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According to the calculation of the investment time of offshore wind and gas power projects: If calculated from the time of planning to being able to operate, it takes about 8 years or even more than 10 years at the fastest time, while business The experience of developing this power source in Vietnam has only just begun. But according to the Power Plan VIII, by 2030 (only 7 years left), the capacity of the two power sources mentioned above must reach 28,400 MW… So what solutions can we have to achieve the set goals? Synthesize, analyze and propose solutions of experts of Vietnam Energy Magazine.
According to Power Plan VIII: The total capacity of power sources by 2030 will be 150,000 – 160,000 MW (nearly double the total installed capacity at present). Thus, ensuring electricity supply and national energy security by 2030 is a huge challenge – it has to grow very rapidly in size and undergo a drastic structural transformation to approach the goal of carbon neutrality. , as well as balanced development of regions and regions, balance between source and transmission.
In particular, the development of our country’s electricity source in the coming time is forecasted to have many difficulties and challenges: Basic hydropower has almost no room for development, only a few more industries can be developed. low-head hydroelectric projects and small hydropower projects; Coal thermal power plants will not be further developed after 2030 according to international commitments to reach Net Zero by 2050. Therefore, gas thermal power development (both domestic natural gas and imported LNG) is the way to go. indispensable and very important role in ensuring stable electricity supply for the economy, promoting energy transition in Vietnam. Because the LNG power source has the ability to run in the background, start up quickly, be ready to run for additional peaks, and quickly supply power to the system when renewable energy sources deflate, and emit less CO2 than heat. coal power. LNG gas power has the ability to reach more than 90% of the capacity factor if it is mobilized when needed, does not face disruptions and depends on nature such as wind power, or solar power.
Along with LNG power, offshore wind power development by 2030 is expected to reach 6,000 MW and the scale can be further increased in case fast technology development reduces electricity production costs, as well as transmission costs. physical.
Electricity development issues:
Currently, we have 13 LNG power projects that have been approved by the Prime Minister in the List of important and prioritized investment projects of the power sector in Decision 500/QD-TTg dated May 15, 2023. Accordingly, by 2030, there will be 22,400 MW of LNG power, accounting for 14.9% of the country’s total electricity, with an expected production capacity of 83 billion kWh.
However, the progress of preparing for investment, construction and operation of power plants is quite long, while we have almost no experience in developing this type of power source. If counting from the time of planning to being able to operate, the fastest takes about 8 years, even with projects over 10 years. The slow implementation of power sources, especially the slow development of background power sources, will have very serious consequences for the national electricity security. Therefore, it is very important to propose key solutions to soon put gas-fired power projects and background power projects into use on schedule.
In fact, in order to ensure the implementation of LNG power projects on schedule, it is necessary to coordinate extremely important with local authorities (where the construction site is located), which is concerned with directing the implementation. some issues related to compensation, site clearance, infrastructure, environment…
Through the implementation of LNG Nhon Trach 3 and 4 gas power projects invested by PetroVietnam Power Corporation (PVPower), and the Bac Lieu LNG project by Delta Offshore Company (foreign IPP) show that: Not As long as the project is included in the issued Power Plan, it will collude, drip, and deploy to the destination as quickly as expected.
Although Nhon Trach 3 and 4 LNG power projects have been implemented since 2017, but in the past 2 years, they have almost stood still in the negotiation of electricity prices and Power Purchase Agreement (PPA) with EVN. force of Vietnam (EVN). Currently, the Ministry of Industry and Trade has not yet issued a price bracket for electricity generation for LNG gas power plants, the commitment of the total annual power output (Qc) from EVN and the annual gas output consumption also makes investors concerns about the effectiveness of the project. Meanwhile, the commitment to annual electricity generation and gas consumption is very important – it is the basis for banks to consider credit financing for the project, as well as for the project to purchase good LNG sources through good prices. through long-term LNG purchase contracts to lower electricity prices.
In terms of capital arrangement for the project, there are also challenges, because this is an independent power project, so it has to arrange capital without government guarantee as before. Therefore, the arrangement of capital is more difficult, the cost of borrowing is higher. Not to mention the capital arrangement depends on the PPA, but the PPA negotiation is still long and it is not known when it will end.
