Green electricity is still slow to deploy

According to the Power Plan VIII, from now until 2030, the total additional capacity from gas-fired power projects will be 30,424 MW and offshore wind power will be 6,000 MW, accounting for about 50% of the total capacity needed to be added. These green power projects play an important role in supplementing the national power system; at the same time, helping Vietnam fulfill its commitment to carbon neutrality by 2050.

For 23 gas-fired power projects in the planning, the total capacity of the projects invested in construction and put into operation from now until 2030 is 30,424 MW, of which 10 projects use domestically exploited gas sources with a total capacity of 7,900 MW and 13 projects use imported LNG with a total capacity of about 22,400 MW.

However, data from the Department of Electricity and Renewable Energy (Ministry of Industry and Trade) shows that, up to now, only O Mon I Thermal Power Plant (capacity of 660 MW) has been put into operation using oil, then will use Lot B gas; Nhon Trach 3&4 power plant project (total capacity of 1,624 MW) using LNG imported from Thi Vai port warehouse (Ba Ria-Vung Tau) has only reached 85% progress. There are 18 other gas-fired power projects still in the process of investment and construction, of which 9 projects use domestic gas and 3 projects are selecting investors with a total capacity of 4,500 MW.

Regarding offshore wind power, there is currently only one project that has been approved by the Prime Minister for survey and pre-feasibility study between Vietnam Oil and Gas Technical Services Corporation and its Singaporean partner. On August 28, Vietnam Oil and Gas Technical Services Corporation (PTSC) and its Singaporean partner Sembcorp Utilities Pte. Ltd. (SCU) held a Bidding Ceremony for the Wind Measurement, Hydrology and Geological Survey Package, a project to export offshore renewable energy from Vietnam to Singapore. According to Mr. Le Manh Hung – Chairman of the Board of Directors of Vietnam Oil and Gas Group (Petrovietnam), this is an important milestone in the implementation of offshore wind power projects of both countries, gradually realizing Vietnam’s commitment to reduce net emissions.

There are still many problems

Explaining the slow progress of implementing “green” power projects, Dr. Nguyen Quoc Thap, Chairman of the Vietnam Petroleum Association, said that the adjustment of the Power Development Plan has not yet provided guidance on the procedures for appraisal and approval of investment projects. In addition, the financial mechanism and capital arrangement for project implementation are still facing difficulties due to exceeding the regulations on the credit safety ratio limit of 15% of charter capital when lending according to the provisions of the Law on Credit Institutions, because capital needs to be arranged for large power projects. In particular, most power projects are not eligible for government guarantees, so arranging capital for these types of projects is the responsibility of state-owned enterprises such as the Vietnam Oil and Gas Group (Petrovietnam),

The Vietnam Electricity Group (EVN) and the Vietnam National Coal and Mineral Industries Group (TKV) are facing difficulties in implementing their projects. In addition, preferential policies for investment in developing power projects, projects using renewable energy sources, and new energy sources under the Electricity Law are slow to be issued.

For power projects using imported LNG, the consumption market has grown slowly compared to the target in the Power Plan VIII while the legal framework to accelerate negotiations and sign legal – economic – commercial agreements between entities in the project chain related to LNG has not been completed. The mechanism and criteria for selecting investors in building infrastructure to serve LNG import do not have specific instructions for investors to participate; There is no mechanism to guarantee foreign currency conversion and international payment obligations for LNG import for LNG power projects, the Chairman of the Vietnam Petroleum Association emphasized.

A representative of PetroVietnam Gas Corporation (PV GAS) said that, with the fact that domestic gas sources are decreasing in output faster than forecast, PV GAS is focusing on investing in imported LNG port warehouse projects to ensure supply for electricity production and other industrial production sectors. However, PV GAS is facing difficulties and obstacles in the policy mechanism related to the business of imported LNG, including the lack of a mechanism for volume consumption, a mechanism for transferring LNG prices to electricity prices, and regulations related to related costs such as freight rates, causing difficulties in determining the total investment level, output electricity prices, and blocking the negotiation process of trade agreements in the stages of the LNG value chain.

