Vietnam Power Development Plan VIII (PDP8) has been released. Here are a few takeaway points from LNT & Partners:
1. Grid development: 60k km up to 2030. However most 500KV lines are in the North and South. Regarding the Central I dont see many lines in Ninh Thuan and Binh Thuan. Central areas are more with 200KV lines (100 projects). Look forward to see socialization/privatization in grid development.
HDVA is underway.
2. Onshore wind: way out to transition projects (16GW). Big opportunities for M&A.
3. Offshore wind: 6GW by 2030 but will be much higher by 2050. The way to achieve COP26 of Vietnam is definitely wind power projects .
4. Solar: focus on rooftop and DPPA (direct power purchase agreement) projects, cope with transition projects and storage technology.
5. LNG: only those approved in PDP VII extension such as Nhon Trach 3-4 or Quang Ninh, or those converted from coal to LNG. Only two LNG terminals Thi Vai and Son My are focused. In light of Ukraine war and high price of LNG, LNG is no longer considered challenging although not much changed since PDP VII.
By 2035 new LNG projects should be designed to convert to hydro.
6. Coal fired: only those remained and started under PDP VII and must start by 2024 or will be removed . All coal power plants must coverted to clean energy or amonia by 2050. Not sure about the “new” plants and who will project finance them?
7. Hydropower: a few projects stil planned.
8. Any question such as FIT or bidding market? Not mentioned in PDP8, look for new guidance. FIT for those completed after 31 October 2021 are set to be 1200 VND/ KWH (5.5 cents), project owners face difficulties.
9. Anything else: some issues are revisited, including the issuance of FIT (most likely new FIT must be reviewed price and cost closely by state audit). But not mentioned in PDP8.
Conclusion: bright future for grid and wind power. Though there will not be many changes for solar projects but by 2050, the combined capacity of solar projects and wind projects would be 71%. Other projects would need to be converted into cleaner energy projects. As for the price, the project owners would need to be ready to justify their price and two be more accountable in negotiating with EVN and under scrutiny of state audit. Obviously only those who have high equity and low debt would justify lower price. Electricity competition market is under development by the ministry of industry in trade.
This PDP is not designed to legalize problematic projects that have not been closed due to lack of documentation, but they are way out for transition projects, DPPA and clarification for other projects.
To implement this PDP the MOIT would need to introduce further guidelines on how to transition of the projects from LNG to Hydro and from coal into ammonia projects. FIT for transition projects and competition electricity tariff market to be clarified.
