Unveiled in late March, Vietnam’s revised Power Development Plan 7 (PDP 7) sets out a blueprint for expanding power generation by using a mix of energy sources. The plan foresees VND3207trn ($148bn) worth of investments in generation and distribution capacity through to 2030, with installed capacity to rise to more than 135 GW.

According to the plan, around $40bn will be invested between 2016 and 2020, of which 75% will be allocated for increasing power generation and 25% will go towards network development. The remaining $108bn, to be invested between 2021 and 2030, will be similarly apportioned.

A bump in supply

Vietnam has about 34 GW of generation capacity, and while this is sufficient for current needs, it is expected to be outpaced by demand in the near term. Advances in industrialisation have seen demand growth of 10-12% per annum, placing additional pressure on the national grid.

In the short term, the government plans to bridge the gap by importing electricity from neighbouring Laos. In late January the National Power Transmission Corporation announced it was in the process of upgrading transmission grids to accommodate the imports, which are expected to fill the demand gap through to 2020.

Longer term, the government aims to revamp the country’s energy mix, with coal anticipated to contribute more than half of total power generated by 2030, followed by hydropower and natural gas.

Turning to coal

While Vietnam plans to ramp up investment in renewable energy, notably wind, solar and biomass, the use of thermal power is also projected to increase significantly.

Under the revised PDP 7, thermal power will account for 45.8 GW of generation capacity, with still more investment likely in coal power plants in subsequent years.

By 2030, coal-fired power stations are expected to account for 53.2% of installed capacity in Vietnam, up from the current 34.4%

“By contrast, electricity production from renewable energy sources, including wind, solar and biomass, will only account for about 10% of Vietnam’s energy mix by 2030,” Peter Cattelaens, project leader for renewable energy at the German development organisation GIZ, told OBG.

Meanwhile, nuclear power will account for about 5.7% of Vietnam’s energy mix by 2030 after the country’s first nuclear power plant comes on-line in 2028.

As reliance on thermal power scales up, coal consumption is expected to see a marked increase over the next 15 years.

According to some estimates, Vietnam will be burning 188m tonnes of coal per year by 2030, more than double the 79m tonnes projected for 2020 and almost 15 times the volume consumed in 2012.

Even with local production forecast to rise from 45.1m to 55m tonnes by 2030, coal imports – which are typically priced relatively higher – will likely be needed to bridge a widening supply gap over the coming years.

To that end, state-owned PetroVietnam has signalled plans to import around 10m tonnes of coal per year, largely from Australia and Indonesia, from 2017 onward.

Shifting hydro share

While hydropower is also expected to see greater investment under PDP 7, competing needs for water resources and global warming have sharpened the focus on other sources of energy.

“Hydropower or coal-fired plants are not sufficient to cope with our growing economy,” Bui Ngoc Bao, chairman of Vietnam National Petroleum Group, told OBG. “With a changing climate, Vietnam’s dependence on hydropower does not make sense, even if it is competitive investment-wise.”

Although PDP 7 should see hydroelectric generation capacity increase from 17 GW to 27.8 GW by 2030, hydropower’s share of the energy mix is projected to drop from around 37% to 16.9% in the next 15 years.

Vietnam must balance water needs between the utilities and agricultural sectors, according to Jacques de Beer, a project manager with consulting and engineering multinational Poyry.

“Balancing water resources has become more complex as a result of climate change,” De Beer told OBG. “There’s an aim to shift away from hydropower due to the difficulties of managing unpredictable water levels for power generation.”

Indeed, reduced rainfall triggered by the El Niño weather pattern is expected to impact water levels at Vietnam’s hydropower plants through to the end of the year, with operations at several facilities temporarily halted.

Broadening the role of natural gas

As Vietnam scales up its manufacturing sector, natural gas could play an important role in satisfying the country’s energy needs, while also serving an industrial use.

The country has sizeable natural gas resources – with 700bn standard cu metres of proven reserves as of the end of 2015, according to figures from the US Energy Information Administration. However, most of the country’s deposits are located offshore and up to 50% have high carbon dioxide content, which adds to operational costs.

Imported feedstock, to be landed at two liquefied natural gas terminals slated for completion in 2020, should help bridge the shortfall in the medium term, though hydrocarbons’ share of Vietnam’s overall energy mix is slated to decline from 25% to 13% by 2030.

“While the revised PDP 7 shifts some coal-fired power plants to natural gas, from a strategic standpoint Vietnam intends to use more gas to produce petrochemicals, with the ambition of becoming a refining and petrochemical hub in South-east Asia,” Nguyen Anh Duc, general director of the Vietnam Petroleum Institute, told OBG.

Oxford Business Group - April 30, 2016

Việt Nam urged to increase use of renewable energy

The Government’s national power development plan that calls for a higher proportion of power generation from renewable energy by 2030, including water, wind, solar and biomass, has not met its targets or the country’s potential, according to the Việt Nam Sustainable Energy Alliance (VSEA).

In the adjusted planning, thermal power will account for more than 50 per cent of the total capacity, Nguyễn Thu Trang, co-ordinator at VSEA, said.

Trang spoke at a seminar on sustainable development held yesterday in HCM City.

The seminar was organised by VSEA in co-operation with Centre of Hands-on Actions and Networking for Growth and Environment, an official national partner of 350.org.

Trang said that more than 85 million tonnes of coal would be imported for use at 52 thermal power plants by 2030, an increase from the 12 existing plants.

“Why does the country put energy security in the import of coal when there are many sources with high potential of power,” she said.

Though the price of power from thermal plants is still cheaper than power from renewable energy sources, the costs do not include the price to the environment, health and carbon tariffs.

The Government should more precisely calculate the costs to “create a fair environment” for investors who want to pour money into power projects using renewable energy sources.

According to Việt Nam Energy Online, under the national plan outlined by the Government, the total capacity of hydropower projects would be 21,600 MW by 2020 and 27,800 MW by 2030, increasing from 17,000 MW now.

The total capacity of the wind power projects would be raised from 140 MW to 800 MW by 2020 and 6,000MW by 2030. As for solar power projects, the capacity would rise from 850MW to 4,000 MW by 2020 and 12,000 MW by 2030.

Negative impact

Other speakers at the meeting noted that Việt Nam is the world’s third largest builder of coal-fired power plants, at a time when the world is switching to renewable energies.

Emissions from coal-fired thermal energy can spread hundreds of kilometres, causing serious health issues, such as chronic respiratory disease, lung cancer and stroke. It can also affect soil and crops.

Moreover, the burning of coal emits wastes such as toxic metals, ozone and fine particulates, which, in contact with sunlight, can create smog, according to a report from the Green Innovation and Development Centre last year.

In addition, coal-fired thermal energy has led to 4,300 premature deaths in Việt Nam each year, a Harvard University report has said.


Mã Khai Hiền, deputy head of the Energy Conservation Research and Development Centre, said there were many challenges to develop power from renewable energy sources.

Although the Government has policies to support the development of renewable energy, investors have not yet to access them, Hiền said.

The low price for buying power from these sources is one of the barriers for enterprises to invest, he added.

As electricity prices are expected to continue to increase worldwide by 2023, this is an opportunity to step up investment in renewable energy, Hiền said.

Viet Nam News - April 30, 2016