Vietnam’s energy demand is expected to grow by a double-digit percentage in 2021, as a natural 10% or so demand growth combines with the Coronavirus recovery, which has dented expected 2020 GDP growth all the way down to 3.6% and power demand growth to 3%. Vietnam aims to increase its generation capacity by 12% to 14% annually through to 2025.
Over the decade, demand is expected to rise from 56 GW to 138 GW, then to 302 GW in 2045. There are fears of insufficient power supply from 2021 onwards, without huge investment and development of both power plants and especially the transmission grid. In the south half of the grid in particular, a potential shortfall of 3.7 TWh was identified in 2021, rising to 10 TWh in 2022, as reported by a representative of state utility EVN to a Ministry of Industry and Trade renewable energy seminar in July.
To meet this challenge, Vietnam is developing gas, solar, coal, and wind, and the transmission lines to handle all of those plus cranked-up imports from its neighbors. Between 5 GW and 6 GW is needed annually, which will involve $8 billion spending per year – several % of the national economy.
Vietnam engaged in a massive solar buildout of 5.5 GW last year, from a base of only 150 MW or so, which suddenly placed it in the lead in the Southeast Asian region for green energy ahead of Thailand. It also now has 429 MW of wind. Those renewable projects, highly incentivized, have run into grid transmission constraints and development has slowed to a more typical pace, as well as shifting from utility-scale solar to commercial and rooftop solar. Ho Chi Minh City by itself recently reached 146 MW solar power in the form of 10,023 domestic installations – and that’s under the restrictions of the pandemic. Curtailment of utility-scale projects is so severe at present that when transmission infrastructure catches up, generation from renewables is expected to double.
While solar got the head-start within renewables, by 2025 the country should have 6 GW of wind power to go with 14 GW of solar, in the baseline scenario, or 12 GW and 20 GW in the optimistic scenario, according to the predictions of state planners. At the same time, almost 20 GW of new coal is planned, despite some of its future pipeline being cancelled or delayed in the 2030s recently. Natural gas additions will be at something like 8 GW by 2030 – that would be much higher, at the expense of coal, but Vietnam simply doesn’t yet have the LNG infrastructure needed for that; in fact, those plants will mostly occur in the latter part of the decade, after 2025.
By the end of October, the Ministry of Industry and Trade will submit the National Power Plan VIII to the Prime Minister, covering the next decade and a view to 2045. However, these Plans are aspirational and allow plenty of room for adjustment, so we may well see further cancellations of coal – which is facing local opposition motivated by pollution concerns – and further encouragement of renewables as technology improves.
Vietnam has plenty of potential for pumped-hydro storage, and for battery development, but until then its renewables can also help its energy security by easing the generation burden placed on hydropower, leaving more water in the dams for later use and making generation less vulnerable to below-average rainfall.