Vietnam 8 Electricity Development Planning Project – Energy and Natural Resources

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The PDP8 project gives priority to the development of renewable energies and intends to create a more incentive regulatory framework to stimulate private sector investments to connect individual power plants to the national transmission network. It also presents important opportunities for the development of LNG-to-power.

Recently, the Ministry of Industry and Commerce of Vietnam (MOIT) has published a draft national planning proposal for Vietnam’s electricity development for the period 2021-2030, with a vision until 2045 (PDP8) to solicit the opinion of the public.

In this legal update, we’ll take a look at the most important takeaways from the draft PDP8.

1. General

1.1 Renewable energy

The PDP8 project shows that the government maintains its point of view on prioritizing the development of renewable energies. The MOIT predicts that the total installed capacity of power projects will be 137.67 GW by 2030 (baseload scenario), with renewables accounting for 30%, 21-23% for gas-fired power projects and 27% for coal-fired power stations. projects.

1.2 Import of fuel and electricity

The PDP8 project encourages the import of fuels (coal, LNG) and the import of electricity from neighboring countries to diversify Vietnam’s primary energy sources. Importing electricity from foreign countries also helps reduce the environmental burden compared to domestic production. Transmission and distribution network links with China, Laos and Cambodia will be established to maximize the energy potential of each country and optimize operations.

1.3 Network upgrade

In the PDP8 project, the MOIT sees the need to reduce the problems of network overload and blackout. From 2021-2030, the MOIT plans to build 86 Giga Volt-Amps ( VAB) additional capacity for 500kV substations and nearly 13,000 km of transmission lines. From 2031 to 2045, an additional construction of 103 GVA with a capacity of 500 kV and nearly 6,000 substations is necessary. The 220 kV electricity network requires the construction of 95 GVA with nearly 21,000 km of transmission lines and 108 GVA with more than 4,000 km of transmission lines.

1.4 Better incentives for private sector investment

The draft PDP8 recognizes the requirements for creating a more incentive-based regulatory framework to stimulate private sector investment in power transmission lines and substations that connect individual power plants to the national transmission grid.

1.5 Commercial electricity demand between regions

According to the PDP8 project, the share of commercial electricity demand in the North will gradually increase from 42.4% in 2020 to 45.8% in 2045, while the South will decrease its share of demand from 47.4% in 2020 to 43.6% in 2045. By 2040, the North’s commercial demand for electricity will begin to exceed that of the South.

1.6 Investment capital

The total investment capital for electricity development during the period 2021-2030 is approximately USD 128.3 billion, of which: USD 95.4 billion for energy sources and USD 32.9 billion for networks. The average allocation of capital investments will be 74% for energy sources and 26% for networks.

2. Key Notes

2.1 Coal-fired energy

Coal stocks in power plants hit record highs in 2018. Many power plants did not have enough coal to operate, resulting in reduced capacity or even suspension of work units. For example, due to the coal shortage, the Quang Ninh power plant sometimes had to shut down 2 of its 4 units. Domestic anthracite coal production to supply the Northeast region is only about 35 million tonnes or 88% of total demand, and therefore coal must be imported and blended to meet demand. of consumption. In the next few years, the demand for anthracite coal will continue to increase when new power plants, such as: Na Duong II, Hai Duong, Thai Binh 2, An Khanh-Bac Giang, come into operation.

2.2 Use of gas

From 2010 to 2019, (on average) 9 to 10 billion m 3 of natural gas per year has been extracted. The gas is currently extracted from 26 gas fields and combined with oil and gas fields such as Lan Tay, Lan Do, Bach Ho, Rang Dong, etc. There are around 30 fields that have yet to formulate a development plan as most of them are small or located in deep offshore waters with difficult geographic and geological conditions.

2.3 Renewable energy

At the end of 2020, the total solar power harvesting capacity (including floating solar power systems) was around 17 GW, concentrated in the southern provinces and the central highlands. Transmission networks are lacking in quantity to accommodate the growing number of solar power projects with extremely fast and improved construction time, thanks to advanced technology, especially in Ninh Thuan and Binh Thuan provinces. As a result, most of the projects that have started operating in these provinces are subject to a daily reduction in production capacity to avoid overloading the regional grid.

The total wind power capacity in operation by the end of 2020 is approximately 600 MW, well below the total wind power capacity approved for inclusion in the Revised Energy Development Plan VII, which is 12 GW. By 2021, the remaining projects are expected to enter commercial operation mainly in the South West and Center-South regions. The PDP8 project lists several potential wind projects, details of these added projects can be found in Annex 1.1

The Vietnamese government is considering and implementing on a small scale and encouraging the development of renewable energy sources, including flammable ice gas, shale gas, coal gas, liquefied hydrogen gas, biomass and waste .

2.4 Hydroelectricity

Until 2019, the total capacity of medium and large-sized hydropower plants built in Vietnam was around 17,930 MW. The country’s total small hydropower potential (less than 30 MW) is around 10,000 MW. Because SHP has an impact on the environment and forest conservation, the MOIT conducted a review and rejected approximately 4,000 MW.

2.5 Opportunities for transforming liquefied natural gas into electricity2

The PDP8 project presents significant opportunities for the development of Liquefied Natural Gas (LNG) in Vietnam, as around 15 GW of LNG power projects were added to the revised power development planning. to be considered for further planning, details on these energy projects can be found in Annex 3.

According to the MOIT, LNG-to-electricity conversion projects fit the global development trend because they are state-of-the-art, highly efficient and environmentally friendly. The development of LNG-to-power projects is also supported by the rich supply of LNG in the world sold at competitive prices. In addition, LNG power projects are more likely to receive funding from credit institutions, as well as support from organizations and countries producing natural gas for export.

Footnotes

1. Read our update on the FiT decision critical for wind power development in Vietnam.

2. Read our update on LNG production projects in Vietnam and key legal issues.

Originally posted May 26, 2021

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.


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