Energy an ongoing challenge for Vietnam

Energy an ongoing challenge for Vietnam

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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Link to Original Article:
http://english.vietnamnet.vn/fms/business/178108/energy-an-ongoing-challenge
-for-vietnam.html

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com