For offshore wind power, the approval of investment policies and selection of investors in the wind power sector still have many problems and are not consistent among current legal management documents. The Law on Bidding, the Law on Investment, and the Law on Land do not clearly and specifically stipulate the authority to approve investment policies at all levels for offshore wind power projects. At the same time, the activities of investigation, survey, exploration, measurement at sea and the assignment of sea areas for investment in offshore wind power projects do not have specific instructions on procedures in legal documents, and there is no price policy framework or price mechanism.

Remove from policy

To promote the implementation of “green” power projects, Dr. Nguyen Quoc Thap, Chairman of the Vietnam Petroleum Association, proposed to amend and supplement the following Laws: Law on Electricity, Law on Environmental Protection (CO2 emission measurement; regulations and conditions for conversion of emissions); Law on Taxation (tax and fee mechanism for investment and operation of LNG power projects, offshore wind power projects; electricity export tax; emission standards and tax and fee framework for buying and selling CO2 emissions); Law on Marine and Island Environmental Resources; Law on Investment, Law on Bidding, Law on Construction, Law on Land, etc.

In addition, research on electricity market development closely follows the goals of Power Plan VIII, focusing on synchronously building LNG port warehouse clusters, power plants, industrial parks and factories with large enough electricity demand; diversifying investment in electricity transmission infrastructure for domestic consumption and export, especially transmission for LNG gas power plants and offshore wind power plants.

In particular, amending the charter of organization and operation and financial regulations of state-owned economic groups in the energy sector such as Petrovietnam, EVN, and TKV is very important, focusing on regulations on capital arrangement conditions for projects that are not granted government guarantees, allowing groups to mortgage assets with entities in gas trading and electricity trading in transactions in the LNG power project chain and electricity consumers, the Chairman of the Vietnam Oil and Gas Association pointed out.

To overcome difficulties with offshore wind power projects, Dr. Ngo Duc Lam – Energy expert, former Deputy Director of the Institute of Energy (Ministry of Industry and Trade) said that in Vietnam, enterprises capable of participating in offshore wind power projects must be large corporations and groups with experience and strong financial potential. Therefore, currently, only Petrovietnam and EVN are capable of piloting the development of offshore wind power projects. In particular, with experience working on offshore oil rigs and technological potential, Petrovietnam is also able to arrange capital more conveniently than other enterprises. Therefore, facilitating Petrovietnam to pilot the implementation of the first offshore wind power project will be less risky.

Currently, the Vietnam Petroleum Institute (VPI) – a member unit of Petrovietnam has proactively conducted research and cooperated with international partners to assess the geological, environmental and hydrographic conditions of the seabed, researched the application of advanced artificial intelligence to analyze high-resolution seismic data and integrate geological and geotechnical data into an integrated foundation model as a basis for foundation design, selecting optimal locations for offshore wind turbines as well as submarine cables for power transmission.

Petrovietnam has also received many proposals from large corporations in the world such as Equinor, Orsted, CIP, Macquarie… to cooperate in developing offshore wind power projects in Vietnam. Petrovietnam has signed a memorandum of understanding with Equinor and CIP (Denmark) to study opportunities for developing offshore wind power and other clean energy sources in Vietnam. Notably, in the past three years, PTSC – a member unit of Petrovietnam has won bids for more than 10 offshore wind power projects with a total power generation capacity of 5.2 GW, providing most of the service stages for offshore wind power projects including survey, design, procurement, construction, transportation, installation, operation, maintenance and repair.

Previously, on July 26, at a meeting to give opinions on the draft offshore wind power development pilot project, Deputy Prime Minister Tran Hong Ha stated that the offshore wind power development pilot project had been proposed for a long time and had received great attention from the Government and the Prime Minister. Therefore, the project must select specific projects, point out legal problems, research and surveys, policies, investment procedures, finance, research and technology transfer, etc. during the implementation of the entire project, thereby proposing pilot plans and removing difficulties and obstacles.