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Vietnam reducing coal but not taking advantage of renewables

April 27, 2021

IHS Markit:

The latest draft of Vietnam’s 8th Power Development Plan (PDP8) shows a ramping up of its intentions during the next decade away from coal-fired power and toward renewables and natural gas, even as the country seeks to keep up with rapid demand growth.

The Vietnam Ministry of Industry and Trade released the third revision of PDP8 in February, and it covers the period 2021 through 2030, supplemented with a more general outline of intentions through 2045. A final draft is expected in the second quarter of this year.

In contrast with the current PDP7 strategy, PDP8 scales back coal-fired power significantly — showing Vietnam’s intentions to reduce its GHG emissions as well as to reduce its dependency on imported fossil fuels.

The Institute for Energy Economics and Financial Analysis (IEEFA), a nonprofit, criticized the planning mindset on which PDP8 was based, saying it ignores improvements in the relative costs and reliability of renewable generation.

“Traditional power sector planning disciplines [in Vietnam] were developed during a period when technology was relatively static and generation-led planning was the norm. That is not the right approach for an unprecedented period of innovation and cost reduction we are witnessing now,” IEEFA said in a report in March. “This calls for a fundamental shift away from the traditional planning approach of assessing technology choices on an ‘as is’ basis to a pathway development process that sees each generation technology more holistically.”

Most prominently, IEEFA said the cost of renewable power available to Vietnam’s developers has fallen by 90% for solar PV and 70% for wind from 2009 through 2020. Coal power’s price has been static during that time, but the plan for the next decade does not reflect the relative shift in costs, nor “designing the system in a way that can optimize a complementary portfolio of technologies,” IEEFA said.

IEEFA was particularly critical of caps on solar and offshore wind capacity at 2 GW each in PDP8, which it said are driven by reports that the intermittency of renewable power could be harmful to the national grid. But IEEFA said these limitations “could have severe implications that would reverberate across the wider economy,” in terms of keeping the country dependent on imported fossil fuels and undermining its environmental goals. 

[Kevin Adler]

More: Vietnam’s draft power plan backs coal cancellations, commitments to gas, renewables

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