Green Growth Strategy stirs up local power mix

08:00 | 27/04/2017
To ensure sufficient electricity for the coming decades, the Vietnamese government is implementing the National Green Growth Strategy with a stress laid on developing various types of energy, including coal-fired and renewable sources. Khoi Nguyen reports.
green growth strategy stirs up local power mix
The Vietnamese power sector is making strides in a more sustainable direction, but it will need help from all businesses to truly go green Photo: Le Toan

State-run Electricity of Vietnam (EVN) has just adopted a resolution on developing solar photovoltaic (PV) power, in an aim to generate more power for the country’s fast-approaching need. If this bold move manifests into action, EVN will be the first state-owned firm in Vietnam to develop renewable energy.

From the past till now, EVN and the state-run giants PetroVietnam and Vinacomin have mainly produced power from coal, with some hydropower plants thrown in.

But in the near future, EVN will develop two solar PV power projects, with one on the land of Tri An Hydropower Plant in the southern province of Dong Nai, and another on the water surface of Da Mi Hydropower Plant in the south-central province of Binh Thuan.

In addition, EVN has worked with Ninh Thuan authorities on constructing a 200-megawatt (MW) solar PV plant on an area of 400 hectares in the south-central province’s Ninh Phuoc district, with an investment of about VND8 trillion ($363.64 million). This project is scheduled to commence construction next year and become operational in 2019.

EVN’s other solar PV power projects will be developed in localities with big solar potential, such as the Central Highlands, south-central, and southern regions. These projects will also be located in areas near EVN’s existing electricity sources, on the water surface of EVN’s hydroelectricity reservoirs, and also on the land of the firm’s hydropower plants.

This is aimed at helping these projects reduce construction costs and conveniently connect with national power grids.

In line with the development strategy of Vietnam’s power industry and Green Growth Strategy (GGS), passed by the prime minister in September 2012, EVN’s upcoming renewable projects will be among many other privately-owned coal-fired and renewable power projects that the country is developing. All of which will supply more electricity to Vietnam, which is now suffering from energy shortages.

Power mix

Vietnam’s current reliance on fossil fuels cause great amounts of environmental pollution, but GGS shows how the future can become more sustainable, green, and clean. GGS proposes to phase out fossil fuel subsidies and reinforce renewable energy development. Under GGS, the government mandates that “national energy security must be ensured with the development of assorted energy sources” and that “new renewable energy sources are encouraged for development”.

To support GGS, Vietnam adopted the Renewable Energy Development Strategy (REDS) in November 2015 and the revised Power Development Plan VII (PDP) (2011-2020, with a vision to 2030) in March 2016. These policies reduce the projected coal imports for power generation in 2030. REDS sets hydroelectricity and renewable energy targets for biomass, wind, and solar PV electricity production through 2020, 2030, and (tentatively) 2050.

The Ministry of Industry and Trade (MoIT) reported that Vietnam’s power consumption grew 11 per cent during the period during 2011-2014, and is expected to grow 9.1 per cent during 2016-2020.

The US Trade and Development Agency cited EVN estimates that that around $123.8 billion will need to be channeled into national power system development over the next two decades. Spending would average $6.8 billion per year.

In the 2013-2015 period, this amount averaged nearly $5 billion per year. Of this, 66.6 per cent was spent on power plants and the remaining 33.4 per cent on network development.

In order to meet this big demand for power, the Vietnamese government has chosen to develop coal-fired power plants despite possible environmental risks, while also pursuing renewable energy development. In the revised PDP VII, coal remains the most important future power source by far and an ambitious programme of coal-based power development remains in place. The adjusted coal targets still require completion of nearly 100 coal-fired power units within several new and existing coal power plants between 2016 and 2030. These nearly 100 units are listed in Decision No.428/QD-TTg issued on March 18, 2016.

Also under the plan, renewable energy would make up 6 per cent of total annual electricity production in 2030, including biomass and wind-based power, but coal-based power would be by far the dominant source with 56.4 per cent.

Coal-fired power

Currently, Vietnam has 19 coal-fired power plants. The government has announced plans to build another 14 plants of this type in the Mekong Delta by 2030, adding a total capacity of about 18 gigawatts (GW) to the southern power grid. On April 12, Japanese energy firm J-Power came to the central province of Quang Ngai to work with local authorities about its plan to build a coal-fired power plant in the province’s Dung Quat Economic Zone.

