Contribution

Private companies have invested in waste-to-energy plants in large cities. IFC, for instance, has invested USD 30m in 2020 in such plants in Bac Ninh (38)

How Much

The total technical potential of waste electricity in 62 localities nationwide is estimated at 1,517 MW, with an average power output of 10,617,740 GWh/year. (8)

Impact Thesis

Waste electricity benefits communities and contributes to increasing electricity supply and reducing greenhouse gas emissions.

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Enabling Environment

Explore policy, regulatory and financial factors relevant for the investment opportunity.

Policy Environment

GoV, Decision 2068/QD/TTg: Vietnam has set a target to raise the rate of municipal waste treatment for energy purposes from the current negligible level to 30% by 2020, about 70% by 2030, and most of it is utilized for energy purposes by 2050 (31)

Waste-to-energy power has been included in Vietnam's strategic orientation for national energy development to 2030, with a vision of 2045 (29)

GoV, Decree 32/2015/TT-BCT: solid waste to energy is added in Vietnam's national power planning (30)

National Strategy on Integrated Management of Solid Waste to 2025, Vision for 2050: All solid waste is collected, reused, recycled, and thoroughly treated with advanced, environmentally friendly technologies, limiting the volume of solid waste to be buried to a minimum (38)

Financial Environment

GoV, Decision 31/2014/QD-TTg: provides incentives for waste-to-energy projects, including access to concessional loans, import tax, corporate tax, access to land, and purchase of power output (36)

GoV, Decree118/2015/ND-CP: refers to policies and investment incentives in various fields. The centralized solid waste treatment sites and the collection, treatment, recycling, and recycling of solid waste are among the incentivized fields (37)

Feed-in Tariff for 20 years (excluding VAT): 10.05 US cents/kWh (direct combustion), 7.28 US cents/kWh (gas from landfills). Corporate Income rate: the first 4 years from the year of taxable income: 0%, the next 9 years: 5%, the next 2 years: 10%, and the remaining years: 20%. (8)

Regulatory Environment

Law on Environment: regulations on environment management, including the transporting, burying, dumping, discharging, and burning of solid waste and hazardous waste in contravention of technical processes and regulations of the law on environmental protection (32)

GoV, Decree 38/2015/ND-CP: Regulations on waste management, including hazardous waste, domestic solid waste, ordinary industrial solid waste, liquid waste products, wastewater, industrial waste, and other specific wastes (33)

Law on Investment by Public-Private Partnership: regulations on investment under the public-private partnership, State management, rights, obligations, and responsibilities of agencies, organizations, and individuals related to investment activities in the form of public-private partnership (34)

Vietnam stipulates conditions for participation in investment projects to build waste power plants in the form of public-private partnership (PPP), and the bidding mechanism based on the Model Power Purchase Agreement issued by the Ministry of Industry and Trade (35, 36).

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Marketplace Participants

Discover examples of public and private stakeholders active in this investment opportunity that were identified through secondary research and consultations.

Private Sector

Electricity Corporation (EVN), Waster-to-energy companies: Thien Y (Soc Son plant), Urbaser, Green Environment Technology Seraphine, Green Energy T&J (Bac Ninh), Everbright (Can Tho), Vietstar and CITENCO (Ho Chi Minh), Huy Hoang (Hai Duong, Da Nang).

Government

Ministry of Commerce and Trade, Municipal governments, Ministry of Resource and Environment, Ministry of Construction.

Multilaterals

European Union (EU), United Nations Development Programme (UNDP), Asian Development Bank (ADB), World Bank (WB).

Non-Profit

Vietnam Energy Association, Vietnam Clean Energy Association, Vietnam Environment Industry Association (VEIA), Vietnam Association for Solid Waste Management (newly established in 2022)

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Target Locations

See what country regions are most suitable for the investment opportunity. All references to Kosovo shall be understood to be in the context of the Security Council Resolution 1244 (1999)
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urban

Vietnam: Countrywide

Vietnam's major cities are under high pressure due to domestic waste treatment of large amounts of daily waste, lack of landfill space, and/or landfills near residential areas. These include Hai Phong, Hai Duong, Ha Long, Hue, Da Nang, Nha Trang, Dong Nai, Binh Duong, Can Tho.
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References

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