According to the recently submitted draft National Power Development Plan for the 2021–2030 period, with a vision to 2045 (Power Development Plan VIII), the Ministry of Industry and Trade would add approximately 20,000 MW of new coal-fired power capacity, increasing total coal-fired power capacity from around 21,000 MW currently to 40,899 MW by 2030, and adding a further approximately 10,000 MW of coal-fired power during the period through 2045. Under this roadmap, Vietnam would become one of the six countries with the largest coal-fired power development plans in the world. Regarding this issue, from the perspective of a company operating in the renewable energy sector, Mr. Nguyen Quang Huan, Chairman of the Board of Directors of Halcom Vietnam Joint Stock Company, also shared his views and opinions. (Source: VnEconomy)

Limitations of Power Development Plan VIII (PDP8)

First, there is no solution to gradually reduce coal-fired power generation in the future in accordance with the spirit of Resolution No. 55/NQ-TW. Coal-fired power is a polluting energy source and is becoming increasingly scarce. The process of mining, transporting and generating electricity from coal will deplete local water resources and directly and indirectly cause water pollution.

Second, the draft does not appear to adequately address the risks of continuing to delay coal-fired power projects, carrying over the entire coal-fired power capacity planned under PDP7 into PDP8 without updating developments in coal prices and global trends regarding coal-fired power over the past 10 years. In recent years, many projects under PDP7 have been repeatedly delayed, with some delayed for more than five years without being implemented because they could not access financing, as financial institutions around the world, particularly those from countries that have traditionally financed coal-fired power projects in Vietnam such as Japan, South Korea and China, are now shifting toward investment in renewable energy. Therefore, projects carried over from PDP7 remain at risk of continued stagnation. Local authorities and residents also do not support the construction of coal-fired power plants and coal mining due to pollution. Although Resolution No. 55-TW has been issued, these issues have still not been addressed or adjusted in PDP8.

Another issue is that most of the coal currently used by power plants in Vietnam is imported, making prices and import conditions difficult to control. Disruptions such as wars, natural disasters and, most recently, the COVID-19 pandemic have caused fluctuations in coal-fired electricity prices, made coal imports more difficult, and affected coal-fired power plants. This makes it unreasonable to carry over the entire coal-fired power capacity from PDP7 into PDP8. Meanwhile, energy sources such as wind power, solar power and waste-to-energy can be sourced domestically. Although their initial investment costs may be high, they can be controlled domestically and may not necessarily be more expensive than coal-fired power in the future.

Third, no solutions have been proposed to address the limitations of integrating renewable energy into the transmission system, such as technological solutions, investment or management measures, etc.

PDP8 also does not clearly address the policy of selling electricity locally. Currently, generated electricity is only fed into the grid and transmitted between regions, creating difficulties for the power transmission system in terms of both transmission lines and system operation. Therefore, direct power sales should be encouraged (DPPA). However, under such conditions, regulation by a smart grid is also necessary, along with active and effective participation by EVN and the Ministry of Industry and Trade in system regulation, because power producers cannot fully and accurately meet the electricity demand of consumers, including requirements regarding load capacity and the timing of electricity consumption.

New FiT Pricing Policy for Wind Power

What Is the Future of Wind Power? 

EVN is not yet ready to absorb the full generation capacity from renewable energy sources, resulting in social waste, while investors could potentially incur losses or even go bankrupt.

The most important issue is not how high or low the new FiT will be, but rather that the pricing policy must be stable and implemented in accordance with the Government’s regulations and policies. EVN needs to purchase all renewable energy generated, as stipulated in power purchase agreements (PPAs), pursuant to Article 4 of Decision No. 13/2020/QD-TTg on the mechanism for encouraging the development of solar power in Vietnam and Article 11 of Decision No. 37/2011/QD-TTg on the support mechanism for the development of wind power projects in Vietnam. At present, the power sector does not have sufficient capacity to absorb the full amount of renewable energy generation, the control mechanisms remain unclear, and regulations have not been properly implemented, affecting Vietnam’s credibility among international investors. The FiT deadline will expire on October 31, 2021, but no new FiT pricing policy has been introduced, causing uncertainty among businesses.

An attractive FiT will strongly encourage investment in renewable energy, but if EVN is not yet ready to absorb the generated power, this will result in social waste. For example, some power plants can only feed 50% of their capacity into the grid. Therefore, even if the FiT is high, investors may still incur losses or even face bankruptcy.

PDP8 Needs to Closely Follow the Spirit of Resolution No. 55

The overarching vision of Resolution No. 55 is highly forward-looking and places strong emphasis on the long-term development of the national energy sector, particularly green and sustainable development, with renewable energy and waste-to-energy being excellent sources of green energy. PDP8 needs to adhere to this core principle to establish clear directions and a roadmap, anticipate future developments, and determine how to develop renewable energy, upgrade the power grid, apply advanced technologies to grid operation, and encourage private-sector investment. A power development plan that only focuses on the present without anticipating the future will not be able to effectively translate into reality.

 

 

“Power Development Plan VIII needs to closely follow the spirit of Resolution No. 55/NQ-TW, stay aligned with actual conditions, and anticipate future demand, including global trends and Vietnam’s commitments to reducing greenhouse gas emissions under the 2015 Paris Agreement on climate change, as well as the free trade agreements (FTAs) that Vietnam has signed with countries and regions around the world.”

– Mr. Nguyễn Quang Huân, Member of the 15th National Assembly, Chairman of the Board of Directors of Halcom Vietnam Joint Stock Company –