Your family’s electricity bills might zoom this year as Vietnam is set to buy 1.5 billion kWh of power from Laos.
Nguyen Dang Anh Thi
It has become necessary since a shortage is forecast for several years starting in 2020.
With the seventh National Power Development Plan (2011-2020) focusing primarily on traditional energy sources like thermal and hydropower, 47 out of 62 power projects, the majority being thermal, are behind schedule due to lack of funding and local resentment against thermal plants.
At the end of the decade, with the government drafting the eighth National Development Plan, it is a good time to have a look back at the power sector.
The electricity shortage is due to three main causes: uncontrolled industrial development, overreliance on thermal power and inefficient energy usage.
To fulfill the dream of making Vietnam an advanced industrialized nation by 2020, the government gave substantial support to the industrial sector in terms of electricity prices. However, despite consuming 54 percent of the electricity, the industrial sector only contributes 28 percent of GDP.
Meanwhile, thermal remains the main source of electricity. In the last 10 years electricity generated from coal has gone up 15-fold as 20 new plants were commissioned.
In the next 10 another 40 thermal energy plants will be built as envisaged in the seventh national power plan, increasing capacity by three times.
They will require much larger volumes of coal than Vietnam can produce, forcing the country to import over 60 percent of its requirements.
In contrast, renewable energy projects are stalling for reasons such as lack of infrastructure and facilities, and have to queue up behind thermal projects.
Industrial use of energy lacks efficiency. In 2010 a new economical energy usage law was passed, but with little practical effect. Thus, the electricity required to increase GDP by $1 is still 250 percent of the global average. Its rate is 1.3 times China and India’s, 1.7 times Malaysia’s, 2.6 times the Philippines’, 3.8 times Japan’s, and 4.7 times Singapore’s.
One example of the energy usage law’s failure can be seen in the cement industry. It required all factories with a capacity of over 2,500 tons of clinker per day to install subsidiary power generators to utilize the heat generated from burning clinker before 2015.
But only 10 out of 74 factories complied.
Workers install solar power panels at a solar power plant in Binh Phuoc Province, southern Vietnam. Photo by Binh Phuoc Newspaper.
The international community is turning away from thermal energy because it is highly polluting and not energy efficient. One clear indication of this is global investors’ shift toward clean, renewable energy.
As the international community commits to reduce fossil fuel use and combat climate change, Vietnam should be part of the solution, not the problem. So, while ensuring national development, it needs to take action on both sides — supply and demand — to sustainably meet energy needs.
First, it needs to change its approach toward electricity usage and economic development. With energy usage as a prominent criterion, the government should focus on industries where energy efficiency is high to prevent excessive use of power by industry, potentially causing an energy crisis in the country.
Second, Vietnam should undertake a large-scale energy saving campaign. Since the cost of generating 1 kWh of electricity is four times that of conserving it, saving energy will be worth the investment.
It is estimated that 10,300 MW of thermal power can be saved before 2030 if factories start to implement energy-saving actions since the nation has the potential to save up to 40 percent of the energy it uses, the World Bank said.
Furthermore, domestic consumption can also be reduced with nationwide demand-side management and installation of a smart grid to minimize the energy loss between the production and consumption stages.
Finally, Vietnam should also add renewable energy to the national power grid to ensure energy security with lowered environmental and social costs.
If the government stops saying things like “Not growing thermal energy would threaten energy security” and “local governments should not discriminate against thermal energy,” Vietnam might impress foreign investors that it is moving in the right direction and in lockstep with the international community.
Hopefully, PM Nguyen Xuan Phuc’s famous exhortation, “Do not sacrifice the environment for economic development,” will serve as a guide to all of Vietnam’s future economic activities.
*Nguyen Dang Anh Thi is an expert on energy and environment. The opinions expressed are personal.