Vietnam Wants More Generation Capacity, Less Reliance on Coal

Vietnamese officials earlier this year said they want the country to more than double its power generation capacity by 2030, to as much as 130 GW from the current capacity of about 55 GW. The Communist Party politburo has said “ensuring national energy security, and sufficiently supplying power for fast and sustainable socio-economic development” is the backbone of Vietnam’s national energy development strategy. Officials have said they will seek foreign and domestic private investment to help develop new power plants, and the government also wants to speed the privatization of state-owned power companies, as it addresses concerns about a shortage of available power as demand increases.

The country today gets about 38% of its electricity from coal-fired generation, and has a goal of receiving as much of 20% of its power from renewable resources by the end of the decade, while reducing its reliance on coal. Vietnam also has begun to develop infrastructure to import as much of 8 billion cubic meters of liquefied natural gas (LNG) annually by 2030, to increase gas-fired power generation. Wind power is quickly emerging as a key source of renewable energy in the Southeast Asian country; Siemens Gamesa Renewable Energy (SGRE) recently closed a deal for its fourth so-called “nearshore” wind project in Vietnam. The deal was part of a double order for the company’s SG 5.0-145 turbines, with a total of 36 units that will be used at the 75-MW Tan Thuan and 90-MW Thai Hoa wind farms. SGRE also signed operations and maintenance (O&M) services contracts, for 10 years and 20 years, respectively, for the two projects. The two deals also mark the first-ever cooperation SGRE has concluded with Power Engineering Consulting Joint Stock Company 2 of Vietnam and Pacific Corp., respectively.

Officials from the Vietnam Energy Institute (VEI), speaking at an internal meeting in July, said the country could cancel at least half of its planned new coal-fired power plant generation capacity this decade. The VEI is a government-affiliated research body tasked with drawing up the nation’s next power sector roadmap. The group at the meeting said Vietnam’s eighth Power Development Plan, or PDP8, which will take effect in 2021, would call for a rapid expansion of renewables and natural gas in the country. The group said as many as seven planned coal projects could be canceled, with another six postponed past 2030.

The Institute for Energy Economics and Financial Analysis, along with the Green Innovation and Development Centre environmental group, in mid-July said that with lower prices for renewable energy, and the challenge of obtaining financing for coal projects, it was not likely any of the 13 projects would be revived once they were withdrawn. “In the next period, [Vietnam] will not strongly develop coal power but only proceed with the development of the projects which are already listed in the PDP7 and revised PDP7,” Hoang Quoc Vuong, the country’s vice minister of industry and trade, said at the meeting. “[We] will no longer develop new [coal] projects.”

1. The Dam Nai project is the first foreign-owned wind power plant in Vietnam. Aboitiz Power, a Filipino company, bought the 39.4-MW project from Singapore’s Armstrong Asset Management for about $46 million. The first phase of three wind turbines at Dam Nai was commissioned in late 2017, and a second phase of 12 turbines was commissioned in late 2018. Vietnam is making foreign investment in its energy infrastructure a priority in order to rapidly increase its power generation capacity. Courtesy: The Blue Circle

Wind energy is leading the country’s push for renewables (Figure 1). SGRE in March said it had secured an order for 25 of the company’s 4.5-145 turbines for the 113-MW Hoa Thang 1.2 wind farm, a deal that includes a 10-year O&M agreement. SGRE already has built three wind farms in Vietnam, with seven more under construction.

“We’re pleased to see the Siemens Gamesa 4.X platform gaining a great deal of traction in Vietnam from the debut for our first nearshore project to the recent largest order and the combined 165 MW for two deals we are announcing today,” said Enrique Pedrosa, Chief Regions Officer of SGRE’s Onshore business unit, in a statement after the Tan Thuan and Thai Hoa deals were announced in July. “We have been able to win trust from existing and many new customers thanks to our product innovation and a growing local team on the ground with strong project execution and servicing capabilities. We are committed to introducing our latest products and technology to Vietnam and partnering with customers to unlock the potential of renewables in Vietnam and Asia Pacific.”

SGRE has been expanding in the Asia Pacific region since the 1980s, and has installed more than 8.4 GW of onshore turbines in the region. The company also last year completed the installation of Taiwan’s first offshore wind power project, a 128-MW facility, and has reached nearly 2 GW of firm orders in Asia Pacific for offshore wind projects.

The wind project announced in March is developed by Hoa Thang Energy JSC, a special purpose vehicle run by Vietnamese construction major Trading Construction Works Organization (WTO). The Hoa Thang 1.2 wind farm will be built in the Bac Binh district, Binh Thuan province on the south-central coast of Vietnam.

The World Bank Group has said Vietnam offers great potential for wind power development, with onshore potential capacity of 24 GW, and 475 GW of offshore capacity along its coastline of more than 1,860 miles. The country had 487.4 MW of wind power generation capacity installed at year-end 2019, and has said it plans to have more than 11 GW of total wind generation capacity in operation by 2025.

Modern Energy Management (MEM), a specialist in developing, building, and operating investment grade renewable energy projects, in July announced it completed its scope of work for Ecotech Tra Vinh Renewables JSC. That group is a partnership between Janakuasa Renewables and Renewable Energy Vietnam (REV), a joint venture between Climate Investor One (CI1), the financing facility managed by Climate Fund Managers (CFM) along with ST International (STI), a Korean energy investor. The work is for the Ecotech 78-MW intertidal wind farm in Vietnam’s Tra Vinh province. MEM provided overall project management for the development team and early works scope along with technical support during both technical and commercial negotiations. The project, with an investment value of more than $150 million, has executed an engineering, procurement, and construction agreement with the consortium of PowerChina and SGRE.

“We have big ambitions to support the growth of renewable energy in Vietnam by not only bringing investor capital in the country but also international-level industry expertise and technology. Modern Energy Management is instrumental in the development of our wind farm in Vietnam because of its strong track record in Southeast Asia,” said Ti Chee Liang, chairman of Janakuasa Renewables.

Nathan Schmidt, head of Asia for CFM, said MEM’s “understanding of the risks related to intertidal wind projects and achieving the schedule to enable eligibility for the Vietnam feed-in tariff was critical to our investment.” Lars Lund, MEM’s project director, said, “Intertidal wind projects are technically complex,” adding that such installations are “presenting unique challenges and risks. There are few firms in the market that have the experience to design and build for construction in these conditions.”

—Darrell Proctor is associate editor for POWER (@DarrellProctor1, @POWERmagazine).