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| Vietnam is now making great efforts to exploit alternative energy sources but the results have been far from satisfactory. |
The issue of energy shortages has moved beyond a yes or no debate and is there for all to see. Along with Vietnam’s economic growth comes increasing demand for power, rising 15 per cent per year and, needless to say, putting pressure on development. Some 60 per cent of Vietnam’s energy now comes from coal and gas-fired plants, and 40 per cent from hydropower turbines, but demand continues to outpace supply.
At its monthly meeting in August, the Cabinet spent time reviewing the problem. Total power consumption, as the government noted in a report, is forecast to rise to 93.4 billion kWh next year, based on forecasted economic growth of 6.5-7 per cent and industrial production growth of 7.5 per cent. Meanwhile, national generation capacity is expected to rise by around 17,900 MW this year, but Vietnam will still have to import about 3.5 billion kWh next year, mainly from China, to cover the shortfall. Two questions therefore occupy the minds of most: When will Vietnam react? Will its measures be sufficiently effective to address the situation?
Nuclear Power
A nuclear power plant (NPP) project is now in the final stages before launch and will be discussed at the upcoming National Assembly session. According to Mr Le Dinh Tien, Deputy Minister of Science and Technology, the NPP will play a decisive role in Vietnam’s future energy security goals. Because of its importance, some may ask why it didn’t come sooner given the fact that the project initially underwent a pre-feasibility study in 2002. When asked, Mr Tien said that project preparation was a long process because it was the first time Vietnam had built an NPP and the nuclear reactor required a very high standard of security.
Vietnam’s future NPP is expected to be located in the two communes of Phuoc Dinh and Vinh Hai in Ninh Thuan province. In the first phase, four nuclear reactors will be installed in the two communes, with a total capacity of 4,000 KW. Investment in the first NPP is estimated at around VND180 trillion ($10 billion), with the State-run Electricity of Vietnam (EVN) as the sole investor. But EVN, in reality, will only be able to pay about a quarter of the total cost, and the remainder will come from foreign investors.
The size of the investment is, to some extent, one of the greatest challenges for Vietnam in building the NPP. According to Mr Le Van Hong, Deputy Chairman of the Vietnam Atomic Energy Commission (VAEC), $10 billion is just an estimate and the figure is likely to change a great deal. “It will be hard to specify the exact investment needed for the NPP because equipment is very expensive and some suppliers have increased their prices in recent times,” he said.
In the long run, however, the reasons for investing in nuclear energy not only relate to energy security but also economic benefit. NPPs are expensive to build, but relatively cheap to operate. Mr Vuong Huu Tan, Chairman of VAEC, believes that an NPP, once in operation, won’t cost much at all. “The material needed to run an NPP is mostly uranium, which will be in large supply for a very long time,” he said “Meanwhile, it can’t be said for certain that other energy sources like coal, gas and oil will be plentiful in the future.”
In order to meet funding requirements, a call for the participation of foreign investors in the national project is a must. The good news is that Vietnam has already signed nuclear agreements with countries that have a wealth of experience in nuclear technology, such as China, Japan and the US. The agreements allow companies from the countries to supply technology and equipment to Vietnam.
Major names, including the US’s Westinghouse Electric, Russia’s Rosatom, Japan’s Toshiba, China’s Guangdong Nuclear Power Group and France’s EDF are reported to be in the race to assist Vietnam in building a future NPP. “Foreign nuclear power companies that want to help Vietnam in this project have committed top quality and modern technologies, as well as sourcing the funds in their country, if we import equipment from them,” Mr Tan said.
Alternative energy
Around the world billions of dollars are being invested in clean energy technologies of one sort or another, from solar arrays to wind turbines. In Vietnam, the gradual exhaustion of traditional energy sources as well as the improper use of energy in general has posed a potential threat to the country’s energy security. Analysts are now beginning to warn of the prospect of a greater dependence on energy imports and some have forecast that Vietnam will probably become an energy-importing country by 2015. To avoid such a pessimistic outcome, the country has no other choice but to concentrate on exploiting renewable sources found within its borders.
Vietnam may not have much of its own gas and oil but the sea, sky and land provide an abundance of renewable energy solutions. Given the climate, solar energy in particular offers bright long-term prospects. If solar power stations were to be built to generate electricity produced for the national grid, the country’s problems would be partly resolved. But while simple in theory, the concept is difficult and costly in practice.
According to Mr Nguyen Duc Cuong, Director of EVN’s Centre for Renewable Energy and CDM, the main obstacles in introducing solar energy is the expense. “Investing in solar energy is costly because we must import technology and equipment from aboard,” he said. “Most solar energy projects in Vietnam are being carried out thanks to sponsored funds from foreign countries.” This is why only a few institutes and universities are participating in the research process, and its potential is being wasted.
Meanwhile, the prospects for wind power are much better as it has already seen the arrival of major investors. Vietnam Renewable Energy Joint Stock Company (REVN), for example, will be the sole investor of the first wind power station project, in Binh Thuan province. REVN’s project has a total capacity of 120MW, with 80 turbines, and is scheduled to be completed in 2011. The project is being carried out in several phases and the first will have 20 turbines installed, with total capacity of 1.5MW. The Fuhrlaender Vietnam Company is also planning to build a wind power turbine manufacturing and installation factory in local Tuy Phong district, at a cost of VND540 billion ($30 million). Once finished, the factory will provide wind power turbines to stations in Vietnam and for export.
Overall, Vietnam is now making great efforts to exploit alternative energy sources but the results have been far from satisfactory. Reasons why lie in the fact that renewable energy projects, due to their high cost and long break-even time, are not attractive enough to encourage investors. “The State should adopt appropriate policies to assist enterprises to invest in new energy projects,” said Mr Cuong. “Preferential treatment from the State will create more opportunities for investors to enter into this highly prospective business.”
Meanwhile, Mr Tran Viet Tuan, Chairman of Fuhrlaender Vietnam, suggested the State complete a framework for wind power energy so that investors won’t have too much trouble during the investment process.