Severe power shortages

Following a Q&A session at the ongoing 8th plenary session of the National Assembly with burning questions on how to tackle power shortages, Minister of Industry and Trade Tran Tuan Anh earlier this week chaired an emergency meeting with relevant entities to mull over the power shortages and urgent solutions aimed to ease difficulties for key power projects.

Vietnam reportedly faces a high risk of power shortages between 2019 and 2020, which would last until 2023. The settlement of such power shortages is a very urgent mission and there would be no more any delays, Minister Tran Tuan Anh noted.

The ministry claimed in its reports sent to the Government and the National Assembly that power shortages are due to extreme weather conditions and a subsequent low water level in hydropower reservoirs, thus forcing the country to a decline in its primary energy resource production.

Vietnam is estimated to import some 20 million tons of coal by 2020 and 35 million tons by 2035 while the domestic gas source is not sufficient for power generation of southern projects. As the electricity system nearly has no backup, the country is facing a high risk of power shortages in 2020.

Power shortages are projected at 3.7 billion kWh by 2021 and nearly 10 billion kWh by 2022 and then quadruple to 12 billion kWh by 2023, according to the ministry.

Speaking at the NA session, Deputy Prime Minister Trinh Dinh Dung said that there are currently 47 out of 62 large-scale power projects with behind schedule, including those with sufficient legal basis and feasibility like a LNG-fired power project in the southern province of Bac Lieu.

The Government will soon determine the scale of gas-fueled power source, including LPG-fired power projects and the addition of LNG-fired ones like Son My, Long Son, Ca Na, Bac Lieu and others to the national power development plan.

Adjustments to renewal energy

Jakob Stenby Lundsager, an adviser of the Energy Partnership Program between Vietnam and Denmark (DEPP) under the Vietnamese Ministry of Industry and Trade underpinned high potential for Vietnam to develop renewable energy.

To attract additional investment into this field, the Government should work on reducing and removing risks facing investors, Lundsager added.

Investors always seek a stable and transparent framework in order to ensure the long term target for renewable energy and a stable subsidy scheme. Given this, Vietnam should sketch out the power purchase agreement (PPA) in conformity with international standards. More importantly, the shift from current feed-in tariff mechanism to auctioning of renewable energy is needed.

The use of current feed-in tariff for ensuring renewable energy expansion is difficult, which has been seen many places, not only in Germany but also in Denmark, he said.

Power generation costs would go down thanks to cutting-edge technologies, this is expected to result in a boom for the renewable energy. If Vietnam remove or lower feed-in tariffs, it would have another boom soon.

In the short term, there would be not quick solutions to the country’s power shortages and Vietnam has to pay for power fueled by coal, LNG, or renewable energy, said the expert, stressing the significance of gaining the cheapest costs for power generation.

The shortages and related challenges could be overcome with additional investments. Similar to renewable energy, if Vietnam removed the risks facing power developers and investors, then the country would have lower prices, he noted.