Power sector in dilemma

The obsession of periodical power blackouts during the dry season seems to have been fallen into oblivion. Yet it is now likely to come back to haunt the Vietnamese economy. One of the reasons is many localities have given a flat no to new power plant projects they deem to entail high risks of pollution.

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A solar system supplying heated water for a house in HCMC. Using renewable energy must be a norm for this city as well as Vietnam 

For the first time after six years, the Ministry of Industry and Trade has sent a warning signal of electrical power shortages. On July 11, during a meeting with Party Secretary General Nguyen Phu Trong, Deputy Minister Hoang Quoc Vuong said Vietnam may have to confront a lack of electricity in the next five to six years. The biggest obstacle now to the satisfaction of the power need, according to the ministry, is no longer a lack of capital, but is of environmental nature. “Everybody says no to coal-fired power plants and flood-causing hydropower plants,” Vuong said. “Meanwhile, renewable energy can’t be developed quickly due to high costs… It’s currently very tough to obtain a location in which to build a coal-fired power plant. Almost all localities are refusing to have a new thermal power generation plant.”

At present, 22 coal-fueled power plants are operational in Vietnam with a total designed capacity of over 13,000MW. According to the National Power Development Planning VII (or shortly Power Planning VII), by 2020, Vietnam’s total capacity of coal-fired electricity generation must be doubled and be 55,300MW by 2030, four times larger than today’s. The failure to meet the goals for the 2020 deadline is clear and present. If nothing can be changed, next in line will be the targets for 2030. The problem lies in the ministry’s bafflement about a feasible solution to both ensuring adequate power supplies and avoiding the overdevelopment of power plants causing high environmental risks.

The enmity against coal-fueled projects of localities is comprehensible. To generate 13,000MW, those plants have to guzzle 45 million tons of coal and emit nearly 17 million tons of ash, cinder and plaster to the environment every year. Imagine that the generation of coal-fired electricity becomes two-fold and then four-fold compared with today’s, then the emission would be so enormous. Experts have argued that to treat all the solid waste to be discharged by coal-fired power plants by 2030, Vietnam will need 28,000 hectares of dump sites.

The renewable energy deadlock still there

Vietnam is no exception as people everywhere in the world are saying goodbye to coal-fired electricity to grasp renewable energy forms friendly to the environment.

In reality, Vietnam is a country that has great potential for renewable energy development, such as wind power, solar power and biomass. As planned, the country expects to have 800MW of wind power by 2020 and 6,000MW by 2030. But all are only plans, the actual figure of today is very humble—at 197MW.

The hurdle to renewable energy is high costs. Currently, wind and solar power generators are selling their electricity at 7.8 U.S. cents and 9.3 U.S. cents per kWh, respectively. Those rates are not attractive enough to investors despite the fact that renewable generation costs are now 40% cheaper than before. For the sake of renewable energy’s development, it’s necessary to raise the rates of this category of power in line with what the World Bank has advised Vietnam many times. However, power hikes are too sensitive to both citizens and enterprises, and renewable energy growth has so far come to a dead end.

The development of gas-fired power may meet both environmental and price goals. However, Vietnam’s gas reserve is not large. In accordance with experts’ calculation, Vietnam’s gas supplies can generate only 12,000MW, or 63 billion kWh, but the total power need stated in Power Planning VII must be 235 billion kWh by 2020 and 506 billion kWh by 2030.

Recently, a foreign investor has proposed building a plant in Bac Lieu Province to be powered by imported liquefied natural gas (LNG). The proposal may be a way out for the problem of coal-fired electricity generation. Nevertheless, whether the imported LNG could be stable in the long run so that new plants could replace coal-fired power plants remains an unknown.

Energy efficiency a solution

It’s absurd that while meeting the national power need is a difficult conundrum, Vietnam’s energy efficiency is incredibly low. According to the World Bank, to turn out products worth US$1 in GDP, Vietnam needs an amount of power twice as much as Thailand’s, triple as much as the Philippines’ and five time as much as Singapore’s.

In fact, the Government has suggested many solutions to raising energy efficiency, such as compulsory energy auditing for electricity-guzzling enterprises, energy labeling and so on. However, the effect has yet to be worthwhile. The power demand has been one and a half times larger than the rate of GDP growth.

The trouble is although power efficiency has been institutionalized since 2010, its implementation has remained quite a personal choice. Enterprises are free to pick cheap power-guzzling equipment and technology. Again, according to the World Bank, Vietnam may conserve between 25% and 40% of her generated energy.

Currently, Vietnam’s electrical power consumption grows at an annual rate of 10-15%. The goal set by Power Planning VII is to reduce this growth to 8.5% during 2021-2025 and 7.5% during 2026-2030. Yet it is a formidable challenge if the Government cannot come up with efficacious measures for forcing enterprises and citizens to conserve power instead of only encouragement as is the case nowadays.

One among the measures proposed by the World Bank and some specialists over the years is to increase power rates as they said it would both improve power efficiency and pave the way for renewable power sources. However, this is really a sensitive issue, which is hard to implement given the current context of the Vietnamese economy.


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