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New Energy World
New Energy World embraces the whole energy industry as it connects and converges to address the decarbonisation challenge. It covers progress being made across the industry, from the dynamics under way to reduce emissions in oil and gas, through improvements to the efficiency of energy conversion and use, to cutting-edge initiatives in renewable and low carbon technologies.
Vietnam power sector needs more renewables
1/11/2023
Vietnam’s long-term goal to phase out the use of coal for power generation by the 2040s and achieve net zero by 2050, faces challenges due to its rapid economic growth and increasing power demand. Renewables, and in particular solar, are set to be the cheapest option to meet the country’s demand for electricity, but growth will need to accelerate, according to a new report from BloombergNEF (BNEF).
Vietnam has seen a lot of progress in its low-carbon transition over the past four years and is now at a ‘pivotal’ moment, according to BNEF’s latest report. However, the country must accelerate its efforts in the power sector, while ensuring energy security and affordability.
Energy derived from utility-scale solar is already cheaper than building new coal and gas power plants in Vietnam. The levelised cost of electricity (LCOE) – the financial measure used by developers and investors – for a new utility-scale solar project in Vietnam ranges from $53–105/MWh today, in comparison to $84–104/MWh for a combined cycle gas turbine (CCGT) and $75–94/MWh for a coal power plant.
By 2030, solar paired with batteries will achieve a cheaper LCOE than new thermal power plants, while electricity from onshore wind paired with batteries would also become cheaper by the first half of the 2030s, BNEF reports. Although these types of hybrid power plants are not as dispatchable as coal or gas, so cannot be switched on or off when needed, they do offer greater dispatchability than renewables alone, and so can help Vietnam achieve a higher share of clean energy.
‘Renewable energy is now both an economic and sustainable choice for Vietnam,’ says Caroline Chua, co-author of the report. ‘Renewables can improve the country’s energy security by lowering its dependence on LNG and coal imports, while also creating new job opportunities. Our sensitivity analysis shows that even if fossil fuel prices decline, renewables will still be more cost-effective than thermal power plants.’
That said, and despite the cost competitiveness of renewables, Vietnam is considering building more coal and gas power plants in this decade on the assumption that such power plants can run on cleaner fuels such as hydrogen or ammonia starting from the mid-2030s. However, BNEF’s analysis shows that retrofitting thermal power plants for these fuels will not be more economical than scaling renewables. A new utility-scale ground-mounted or floating solar plant is already cheaper than the cost of running existing thermal power plants. The same will occur for onshore wind by the early 2030s.
To fully eliminate CO2 emissions, thermal power plants should only burn green hydrogen or ammonia. However, BNEF’s analysis has shown that this approach would also be significantly more costly.
‘Building more thermal power plants on the assumption that they can be retrofitted for clean hydrogen or ammonia will saddle Vietnam with significant financial risk,’ comments Isshu Kikuma, co-author of the report. ‘Such an approach would mean relying on complex, nascent technologies to deliver Vietnam’s net-zero goal. Vietnam would be better off prioritising domestic clean hydrogen for decarbonisation of hard-to-abate sectors such as steel manufacturing.’
