Vietnam’s energy strategy shifting from coal to renewables
Securing development goals
To tackle increasing power demand amid declining natural energy resources, the National Power Development Planning for the 2021-2030 period (PDP8) will map out development orientations based on renewable energy sources, determine the scale and progress of key power grid projects and propose solutions to ensure electricity supply for the country’s socio-economic development, national security and defense.
At an initial workshop on Strategy Environmental Assessment (SEA) of the National PDP 8, experts and participants reviewed and analyzed potential environmental impact in order to choose the most suitable plans.
The previous decade’s Power Development Plan (PDP 7) focused largely on coal-fired power plants and importing thermal coal despite Vietnam’s abundant supply of wind and sunshine, particularly along its eastern coast.
The Ministry of Industry forecast that electricity demand would outstrip supply by about 5 percent by 2023.
Nguyen The Thang, a representative from the Institute of Energy said Vietnam’s electricity industry is undergoing rapid changes. Challenges to PDP 8 include efficient use of domestic energy sources, assessing the potential of renewable energy, mitigating climate change and air pollution, and financial mobilization in from the private sector.
Thang added that SEA is a compulsory process to assess the environmental impacts of power development and identifying optimal solutions. It also addresses issues of international standards, such as the level of greenhouse gas emissions, air pollution impact on human health, the effects of rapid renewable energy development (especially wind and solar) on land resources, and more.
Favorable investment incentives
To make PDP 8 effective, power development plans must yield economic benefits; secure socio-economic development and environmental and sustainable development goals and meet international commitments. Therefore, the proposed scenarios assess exogenous costs for each power source option.
Nguyen The Thang, a representative from the Institute of Energy
According to Nguyen Tam Tien, General Director of Trung Nam Group, planners also need to work out the level of backup capacity in the long term. Also under consideration is using liquefied gas to balance dips in solar and wind power availability.
Over the past 10 years, the number of registered wind power projects has increased sharply to enjoy preferential FIT prices (prices applied to electricity produced from renewable energy sources for sale on the grid or for on-site use). However, so far, the preferential price period is almost over, challenging the projects’ future operations.
The Institute of Energy is also being urged to conduct research on additional electricity storage systems, which can be accomplished much faster than building pumped storage at hydropower plants. Once the proportion of renewable energy increases and accounts for a larger part of supply, the charged power plants will be very useful, Tien added.
“The power planning will create infrastructure and offer investors more opportunities in this field, but how to operate it will depend on the electricity market. The Electricity Regulatory Authority of Vietnam under the Ministry of Industry and Trade will study and promulgate pricing mechanisms and policies for low and peak purchases, installed capacity, frequency regulator capacity and rotation reserve capacity to attract investor interest.” Thang said.
Nguyen Thi Thu Huyen, a representative of the Environment and Sustainable Development Department under the Institute of Energy, said the SEA research and evaluation is bringing up additional issues, such as the potential use of waste to generate power due to the urgent need for urban and industrial solid waste treatment across the country. However, such projects are currently facing difficulties in burying waste ash and slag.
Other factors affecting the overall progress of power projects include strict regulations on environmental protection and national resource conservation, uneven capability of contractors and prolonged approval procedures. These require urgent state mechanisms and direction for development programs of power sources.