VietNamNet Bridge – Life improved markedly for Bui Van Mao's family in Kim Boi District in the northern province of Hoa Binh when his house was connected to the national electricity grid in 2002.

Workers from Lam Dong Electricity Company in the Central Highland province of Lam Dong build an electricity network to supply power to rural and remote areas in Don Duong District. (Photo: VNS)

As a result their school grades have improved. Meanwhile, Mao's saw mill and soya factory are also mechanised, resulting in higher productivity and profits.

His total annual income is now about VND150 million ($7,500), a 10-fold rise compared to eight years ago.

Meanwhile, in the Central Highlands, life for Nguyen Tho Son, from mountainous Chu M'Nga District in Dak Lak Province, has also improved since his house was connected up to the central grid.

Electricity now pumps coffee-making machinery and has improved rubber production, which has risen 25 per cent. Electricity has also improved agricultural production in general.

Mao and Son are among millions who have benefited from the Government's Rural Electrification Programme that was launched ten years ago.

According to an independent research project entitled "The benefits of rural electrification" conducted by the World Bank and the Ministry of Industry and Trade, Viet Nam has gone improved by leaps and bounds since the programme was launched in rural and remote areas. All districts are now either connected to the national grid or have electricity generators. Meanwhile, 98 per cent of communes and 95 per cent of households are connected to the grid.

One decade ago, just 70 per cent of households and nearly 80 per cent of communes had access to electricity.

Electrification has led to a comprehensive change in the social and economic picture in rural areas and contributed more than 30 per cent to the development of the rural economy.

Jennifer Sara, director of the World Bank's Sustainable Development Programme, said the Rural Electrification Programme, in which the bank was the leading investor, had made impressive gains. However, she said if Viet Nam wanted all 3,000 remaining communes and some 1 million households to have power by 2020 (5 per cent of the national total) the Government needed to mobilise more resources.

She said the remaining 1 million households that did not have power were in small or dispersed communities, and that the cost of expanding the grid, would amount to $15,000 to $30,000 per household. This means the project needs to raise $20 billion. In addition, the expenditure for grid intensification in 3,000 communes would be $400,000 per commune.

"This is both technically and financially challenging," Sara said.

The latest survey conducted by the World Bank and the Institute of Sociology showed that monthly average electricity consumption per household in remote areas was just 30kWh or 7 cents for one kWh. The likely profit is low while the unit connection costs are higher in rural parts, making it unattractive to the private sector.

She said that was why it was impossible to achieve full rural electrification without a major incentive mechanism for business.

Off-grid power

In recognition of the technical and financial challenges that come with grid extension, the Vietnamese Government must take into consideration other viable alternatives for increasing electricity access, Sara said. There are a number of renewable technologies including mini-hydropower generators with a capacity of less than 10MW, and solar and wind power for stand-alone service provision.

According to World Bank energy expert Peter Meier, the estimated cost of off-grid hydroelectricity ranged from $700 to $1,000 per household, which is much more cost-effective.

Research conducted in 2008 by the Ministry of Natural Resources and Environment, showed that investment in wind power in coastal and lowland areas was promising.

Viet Nam has 3,000km of coastline and thousands of islands, while 70 per cent of the country is mountainous offering potential for wind power. The generation capacity on the islands and on the mountains may amount to 1,700kWh to 4,500kWh and 2,000kWh to 3,000kWh per square metre per year, respectively.

On the other hand, the average potential for solar power in Viet Nam is 5kWh per square metre per year in the central and southern provinces, 1kWh higher than in the north. Solar power could be utilised to generate electricity and used to heat water and cook.

The World Bank country director in Viet Nam, Victoria Kwakwa, said that to develop renewable energy projects that were practicable for poor households, the Vietnamese Government needed to be more proactive in restructuring the energy sector to attract capital, while building a support mechanism for the five per cent of the population without electricity.