New hopes from new planning

Electrical Power Plan 7, the latest version of national power planning, has addressed almost all problems of the previous scheme.

A national plan for electrical power development in 2011-2020 with a consideration toward 2030 was ratified by the Prime Minister late last month. Shortly called Electrical Power Plan 7, the scheme is expected to remarkably relieve the pressure on ever-expanding power sources and coal supplies for thermal power plants if it can be implemented successfully. In relation to its predecessor, Electrical Power Plan 6, the new version has tackled the bulk of problems pointed out by energy scientists and economic experts over the past few years.

The most prominent change in the revised plan relates to a breakaway from catching up with demand at all costs. It focuses instead on the goal of upgrading technologies so that power can be more efficiently generated and consumed. In line with the new viewpoint, the ratio between energy usage and GDP will be reduced from the current 2 to 1.5 by 2015 and 1 by 2020. This change will drastically cut the investment needed to accelerate power generation after 2015. The Electrical Power Plan 7 sets the total additional capacity source for the 2016-2025 period at 62,376MW, way below the 212,424MW predicted in the previous plan.

Less electrical power demand will not only considerably relieve the pressure of capital needed to invest in the power sector but also effectively help solve the problem of coal supplies to thermal power plants. Despite the fact that coal-fired power plants will still account for 48% of the country’s total electricity generation by 2020, that also means coal demand for power generation will drop significantly. As outlined in the latest plan, the total coal volume required by the power industry by 2020 is 67.3 million tons which can be almost met by local supplies. Currently, Vietnam exploits some 45 million tons of coal every year. According to industry experts, with adequate investment in exploitation and waste reduction, Vietnam is able to raise her total yearly coal output to 55 million tons. If things go that way, by 2020, Vietnam’s coal import demand will be under 20 million tons instead of 44-56 tons as predicted previously by the Ministry of Industry and Trade.

Another new point is that policy-planners have embraced in their plans a roadmap for renewable energy development. The new strategy also takes into account the potential for power generation from waste materials and excessive energy produced by various industries, as well as power import from neighboring countries. Of these, renewable power—which includes wind, solar and biological (biogas) energy—is prioritized.

That said, by 2020, of the 330 billion kWh to be produced, 46.8% will come from coal-fired generators, 24% from natural gas-fired power plants (4% will be from imported liquefied natural gas), 19.6% from hydro-power plants, 4.5% from renewable energy, 2.1% from nuclear power, and 3% from imports.

To generate this volume of power, Vietnam will need US$48.8 billion from now to 2020 whereby she will be able to raise the total capacity to 75,000MW, 3.5 times higher than the current capacity. Another US$75 billion must be sourced to boost the total capacity to 148,000MW during 2021-2030.

In Electrical Power Plan 7, the Government affirms that it will gradually raise retail power rates to reach 8-9 U.S. cents per kWh by 2020. The plan also confirms that the State will hold its monopoly of power transmission while leaving all other business fields open to all economic sectors.

Vietnam has also set ambitious goals for her electrical engineering industry, for instance, local manufacturers will produce 60-70% of equipment for thermal power plants by 2030.

The latest version of Vietnam’s power development shows a higher possibility of satisfying the power need of the economy. However, the core of the issue is whether these ambitious goals can be realized, the kingpin of which is how to reduce the ratio of additional charges of power plants. Failing to materialize this goal also means that all demand forecasts and planning will be shattered. Repercussions will be disastrous.

Aside from a complete overhaul of the power generation sector, the Government pins high hopes on higher power prices and gradual abolition of price subsidies which will exert a considerable pressure on household consumers and companies, compelling them to use power more efficiently. – SGT

Tags: Vietnam electricity, Vietnam energy, Vietnam national power planning, Vietnam power shortage