LNG-based power generation of 23,900 MW a must: ministry

The Ministry of Industry and Trade has reiterated that LNG-based power projects should generate 23,900 megawatts, or 16.4% of the country’s energy mix, by 2030.

In its latest report submitted to the government in July about the Power Development Plan VIII (PDP VIII), the ministry said the LNG capacity was “essential.”

On importing 14-18 billion cubic meters of LNG by 2030 and 13-16 billion cubic meters by 2045, higher than the Party Central Committee’s resolution (of about eight billion cubic meters by 2030), the ministry proposed that the government asks the Party Politburo or the Party Economic Commission for guidance before approving PDP VIII.

Prime Minister Pham Minh Chinh had last month ordered the industry ministry to recalculate the ratio of LNG power in the country’s energy mix under PDP VIII as soaring prices of imported LNG might make LNG-based power generation plants infeasible.

“Due to the Russia-Ukraine conflict, the price of imported LNG has soared to 15-20 U.S cents/kWh, while the current selling price of power is 6-7 cents/kWh,” the prime minister said in a document sent to the ministry.

“This will be a hindrance to future negotiations on power purchase agreements (PPA) between investors and Electricity of Vietnam (EVN). Moreover, LNG is a kind of fossil fuel that only helps cut carbon dioxide emissions by half compared to coal-fired power,” the PM noted.

While reiterating the necessity to persist with the LNG import plan, the ministry also proposed that the government allows an addition of 2,428 MW of solar power for commercial operations by 2030. Of this, 453 MW with VND11,800 billion ($505 million) in disbursed investment capital would come from completed projects or project components, and 1,976 MW from projects included in approved plans or those whose investors have been approved but are yet to come into operation.

This would help avoid legal disputes, petitions and payment of compensation to investors.

In its previous report, the ministry had said that solar power capacity for the next 10 years (2021-2030) should be maintained at the current 8,738 MW. “The projects already included in the amended PDP VII, totalling 6,200 MW, should be delayed until after 2030,” it had said.

The above-mentioned proposal has become controversial, raising concerns of possible legal disputes between the government and private investors.

Under the draft PDP VIII, thermal power will have capacity of 37,467 MW by 2030 in the "high case scenario", followed by hydro power (28,946 MW), LNG (23,900 MW), onshore wind power (16,121 MW), gas turbines (14,930 MW), solar power (8,736 MW), offshore wind power (7,000 MW), pumped-storage hydroelectricity and storage battery (2,450 MW), and others (1,230 MW).

Up to now, no LNG-to-power plants operate in Vietnam.

American corporation AES and PV Gas in May this year secured an investment certificate for their $1.4 billion Son My LNG terminal project in Binh Thuan province, south-central Vietnam. It is expected to achieve financial completion in 2023 and begin commercial operations by 2026. The terminal will receive, process and supply LNG reprocessed as fuel for Son My 1 and Son My 2 power plants.

PV Power on March 14 awarded a $940 million contract to build Nhon Trach 3 and 4, Vietnam's first LNG-fueled power plants, to a consortium of Samsung C&T Corp and Lilama Corp, a leading Vietnamese construction company.

With a total capacity of 1,500 megawatts and capitalized at $1.4 billion, Nhon Trach 3 and 4, located in Nhon Trach district, Dong Nai province are important national projects under the PDP VIII. The government has assigned PV Power as investor.