Vietnam opens new doors with push for coal energy

Vietnam opens new doors with push for coal energy

Having pulled away from atomic energy projects late last year, Vietnam is
now sharpening its focus on coal to tap its abundant reserves.

Many Japanese companies are drawn to this new business opportunity -- but so
are Chinese rivals that threaten to give them a run for their money.

Mitsubishi Corp. has said it will build a 1,200-megawatt coal power plant in
an economic zone in central Vietnam's Ha Tinh Province. This plant, the Vung
Ang No. 2 project, is slated to start in 2021. The government estimates
related investments at $2.2 billion.

Mitsubishi will help manage the facility before handing over its operation
to state-run Vietnam Electricity. The site is near the Vung Ang No. 1 plant,
built by a Vietnamese company and boasting a similar generating capacity.

Producing around 60% of the power that the nuclear projects would have, the
two plants will together be an important ingredient in Vietnam's energy mix.

The government had earlier seen the atom as a critical tool for resolving
the nation's power shortages.

Though the market loosened somewhat during a slowdown following the 2008
financial crisis, electricity shortages are always a concern for a Vietnam
whose economy continues to grow at a 6%-plus clip.

So the government had high hopes for the Japanese- and Russian-backed
nuclear projects in Ninh Thuan Province to the south. With a total capacity
of 4,000MW, the facilities would have gone online in 2028.

But the deal was blocked over the estimated $27 billion in outlays as well
as pushback from locals over safety since the 2011 Fukushima meltdown in
Japan. The legislature officially dropped the plan in November.

Coal quickly took center stage, as Vietnam enjoys abundant reserves of
high-quality coal. The country produced 38.3 million tons last year.

And coal-burning plants are cheaper to build than liquefied natural gas
power plants -- not to mention nuclear facilities. Coal power is more
affordable for Vietnam, where government debt has grown to 65% of gross
domestic product.

Vietnam now has 20 or so coal power facilities. The government envisions
lifting the tally to 32 in 2020 and 51 in 2030.

Fossil fuels supplied one-third of Vietnam's power in 2016. The plan is to
raise this to 45% in 2030. Coal power capacity is seen nearly tripling from
current levels to around 40,000MW.

Vietnam seems able to live without nuclear power, which was going to account
for 10% or so of its generating capacity.

Mitsubishi is planning another major coal power plant in the southern
province of Binh Thuan. Marubeni is building a coal power plant near Hai
Phong, which will likely grow rapidly as a port city. Sumitomo Corp. is
constructing a plant in Tra Vinh Province, near Ho Chi Minh City.

With 300 to 500 companies, mainly suppliers, needed for constructing a
single reactor, many Japanese companies preparing for the nuclear work were
hurt by the about-face on energy policy. But now, they could seize new
opportunities by offering their strength in fossil-fuel power.

Price-competitive Chinese companies are key rivals. Chinese contractors are
said to undertake nearly 90% of fossil-fuel plants in Vietnam, though the
facilities themselves are not large.

Russian and Malaysian contenders have also been getting into the coal power
game. And many are collaborating with the Chinese.

Japanese companies hope to tout their efficiency in power generation and
green technologies to set themselves apart. Toxic discharge from a steel
mill construction site of Taiwan's Formosa Plastics in April 2016 raised
environmental awareness in Vietnam. And more and more residents oppose coal
power.

In such an environment, Japanese technologies could draw attention, although
costs will be a challenge. Vietnam Energy Association Chairman Tran Viet
Ngai says the country has no choice but to rely on fossil fuels now that
nuclear energy is out of the picture.

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Link to Original Article:
http://asia.nikkei.com/Business/Trends/Vietnam-opens-new-doors-with-push-for
-coal-energy

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com