Exploring Collaborative Opportunities: Coal in the Energy Transition in Vietnam
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By John Rockhold, Head of the Power & Energy Working Group, Vietnam Business Forum
Vietnam has made significant strides in the renewable energy sector in recent years. On the first day of August, Vietnam achieved a remarkable milestone by mobilizing over 40% of its electricity from renewable sources, including hydropower, wind and solar. This achievement was made possible through the country’s policy to prioritize renewable energy, resulting in an increase in its renewable power mix. However, this progress also presents challenges for coal-fired power plants, which are under pressure to adapt as the base load.
The reliance on coal-fired thermal power remains critical for Vietnam’s electricity supply due to its stability and low cost. As the nation aims to ensure adequate and stable electricity supply and national energy security in the coming years, maintaining coal-fired power capacity remains a necessity. Nevertheless, the development of coal-fired power plants has led to a sharp increase in greenhouse gas emissions, negative environmental impacts and dependence on imported energy.
The rapid expansion of solar and wind energy has strained the national power grid. Integrating these renewable energy sources into the grid, especially those with medium and large capacities, poses challenges when connected via the 110-kilovolt or higher grid system. To ensure the stability and dependability of the power system and grid, experts emphasize the importance of having a buffer capacity capable of compensating for the disparity in available capacity of renewable energy sources.
In 2020, Vietnam saw significant progress in its renewable energy efforts, with more than 100,000 solar rooftop installations and 15 solar facilities connected to the grid. The trend continued in 2021, with at least 84 operational wind power facilities. These initiatives are concentrated in Ho Chi Minh City and a few southern provinces, where they have exceeded the current grid’s capacity.
Vietnam has demonstrated a strong commitment to transitioning towards renewable energy and reducing carbon emissions to combat global climate change. The country has set an ambitious net-zero emissions goal for 2050 and has entered into partnerships such as the Just Energy Transition Partnership (JETP) with South Africa, in 2021, and an agreement with the International Partners Group in December 2022. The International Partners Group aims to assist Vietnam in reducing coal-fired electricity capacity from a peak of 37 GW to 30.2 GW, thereby lowering carbon emissions. Before reaching the JETP agreement, Vietnam had set a target to reach a peak of 240 metric tons of carbon dioxide equivalent (MtCO2e) emitted into the atmosphere from electricity generation by 2035. However, under the JETP agreement, this target has been revised down to 170 MtCO2e by 2030.
Three months ago, the Vietnamese Government formally authorized the National Power Development Plan VIII (PDP8), which prioritizes the rapid development of renewable energy sources to meet between 30.9 and 39.2 percent of the nation’s energy demand by 2030. PDP8 includes orientations for coal-fired power plants to reduce GHG emissions, such as not building new coal power plants after 2030, converting biomass and ammonia co-firing fuels for existing coal-fired power plants and early retirement for those unable to convert to co-firing fuels. While PDP8 attempts to align with international commitments, it is not fully aligned with the JETP commitment; support from the International Partners Group is a must for Vietnam’s considerations toward JETP targets.
The conversion process of coal-fired power plants to alternative fuels involves considering various costs, such as life extension costs, renovation costs for co-firing with other fuels, efficiency reduction rates during the extension period and co-firing fuel prices. For ammonia co-firing in pulverized coal-fired power plants, the mixing ratio of ammonia in coal-fired power plants poses a significant challenge.
Coal transitions extend beyond merely replacing coal. They entail building clean energy alternatives that offer affordable and secure energy services without harmful emissions. A feasible option is to convert new coal power capacity to renewables and continue only with plants already under construction until 2030, ensuring grid stability.
Following the release of the PDP8, the Ministry of Industry and Trade (MOIT) is responsible for developing an implementation plan for decarbonization in Vietnam. As the country finalizes this plan, it grapples with the challenge of reconciling decarbonization commitments with the imperative to maintain economic growth. During the plan’s development, the MOIT mandated the investors of the existing 33 coal-fired power plants to create coal conversion plans and submit them by mid-July 2023.
Vietnam’s leadership seeks to strike a balance between its commitments to decarbonize the economy and the influence of stakeholders vested in the coal industry. Despite numerous studies conducted by NGOs and multilateral agencies, a concise strategy remains elusive on bridging the evolving conversation around decarbonization, the interests of the coal sector and the necessary investments to transition away from coal.
The Power and Energy Working Group (PEWG), established in 2011 and part of the Vietnam Business Forum with nearly 200 members, focuses on renewable energy policy and fostering private sector involvement in sustainable energy development in Vietnam. This year, the PEWG’s primary focus is to support Vietnam in implementing the PDP8 and working towards achieving net-zero targets in the long run.
The U.S. possesses cutting-edge technology for clean-running coal power plants, including air-quality control, wastewater treatment, carbon reduction and other advancements. Although transitioning to renewables may take decades and have long-term impacts, upgrading coal power plants in Vietnam with U.S. technology could rapidly promote cleaner and more efficient technology.
The PEWG actively seeks partners who can support this work and invites further discussions. Interested parties can reach out to the PEWG Secretariat at pewg@vbf.org.vn. Vietnam Business Forum (VBF), established in 1997, is an ongoing policy dialogue channel between the Government of Vietnam and the business community to nurture public-private dialogue to develop a favorable business environment that attracts domestic and foreign private sector investment and stimulates sustainable economic development in Vietnam.