As for the Bac Lieu LNG power project with 100% foreign capital, which has been granted an Investment Certificate since the beginning of 2020, until July 2023, it is not known when the negotiation of electricity prices and PPA will end. The root cause of the stagnation of LNG power projects is the selling price of electricity to EVN (according to calculations, it is higher than the average retail price of electricity sold by EVN).
In the Power Plan VIII, the price of LNG (reduced to 2020, excluding price slippage) to Vietnam is forecasted to be USD 10.6/1 million BTU (period 2021 – 2045) and the average price to the power plant is 11.8 USD/1 million BTU. With this price, the price of electricity produced is about 9.2 UScent/kWh.
According to calculations by experts in power planning, with a 3,200 MW project, when the LNG price ranges from 10 USD to 20 USD, 30 USD and 40 USD/MMBTU, the corresponding electricity selling price will be 9, 03 UScent/kWh, 15.5 UScent/kWh, 22.07 UScent/kWh and 28.6 UScent/kWh.
To develop about 22,000 MW of gas-fired power from LNG, the annual LNG import demand will be about 15-17 million tons.
Currently, the biggest barrier of LNG gas power plants is still the high cost of electricity production, input fuel for power production depends entirely on imports. Therefore, factories need to be run at background load to be able to have better and more acceptable prices. However, currently, there is no price framework for electricity generation of LNG gas power projects, so it is not known how much should be negotiated, because if only looking at the world LNG price in the past time (sometimes up to up to 30 USD/million BTU), the purchase price of electricity from LNG gas power source will be much higher than the retail price of electricity sold by EVN.
From the above calculations, it is difficult for EVN’s financial supervision agencies to accept and also cannot decide on this purchase.
In addition, the commitment on foreign currency conversion, guarantee of payment obligations to EVN and compensation for damage upon termination of PPA, conversion of LNG gas price to electricity selling price, and power output off-take, etc. Ensuring the effectiveness of the project when there is no officially determined electricity price is also an issue that needs to be considered carefully.
Regarding offshore wind power development:
As with LNG gas thermal power projects, the development of offshore wind power in Vietnam has just begun. Therefore, to achieve a total capacity of 6,000 MW by 2030, it is necessary to have great efforts of investors, as well as the addition of mechanisms and policies of the state to develop this type of power source.
Regarding offshore wind power, currently we do not have regulations on procedures, order, records, management of measurement, observation, investigation, survey and assessment of marine and wind resources of the agency. competent state. The regulations on investment and construction for offshore wind power have not been fully promulgated (norms, unit prices, practice capacity, fire prevention and fighting, work grade, management of state agencies…). The current infrastructure system such as seaports, ships, and auxiliary vehicles has largely failed to meet the requirements for construction and operation. Data on natural conditions are not available and incomplete. In terms of capacity and experience, Vietnam has only a few small (near-shore) wind power projects that have been invested, so there is no experience in management, investment, design, construction and operation of these projects. large offshore wind power plants (offshore).
According to the calculation of investment time: An offshore wind power project needs 7-8 years to complete. In order to meet the set goals, the state needs to continue to improve the legal framework, introduce mechanisms and policies to harmonize the interests of gas and offshore wind power investors and customers. electricity, specifically as follows:
Firstly: It is necessary to update the legality related to the import of LNG.
Secondly: Promulgating a set of safety technical regulations and standards on the design, construction and operation of LNG import infrastructure to import about 8 billion m3 by 2030 and about 15 billion m3 by 2050.
Third: Approving the national marine spatial plan, promulgating legal provisions on investment and construction in order to guide and perfect policies and laws on investment and operation of offshore wind power.
Fourth: There should be policies to attract investment, as well as upgrade the infrastructure system (seaports, ships, auxiliary vehicles…).
Only 7 years left until the 2030 milestone, while our development of LNG and offshore wind power is at the “zero line”. Without the drastic direction of the Government, related ministries, departments, branches, local authorities (with projects), active participation of investors… the capacity target would not be possible. The above two power sources according to the Power Plan VIII are difficult to achieve and the possibility of power shortage after 2030 may occur.
Dr. NGUYEN HUY HOA – VIETNAM ENERGY MAGAZINE
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