The draft National Power Development Planning Project for the 2021 – 2030 period with a vision to 2045 (Power Plan VIII) is being widely consulted by the Ministry of Industry and Trade. In particular, the content of continuing to develop coal power overthe next 10 years as well as the need to mobilize huge capital for electricity investment is a problem that raises many concerns about rationality and feasibility.

Strong development of wind and solar power is one of the notable
points in the content of Draft VIII. Photo: Internet

The trend of gradually decreasing the development of coal power

Compared with the revised Power Master Plan VII, in the draft Power Master Plan VIII, in the period to 2030, there will bemajor changes in the power source development program. It includesthe large-scale development of wind and solar power (wind power capacity is 3 times higher and solar power is nearly 2 times higher than adjusted power master plan VII).

The structure of power capacity willchange in the direction of gradually reducing the proportion of coal-fired power from 34% in 2020 to 27% by 2030. In particular, in this period, there will beno new development of coal-fired power plants outside of thermal power plants. Coal power is under construction and investment is being promoted so that it can be put into operation in the 2021-2025 period.

Regardingthe above contents, the Vietnam Sustainable Energy Alliance (VSEA), the Vietnam Alliance for Non-Infectious Diseases (NCDs-VN) and the Vietnam Rivers Network (VRN) in apetition to the Head of the Central Economic Commission, Minister of Industry and Trade Tran Tuan Anh recently stated that the Draft shows the trend of gradually decreasing the development of coal power and increasing the development of renewable energy in phases. However, in the next 10 years (2021-2030), coal-fired thermal power will still be given priority to increase strongly, adding about 17 GW of new coal power to the system.

The coalition proposed to consider the suitability, feasibility and consequences of the plan to continue developing new coal power. The specific argument is the coal-fired power development in the previous period (2016-2020) shows that this type of powerhas many difficulties in mobilizing capital, local people and authorities do not support it because of these reasons, the volume of power only achieves about 57.6% of the plan according to the adjusted Power Master Plan VII.

In the past 5-year period, only about 7 GW of coal power was put into operation, of which only one unit (0.6 GW) was put into operation by 2020. These difficulties will continue in the future, leading to the danger of continuing to slow down the progress of coal power projects.

In addition, 86% of the new coal source capacity must use imported fuel, showing a great dependence on external supplies while the ability to import from the sources identified in the draft is facing many difficulties, affecting national energy security. Another aspect mentioned in the petition is that new coal-fired power plants with more advanced technology cannot completely solve environmental issuesand make them more expensive than renewable energy sources.

Ms. NguyThiKhanh, Director of Green Innovation and Development Center (GreenID), said according to the guiding viewpoint in Resolution 55 / NQ-TU dated 11/2/2020 of the Politburo on the orientation of the Development Strategy of Vietnam's national energy to 2030, with a vision to 2045, is: "to prioritize the exploitation and use of renewable energy and new energy efficiently and effectively", which will put Vietnam in the opposite direction of the world's green shift and efforts to realize the climate goals of the Paris Agreement on climate change.

Related to the problem of continuing to develop coal-fired power in the next 10 years, PhD. Pham Xuan Hoe, former Deputy Director of the Banking Strategy Institute (State Bank),said that if coal-fired thermal power projects continue to be prioritized for development, they will find it difficult to raise capital. Financial institutions around the world are divesting capital from coal power.

The alliance recommends that the Ministry of Industry and Trade should not develop new coal power projects, especially in the next 10 years, and instead solutions should be issued to further promote the development of renewable energy, especially solar and wind power.

Worries about capital mobilization plans

According to Draft Electricity Planning VIII, the total investment capital for electricity development in the 2021-2030 period is about US$128.3 billion, of which capital for power sources is US$95.4 billion, and power grid is about US$32.9 billion. In the 2021 - 2030 period, an average annual investment is about US$12.8 billion (US$9.5 billion for the source and US$3.3 billion for the net).

The total investment capital for electricity development in the 2031-2045 period is about US$192.3 billion. In which, capital for electricity is US$140.2 billion, and for power grid is about US$52.1 billion. In the 2031 – 2045 period, an average annual investment is about US$12.8 billion (US$9.3 billion for the source and US$3.4 billion for the net).

Dr. Pham Xuan Hoe assessed that the capital structure in the draft is only allocated to the portfolio, not mentioning where the capital structure is raised from, it is not in line with important financial orientations and solutions about green banking and green finance which are mentioned in Resolution 55 / NQ-TU of the Politburo.

According to the Vietnam Sustainable Energy Alliance (VSEA), the Vietnam Union for Non-Infectious Diseases (NCDs-VN) and the Vietnam Rivers Network (VRN), in order to arrange about US$13 billion/year. The experts' calculations show that the arrangement ability of the domestic corporation is about US$3 billion/year. The remaining 77% must be mobilized from foreign investment, domestic enterprises and households.

In the context that governments, investors, financial and non-financial institutions are divesting their capital from coal power, domestic private enterprises cannot afford to invest in large projects, so the feasibility of raising capital for coal-fired power development is very low or risky depending on a single source of funding from China.

Meanwhile, solar power is fragmented – it can be developed on a small scale and is more easily able to mobilize social resources. In addition, the shift of investment in renewable energy is a global trend; Vietnam needs to seize this opportunity.

The coalitions also stated that the proposal to consider granting Government guarantees for investment projects in the form of Build-Operate-Transfer (BOT) is unreasonable.

Although Vietnam's public debt ceiling has decreased, the country's macro balance remains weak, for example, there is not enough contingency budget for natural disasters, balance of import-export balance, and projects of trillion with unresolved mistakes.

In particular, in the ongoing Covid-19 pandemic, priority is given to protecting people's health. These are Government priorities that need to invest resources instead of budget provision to guarantee BOT power projects that are potentially risky.