Coal conundrum ahead forces Vietnam to rethink priorities

While Vietnam is well aware of the environmental risks associated with fossil fuels, the affordable energy source remains indispensable. Photo: Le Toan

State-owned Electricity of Vietnam (EVN) and Vietcombank on June 30 signed a credit contract to finance the Quang Trach 1 thermal power plant with a total investment of $1.78 billion.

Nghiem Xuan Thanh, chairman of the board of directors of Vietcombank, said that it will grant credit worth $1.17 billion to EVN, which will be disbursed over four years, with the loan term set for 15 years. Existing technology allows to minimise the impact of coal-fired power on the environment, said Nguyen Tai Anh, deputy general director of EVN. According to Tai Anh, the Quang Trach 1 plant will be equipped with modern technology to ensure environmental protection. Additionally, the plant will use synchronous systems of wastewater treatment, gas exhaustion, and dust filtration. Among these, the gas emissions will comply with Vietnam’s environmental standards that are equivalent to those of the World Bank.

Difficult to ditch

EVN has chosen advanced technology for Quang Trach 1 to minimise emissions to the environment, but this also renders the entire project more expensive. For example, Japan’s coal-fired power technology has a roughly 10-20 per cent higher investment cost than the plants that Vietnam is investing in. That means a 1,200MW plant that would normally require an investment of about $2.2-2.4 billion, would then cost an additional $220-480 million, which of course, would be reflected in the cost of electricity.

The low cost and advantages allow coal-fired power to maintain its position in the development strategy of Vietnam. Truong Duy Nghia, chairman of the Vietnam Association of Thermal Science and Technology, said that coal-fired thermal power has the lowest cost (about 7 US cents per kilowatt-hour). Moreover, the investment capital is not too high, equivalent to around $1,500 per kWh, lower than hydroelectricity, solar, wind, and nuclear power.

The electricity output is large, meeting the demand amid the current high economic development in Vietnam.

Another advantage, according to Nghia, is that the construction of a coal-fired power plant is not as complicated as hydroelectricity. Coal-fired power plants only need to be located near a river with a large flow, or along the coast.

The construction of such a plant would also only take about three years. With these advantages, it comes as no surprise that in recent years, the south-central region of Vietnam has established several coal-fired power plants, such as the Vinh Tan plant in Binh Thuan province, with a total capacity of over 6,200MW.

As such, EVN continues to put its faith in coal power, while many countries and institutions around the world decided to turn away from this type of energy to switch to solar and wind power – not only are these renewables more eco-friendly but the prices of these sources are becoming more competitive.

The Renewable Energy Policy Network for the 21st Century report showed that renewables are increasingly cost-competitive compared to fossil fuels. By the end of 2018, electricity generated from newly invested solar and wind power plants had become more economical than electricity from fossil fuel-powered plants in many parts of the world. In addition, in some locations, it is more cost-effective to build solar and wind power plants than to continue operating existing fossil fuel power plants.

Data from the International Renewable Energy Agency also showed that the price of electricity from solar and wind power declined dramatically from 2010 to 2019. On average worldwide, the price of solar power has decreased by 82 per cent, with the price of onshore and offshore wind falling by 39 and 29 per cent, respectively.

Sustainable solutions required

According to the Institute of Energy under the Ministry of Industry and Trade, Vietnam’s electricity system ensured supply for socioeconomic development and national security in the last decade. The average commercial output per capita increased from 982 kWh in 2010 to 2,320 kWh in 2020.

The transmission has also been meeting the requirements of power source projects within the entire power system. With the backup rate of power sources in 2020 reaching 22.2 per cent, the system also ensures power supply for the current demand.

In Vietnam, coal-fired power is currently the main source of electricity, and the installed capacity increased significantly from about three gigawatts in 2010 to 20.2GW in 2019, accounting for about 36 per cent of total installed capacity.

The total output of coal power plants in 2019 stood at about 120 billion kWh, accounting for about 50 per cent of the total distributed output. Currently, there are 32 coal-fired power plants in operation in Vietnam, most of which are located in the northeast, near the coal mines in Quang Ninh province. Besides these, there are eight factories under construction and 27 factories planned.

However, this impressive growth in coal power also means that Vietnam has been and will pay significant environmental costs. The establishment of coal-fired power centres in Vinh Tan, Duyen Hai, and Mong Duong also led to the emergence of environmental pollution like ash and fine dust, which could cause serious health problems for the people in the surroundings.

Dr. Tran Ba Quoc from the High-tech Research and Development Institute at Duy Tan University said that burning fossil fuels emits much hazardous waste into the atmosphere.

“Coal combustion in thermal power plants emits 84 of 187 hazardous wastes in the air as determined by the US Environmental Protection Agency. Many other studies from India, China, and Europe also warn that burning coal releases many harmful pollutants into the atmosphere,” Quoc explained.

Studies have shown that the full operation of all coal-fired power plants in Vietnam can render the concentration of dust in the air 30-300 times higher than Vietnamese standards. Surveys with people living in provinces with coal-fired power plants such as Thai Binh, Quang Ninh, Haiphong, Ha Tinh, Tra Vinh, Binh Thuan, and many others show that the air quality has been getting worse since the plants came into operation.

However, coal-fired power is still meant to contribute a significant proportion to Vietnam’s energy production. According to the Power Development Plan VIII (PDP8), by 2030, the total installed capacity of coal-fired power plants will be nearly 17,000MW, 19 per cent higher than in 2020 (14,300MW).

Quoc said that if Vietnam continues to build coal-fired power plants, it is inevitable that air quality will continue to be affected more strongly. According to scientific simulation results, if coal-fired power plants are developed according to the PDP8, by 2030, the concentration of harmful substances released into the environment will be up to 8.6 times higher than in 2011.

“Vietnam needs a sustainable power scheme that ensures both energy and environmental security. Long-term exposure to air pollution will increase the likelihood of diseases. Thus, these negative effects should be considered in the decision-making process related to coal-fired power development in Vietnam,” Quoc argued.