Jahana Takashi, director of the International Development Business Department of J-Power Electricity, said the firm wants the local government to allow it to conduct a site survey and make a pre-feasibility study for the project.

The project will include two stages. In the first stage, the project will have a total capacity of 2.4GW, going online in 2028. In the second stage, the plant will add 2GW of capacity, going online in 2030. Coal used for the plant will be imported from Australia, Russia, and Indonesia. It may also be locally sourced. This project has received a nod from the local authorities.

Singapore’s Sembcorp Development also plans to construct a 1.2GW coal-fired plant under a 25-year build-operate-transfer model in this province.

According to the United Nations Development Programme (UNDP), coal-based power will make up over half of Vietnam’s power mix by 2030. The main reasons for these plans are that Vietnam needs a large amount of power to support its economic growth; Vietnam has substantial coal reserves; and coal is seen as a cheap source of power. In addition, Vietnam lacks the public financial capital for expansion of its power supply, and international private financiers and equipment and construction companies remain interested in investing in coal-fired power plants in Vietnam.

“But all these reasons can be challenged,” said a UNDP report on Vietnam’s power mix.

According to UNDP, national energy security is deteriorating as increased fossil fuel imports are required to meet the rising energy demand. Vietnam is becoming a net importer of coal. By 2030, Vietnam targets a total electricity production capacity of 146.8GW, of which 75GW is forecast to be supplied by coal-fired plants, according to the UNDP report.

“Reducing the rate of growth in domestic energy use, combined with the expansion of domestic, renewable energy sources, will significantly reduce Vietnam’s dependency on international energy markets and thereby enhance national energy security. This is also an opportunity for Vietnam to adjust its future power development plans, which rely heavily on imported coal,” said another UNDP report on Vietnam’s green growth and fossil fuel policies.

Renewables

According to MoIT, in parallel to the development of coal power, the government is calling on investors to invest more in renewable energy, such as wind power, solar power, and biomass power. Vietnam has great potential to develop these types of energy.

Over the past few years, only 7MW of solar PV capacity has been installed in Vietnam, with around 2MW drawn from rooftop solar arrays, though dozens of foreign investors have come to Vietnam in search of investment into renewable energy projects.

According to UNDP, the future of electricity supply in Vietnam can be strongly based on renewable energy. This would help limit the country’s growing dependency on energy imports, including coal imports.

For example, recently in Ninh Thuan, Singapore’s Nexif Energy worked with authorities on several wind and solar power projects in the province. These projects have received the thumbs-up from the authorities. It is expected that the investor will officially submit their investment proposals to the province in the near future.

Earlier this month, Singapore’s Sinenergy Holdings inked a memorandum of understanding with the government of Ninh Thuan for a 300MW solar power plant in combination with high-tech agricultural production in Ninh Phuoc district. The 832ha, VND7.92 trillion ($360 million) project will annually produce over 550 million kWh per year. It is expected that the project will commence construction in February 2018 and begin operation in July 2019.

Also in Ninh Thuan, local company Thien Tan Group is co-operating with US firm Black & Veatch Group to make a feasibility study for implementing a $2 billion, 1GW solar power project. Also in this province, Canadian company CMX Renewable Energy planned to construct a 250ha, 150MW solar power plant worth $150 million. In the nearby province of Binh Thuan, US-based ACO Investment Group also expressed an interest in building a 50MW solar power farm.

“Vietnam has sufficient indigenous energy resources to meet all its energy needs, from natural gas, renewable energy, and investment in energy efficiency,” Gavin Smith, director of the Clean Development Fund at Dragon Capital Management Limited, told VIR.

The fund has invested in solar, small hydro, waste, and clean water projects.

“Vietnam has excellent onshore wind resources in Binh Thuan and Ninh Thuan, abundant solar resources are available throughout southern Vietnam. The future of waste heat recovery from plants like cement, steel, and fertiliser plants could be very great,” Smith said.

According to the Ministry of Planning and Investment’s Foreign Investment Agency, currently Vietnam has about 110 foreign-invested electricity and gas projects, of which 16 are in the clean energy sector with total registered capital of $778 million. Of this, $577 million is for wind power, $137.38 million is for solar power, and the remaining is for biomass power.

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Based on MasterCMS Ultimate Edition Ver 2.8 2018