Support for the Development of an ESCO Market

Despite the existing energy efficiency (EE) and conservation policies and initiatives of both the government and donor community in Vietnam, significant barriers still exist such that many energy-saving opportunities remain unexploited. International experience demonstrates that the development of an ESCO market under an enabling policy environment effectively helps scale up EE investments. Despite the major EE potential in Vietnam, very little investment has materialized due to the low capacity of key stakeholders such as industrial enterprises and private finance organizations. The Ministry of Industry and Trade (MOIT) has therefore requested that the World Bank continue supporting the development of the ESCO market to leverage the results of ongoing EE activities and foster greater EE investments.

Econoler was hired to support the MOIT in the assessment of ESCO operations and corresponding regulatory framework, as well as provide policy recommendations and options to further develop the ESCO market in the country. Econoler also provided the Carbon Partnership Facility with detailed insights on the role of carbon payments and target activities that could enhance and facilitate the implementation of EE measures in industrial enterprises. The assignment includes the following tasks:

• Update the status of ESCOs and market needs;
• Review existing legal documents and regulations, then provide recommendations and proposals to develop the ESCO market;
• Conduct a workshop to present recommendations on operational and financial aspects, policy approaches, and market development capacity building programs for discussion with stakeholders;
• Evaluate the potential impacts of implementing either a Super ESCO, a utility-based ESCO, or the development of an EE fund/guarantee fund;
• Assess the role of carbon financing in ESCO market development;
• Develop an implementation plan for approved recommendations.

  The development of a plan with short, medium and long-term goals provided the MOIT with an initial road map to be incorporated into their annual work plan with defined activities and objectives. This plan was a crucial phase towards a more structured and developed ESCO market in Vietnam.