Gas to be key source of power in Vietnam: securities broker

By Huong Dung
Sun, May 28, 2023 | 10:38 am GMT+7

The freshly approved Power Development Plan VIII (PDP VIII) is expected to open a new chapter for Vietnam's electricity industry, with gas to become a key source of power in 2021-2030, said VNDirect Securities.

In a new report, the leading Vietnamese broker argued that gas-fired power will see a compound growth rate of 26%, the highest among major power sources, and accounting for 27% of the country’s total power capacity in the above period. The respective figures for 2030-2050 will be 4% and 15%.

The Nhon Trach 4 gas-fired thermo power plant of PV Power in Dong Nai province, southern Vietnam. Photo courtesy of the company.

The Nhon Trach 4 gas-fired thermo power plant of PV Power in Dong Nai province, southern Vietnam. Photo courtesy of the company.

PV Gas, a subsidiary of state-owned Petrovietnam, will also be a major beneficiary in this development period thanks to its implementation of LNG terminal projects, according to VNDirect.

In addition, the broker's analysts said that the PDP VIII will accelerate the progress of long-stalled billion-dollar gas field projects such as Block B and Blue Whale in the coming years in order to ensure domestic gas sources and reduce dependence on LNG imports for power generation.

According to Vilaf law firm, the PDP VIII prioritizes maximizing the use of domestic gas for power generation. "In case domestic gas production decreases, natural gas or LNG will be imported. Gas-fired power projects will be gradually converted to use hydro as fuel when the technology is commercialized and the generation cost is reasonable," it wrote in an article for The Investor.

PDP VIII limits the development of power sources using LNG if there is an alternative to reduce the dependence on imported fuels. By 2050, plants using LNG will gradually switch to hydrogen, Vilaf noted.

The list of LNG projects of importance and priority for development until 2035 are prescribed under Table 1 of Appendix II, including Quang Ninh (1,500 MW); Thai Binh (1,500 MW); Nghi Son (1,500 MW); Quang Trach II (1,500 MW); Quynh Lap/Nghi Son (1,500 MW); Hai Lang Phase 1 (1,500 MW); Ca Na (1,500 MW); Long Son (1,500 MW); Hiep Phuoc Phase 1 (1,200 MW); Long An I (1,500 MW); Long An II (1,500 MW); and Bac Lieu (3,200 MW).

Under the PDP VIII, approved by the Prime Minister on May 15, renewable energy will make up 50.3% of the total capacity generated by 2030. Coal will account for 20.5% by the year, down from almost 29% in 2020. Vietnam will eliminate a total of 13,220 megawatts of coal power, marking an early end to this power source.

In the near future, coal-fired power plants aged over 40 years will be phased out. Coal power capacity is expected to grow 2% in 2021-2030 and decrease 1% in 2030-2050, and its proportion in the country’s power source structure will fall from 19% in 2030 to 4% in 2050.

The PDP VIII aims to ensure energy security for the fast-expanding country based on forecast annual GDP growth of 7% until 2030.

Vietnam needs $134.7 billion of funding to develop new power plants and grids between 2021 and 2030. The 2031-2050 period will require $399.2-523.1 billion of funding, with $364.4-511.2 billion for generation and $34.8-38.6 billion for transmission.

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