Emphasis is being made that the implementation of the nation’s power plan for the decade and beyond will not be successful without a detailed plan and clear investor selection process.
The latest draft plan for implementation of Power Development Plan VIII (PDP8), submitted by the Ministry of Industry and Trade (MoIT) on August 31, pointed out the vast challenges remaining despite the approval of the plan in May.
|Detailed implementation will direct success of PDP8, Source: Vietnam+ |
“For solar power projects that have been approved and assigned to an investor, the specific progress will be considered in the implementation plan PDP8. However, this request cannot yet be carried out according to the MoIT’s Institute of Energy,” noted the latest draft plan.
The Institute of Energy, the unit responsible for developing plans to implement PDP8, explained that there are currently 23 solar power projects approved and assigned to investors with a total capacity of about 2,360MW. This is a much higher capacity than the 1,500MW limit currently set in the PDP8.
Meanwhile, the MoIT reported that there are more than 2,000 proposed wind, solar, and small hydropower projects. Among them, there are many whose connection plan to the power grid is unknown.
“The registration demand of localities for renewable electricity is also considerable compared to the amount of optimal calculated capacity in the PDP8, while the ranking of these projects in terms of legal status, land use, electricity prices, and socioeconomic efficiency are not yet available,” noted the latest draft.
The MoIT has now proposed that the selection of solar, wind, and small hydropower projects will be the responsibility of the locality, which is a new direction compared to a draft submitted in July.
“However, the fact that the locality has the right to choose an investor to develop projects will not guarantee that those investors will sign a power purchase contract to mobilise capital and actually build on the ground in time or not,” said an expert in negotiating such contracts.
Thanh Pham, country manager at Wartsila Corporation said, “It is very critical to have a detailed implementation plan with clear information on project capacity, location, and timeline together with required market mechanisms. Without these, projects planned in PDP8 cannot move ahead and the power system will face a lack of capacity, leading to potential power shortages.”
The MoIT admitted that the legal corridor for offshore wind power development is still unclear due to the lack of a national marine spatial plan, with no basis to determine the scope of marine management; thus, offshore wind power projects will be distributed regionally. Localities will decide on specific sizes and locations based on factors such as electricity production costs, capacity to release grid capacity, and transmission costs.
The PDP8 does not regulate the capacity of specific solar and wind power plant projects but only regulates the total capacity for each region. It sets out the country’s electricity roadmap for the period through to 2030, with a vision towards 2045. Under that, by 2030, renewable energy capacity is expected to reach 40GW or 40 per cent of the national power capacity.
There will be no limit on the capacity of behind-the-grid solar power projects, and no new coal-fired projects will be approved.
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Weeks after the Vietnamese prime minister approved the national power development plan for 2021-2030 (PDP8), Hanoi and other major northern cities of Vietnam experienced serious electricity supply crunch. The PDP8, which will shape the country’s power development in the next decade, would be a good start to find a solution. Ngoc Nguyen, counsel at Hogan Lovells International LLP, explores the aspirational development goals set by the government and how to resolve the situation.
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