Vietnam needs US$135bn power generation investment in next decade

Total investment capital for power generation and transmission is estimated at US$399.2bn-US$523.1bn during 2031-2050, according to the PDPVIII.

Vietnam’s onshore wind power capacity is expected to reach 21.9 gigawatts (GW) by 2030; offshore wind power for new energy production to reach 15GW by 2035 and 24GW by 2050; solar power to increase 4.1GW by 2030 and reach a total capacity of between 168.6GW and 189.3GW by 2050; and hydropower is expected to reach 29.3GW by 2030.

For coal-fired power plants, Vietnam will continue to implement only those projects which are already in the revised Power Master Plan VII and under construction until 2030. Fuel switching to biomass and ammonia for power plants that have been operating for 20 years will happen when prices fall sufficiently. If fuel switching is not possible, plants over 40 years will be terminated.

By 2050, Vietnam intends to no longer use coal to generate electricity and to have completely converted these plants to biomass and ammonia with a total capacity of 25.6GW-32.4GW.

Renewables expert John Yeap of Pinsent Masons said:” The market will be encouraged by the approval of the PDPVIII as developers and other market participants can now move forward with their plans for the Vietnam power sector. There will be some who will be disappointed by the continued use of fossil fuel, but the approach taken in the PDPVIII reflects the reality of energy transition challenges for economies such as Vietnam that have relatively new coal fired power plants and continue to have strong economic growth.”

“The focus on the wind sector is to be expected given the country’s long coast line, though the finance ability of such projects, particularly for the near or offshore projects which will be more capital intensive, will likely be dependent on greater clarity and enhancement of the current regulatory framework,” he said.

For planned projects, PDPVIII lists 15 liquified natural gas (LNG) thermal power plants with a total generation capacity of 28.5GW during 2021-2035; five coal-fired power plants, total capacity of 6.1GW under construction during 2021-2030; 25 medium and large hydropower plants with total capacity 2.8GW during 2021-2030; and five coal-fired power plants behind schedule, which are allowed to be extended till June 2024 and be terminated if cannot be implemented.

The plan also lists 14 potential hydropower projects with potential capacity of 1.1GW which will be considered later, and 27 solar power projects with unoperated capacity of 4.1GW will be considered after 2030.

The country will be developing a revised Electricity Law to improve policies on investment, planning and administration of electricity prices; using tariff bidding to select investors in the process of revising the Electricity Law; launching a pilot to gradually set up a mechanism for direct electricity purchase and sale contracts between renewable energy power producers and consumers. The Law on Economical and Efficient Use of Energy will also be revised.

The Ministry of Industry and Trade will be responsible for the implementation of the plan.