Generating a smart energy strategy

Deputy Minister of Industry and Trade Hoang Quoc Vuong

Vietnam has shifted from an energy exporter to an energy importer. What ­challenges will the local ­energy sector face in the ­upcoming decade?

As Vietnam is a developing country, the demand for energy, particularly for electricity to meet socioeconomic development requirements, is ­tremendous. Local power consumption has jumped sharply in the past 15 years, with about 9.5 per cent hike a year in actual production output, and is forecast to continue rising quickly in the next 15 years.

Local power consumption grew by an average 13.07 per cent per year during 2006-2010, and about 11 per cent during 2011-2015, placing Vietnam among the countries posting the highest power consumption growth in the world. The current high growth rate of power consumption, which almost doubles the country’s GDP, attests to qualms over the low efficiency of power use in Vietnam.

Therefore, we have confronted lots of challenges, such as the huge pressure to ensure energy security, efficiency, and conservation, the need to upgrade infrastructure, and developing new renewable energy sources as the country’s fossil sources are gradually becoming depleted, and environmental protection requirements are increasingly stringent.

How could we surmount these challenges to ensure the national energy security from the angle of the regulatory system?

With a view to ensuring the national energy security and ­mitigating pollution levels, the Vietnamese government has worked out long-term development orientations and strategies linked to sustainable development. These are geared towards modernisation, assuring sufficient supply of preliminary energy sources, energy efficiency, and conservation, in parallel with developing safe and renewable energy sources. According to our energy master plan development scenarios, in the future coal-consuming industries will continue developing robustly despite limited domestic coal power production capacity, leading to an imbalance of coal demand and supply. In this context, importing coal to feed industries becomes imperative. Introducing policies on long-term coal imports then proves crucial to ensure stable production for these industries, particularly the power sector.

The plan also shows that local coal production can hardly meet the growing demand of power plants. Vietnam envisages importing more than 70 million tonnes of coal for power production by 2030.

In addition, by 2024, gas sources in the south-western and south-eastern regions are forecast to gradually run out, falling short of the burgeoning industrial demand, insufficient to meet development requirements from related industries. Therefore, it is important to offset the gas shortage with imported liquefied natural gas (LNG) sources. Vietnam must take into account these factors to achieve its energy security targets.

The current prevailing trends in the global energy industry are ensuring energy efficiency and conservation, and applying environmentally- friendly technologies, looking to develop a low-carbon economy, green industries, and changing current production and consumption models for sustainable ones.

Vietnam has and will continue paying due heed to these measures in the future to achieve its targets of energy security and sustainable development.

Power is essential for ­socioeconomic development. What orientations are there for the power sector to ensure this in the ­future?

The revised National Power Development Plan for the period of 2011-2020 with vision towards 2030 has set forth the targets of ensuring a sufficient and stable power supply for socioeconomic development and ensuring energy security. While working towards these goals, assorted domestic and external resources will be mobilised for power development to ensure a sufficient power supply at a growing quality and to keep power costs at rational levels.

It is also important to effectively mobilise diverse preliminary energy sources and step up the use and development of renewable energy sources in power production, gradually increasing the proportion of power produced from renewable energy sources to contribute to ensuring energy security, mitigating climate change implications, protecting the environment, and developing the economy and society in a sustainable manner.

To meet the ever-growing power demand, which will be increasing at an estimated 11 per cent until 2020 and at 7.5-8.5 per cent during 2021-2030, the power sources to meet this demand must be enormous.

In light of the approved power plan, the total combined power capacity of local power plants will amount to about 129,500 megawatts (MW) by 2030, of which about 27,800MW will come from hydropower, 28,000MW from renewable energy sources, 19,000MW from gas-fired power plants, about 2,000MW from imports, and around 55,000MW from coal-fired thermal power plants. Besides developing sources, we need to develop a transmission and distribution network on the national grid to ensure safe, reliable, and economical transmission from power centres to local loading centres and customers. The quality of power supply needs to be gradually improved as well.

In addition, Vietnam must develop a power generation market and present suitable pricing policies with enhanced transparency to attract investors in order to diversify investments and trading methods.

Smart energy is a fresh global trend. How has Vietnam availed itself of smart energy technology?

Increasingly, modern life has paved the way for humanity to access smart devices through the birth of the Internet of Things, including smart energy applications. Smart energy is a general concept describing the application of smart technology in the fields of energy conversion, storage, transmission, and controlling energy consumption. Vietnam has been and is deploying a smart grid and smart metering programmes in power system operation and management.

Like other smart grid programmes around the world, the two core targets of this programme in Vietnam are improving energy usage efficiency and developing renewable energy resources. To achieve these goals, in parallel to executing investment construction projects, Vietnam needs to build and complete the regulatory framework for smart grid development; enhance the capacity of relevant individuals and corporate stakeholders ­engaged in the programme, and foster research and ­development of smart grid ­applications.

In 2012, the Ministry of Industry and Trade compiled and submitted for the prime ministerial approval a project on smart grid development in Vietnam. The project set forth the targets of building a relevant regulatory framework and standards to ­establish remote control ­centres. These allow closing or cutting off electric circuits as well as metering and collecting data through remote controlled electrical devices, unifying technical specifications, and defining the responsibilities of related sides associated with metering services in the power system.

State-run Electricity of Vietnam and power corporations have come up with a raft of concrete programmes, such as those associated with installing electric power meters and developing a remote metering data collection system, establishing remote control centres or devising pilot ­programmes on power load ­adjustment.

Several programmes have been deployed after the termination of a test-run period, such as National Power Transmission Corporation and power corporations at localities reviewing test run outcomes, and putting into operation unmanned control centres and transformer stations which matches the development orientations set out under the master plan on smart grid development. The initial results have been encouraging, attesting to the feasibility and reliability of the programme.

How do you perceive the trend of smart energy development in Vietnam? What awaits in the future?

The long-term development orientations and strategies presented by the Vietnamese government for the power sector are closely attached to sustainable development, gearing towards modernisation to ensure power efficiency and conservation, the development of new renewable energy sources, combined with the implementation of the smart grid programme and competitive power market development.

In the upcoming time, ­Vietnam will promote the ­application of smart grid technology to connect and stably operate new renewable energy sources, develop and operate advanced devices in order to integrate big volumes of hard-to-control renewable power sources to ensure the effective exploitation of these sources.

In the forthcoming period, we will continue carrying out programmes in the development pipeline, while simultaneously deploying several new programmes, such as using energy storage technology, in-house smart devices which can adjust energy consumption based on power supply situations, power price changes, or microgrid models.

When these programmes are on track, we will build up the infrastructure and the relevant regulatory framework for all members of society to apply, including power sector customers, with a focus on the application of modern technology measures, research and development of IT products, and energy efficiency software, connecting and developing renewable energy sources, as well as development trends of products and services for the building of smart homes and smart city models.