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Vietnam Today

Energy an ongoing challenge

Released at: 09:19, 10/05/2017

Energy an ongoing challenge

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Vietnam's high growth means a greater reliance on coal to meet its rising energy demand.

by Duy Anh

More than $400 million was spent during the first quarter of this year on importing coal, newly-published figures from the Vietnam Industry and Trade Information Center (VITIC) reveal. Volume increased 1.6 per cent year-on-year and price 90.6 per cent.

Australia remained the largest provider of imports, with nearly 1.3 million tons worth $157.2 million (up 11.6 per cent and 136.8 per cent year-on-year), followed by Indonesia with nearly 1.1 million tons worth $77.2 million (up 127 per cent and 260 per cent).

Vietnam also imported 555,568 tons of coal worth $60 million from Russia, 232,890 tons worth $52.5 million from China, and 53,385 tons worth $3 million from Malaysia.

Historically, Vietnam has been self-sufficient in coal but this has now changed. It is now transitioning from exporting to importing energy. “Vietnam imported nearly 10 million tons of coal in 2016 and purchased 5 billion kWh of electricity from China in the peak period,” Deputy Minister of Industry and Trade Hoang Quoc Vuong told a recent energy conference.

“While the amount of imported electricity from China is declining, it still stands at around 1 billion kWh,” he added. “Vietnam will also need to import an estimated 17 million tons of coal, equivalent to 31 per cent of demand, to generate electricity to 2020, with the amount to subsequently head further upwards.”

Coal-fired power, while having environmental impacts, is still the necessary power source for Vietnam to meet its growth demand, Deputy Minister Vuong explained, adding that Vietnam will not sacrifice the environment for economic development. “In the time to come, the supervision process and environmental standards applied on coal-fired power plants will be stricter. Investors will also have to come up with eco-friendly solutions for coal ash handling.”

Last November, after years of mulling over costs, feasibility, foreign cooperation, and safety issues, Vietnam pulled away from nuclear power. The two nuclear reactors still on the drawing board would have added 40,000 MW to the national grid but the estimated price tag of $27 billion was too high for a country with a public debt now touching 65 per cent of GDP.

A pressing need to expand its energy generation capacity without burning a hole in the country’s State budget forced Vietnam to turn to what it already had: coal.

The country’s annual power consumption is about 162 billion kWh, according to estimates by Electricity of Vietnam (EVN). It has some 20 coal-fired plants and plans to increase that number to 32 by 2020 and 51 by 2030. This means that, by 2020, the country’s coal plants will be producing 49 per cent of its electricity output by burning 63 million tons of coal.

This would then reach 129 million tons by the time it has all 51 plants in operation. Its revised National Power Development Plan for 2011-2020 (PDP XII) makes it clear that thermal power will be the mainstay of its energy mix.

In the opinion of Mr. Eric Sidgwick, Country Director of the Asian Development Bank (ADB), energy sources need to be diversified, and the government needs to reduce its reliance on coal and provide for renewable energy to be a substitute.

“As far as we understand, the Vietnamese Government is eager to have more renewable energy, but the cost, while coming down, is still relatively high,” he told VET. “The issue for Vietnam is that because it is growing so quickly, it will need to use and access more energy.”

Last month, Prime Minister Nguyen Xuan Phuc issued a long-awaited decision approving the mechanism on the development of solar power projects, Decision No.11/2017, introducing a tariff of $0.0935 per kWh for the purchase of electricity from grid-connected solar power plants. This is higher than the tariff applied to onshore wind power projects of $0.078 per kWh.

Professor Tran Dinh Thien, Director of the Vietnam Institute of Economics

“Energy waste stands at 50 per cent in the cement industry, 35 per cent in ceramics, 30 per cent in textiles, 20 per cent in steel, and 50 per cent in agriculture.”

Mr. Phan The Hung, Deputy Director General of the General Department of Energy under the Ministry of Industry and Trade

“$148 billion is needed to develop electricity sources and transmission networks during the 2016-2030 period, including $40 billion during the 2016-2020 period and $108 billion during the 2021-2030 period.”

Mr. Eric Sidgwick, Country Director of the Asian Development Bank (ADB)

“It is not just the total amount of energy that needs to be looked at, but making supply more efficient.”

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