JAKARTA, Indonesia — Power outages are leaving Vietnamese homes and businesses without power for hours at a time, as a prolonged drought and high temperatures strain the fast-growing economy’s capacity to keep up.
A much-anticipated energy plan to help the country achieve its ambitious climate goals and fix the energy crisis will provide some relief, but experts believe it may not be enough.
The need for progress is evident.
Streetlights have been turned off in some major cities and businesses have been told to cut energy use. Two of Vietnam’s three biggest hydroelectric reservoirs have been almost entirely shut down due to severe drought.
“It is a big headache for us,” said Nguyen Thanh Tam, deputy director of Hoa Long printing company in Hanoi. “We need power to operate the machines.”
The national energy plan, called Power Development Plan 8 or PDP8, aims to more than double the maximum power Vietnam can generate to some 150 gigawatts by 2030. That’s more than the capacity of developed countries like France and Italy, though well below Japan’s 290 GW.
It calls for a drastic shift away from heavily-polluting coal, expanding use of domestic gas and imported liquefied natural gas or LNG, which will account for about 25% of total generating capacity, while hydropower, wind, solar and other renewable sources will account for nearly 50% by 2030.
“This is a plan that demonstrates Vietnam’s ambitions for macroeconomic growth. It includes plans for expanding the power sector and its associated generation capacity to meet the growing demand for energy in the country.
While Vietnam’s new energy plan mandates that no new coal-fired power plants will be built after 2030 as the country transitions to cleaner fuels, total generation capacity from coal power will still rise by 2030, contributing some 20% of total energy production — down from the current 30.8%.
By 2050, Vietnam will stop using coal for power generation, switching all coal plants to using biomass and ammonia, according to the plan.
Experts are concerned about the continued use of fossil fuels, burning biomass like rice husks or residues from sugarcane farms and building new infrastructure to power gas powered plants.
In July 2022, Vietnam enshrined in law a pledge to reach net-zero emissions by 2050. Late last year the Group of Seven advanced economies promised to provide $15. 5 billion to help it end its reliance on coal-fired power plants as a part of a Just Energy Transition Partnership or JETP. Such projects have offered similar incentives to South Africa and Indonesia. Vietnam pledged to phase out coal power by 2040 at the United Nations climate change conference in Glasgow in 2021
“While coal remains part of the energy mix, it is a marked shift from the coal dependence that Vietnam sees today,” said Chawla. “A definite phase down in share of energy mix and future emissions, in line with the JETP, even as absolute quantities of thermal power are largely unchanged.”
Vietnam has also drawn criticism for cracking down on environmental campaigns. The German government has warned that the recent detention of prominent environmental campaigner Hoang Thi Minh Hong, the fifth activist to be arrested in the past two years, could endanger a recent multi-billion-dollar deal to help the country phase out coal use.
The gradual shift away from coal won’t wean Vietnam from fossil fuels, given its goal of expanding use of LNG — cooled natural gas that is made predominantly of methane whose production and transportation leaks contribute to global warming.
The demand for LNG has increased as the natural gas supply from Russia is disrupted due to war in Ukraine. This means that prices will rise and supplies may be less reliable.
“If it is implemented, this would be one of the biggest gas consumers in the area,” Aditya Lolli, Asia Program Lead at Ember, an independent energy think-tank, said. “Any disruption to gas supply, even if they emanate due to reasons outside of Vietnam’s control, may potentially push the country back to coal if alternate renewable energy capacity is not ramped up soon.”
Financing is another challenge since the plan calls for spending nearly $135 billion on new power plants and electricity grids from now until 2030.
Investors favor renewable energy sources, said Trang Nyguyen, leader of Climateworks Centre’s Southeast Asia team.
“It is good to have a plan that gives investors clarity. However, a big risk is that LNG assets will become stranded, as it is happening now with coal. “I see a big challenge in how to get enough investment in something which may not even be viable within the next 10 years or so,” said Ms. Shen.
Vietnam, which has rapidly industrialized and made electricity available to nearly its entire population, has made huge strides in expanding use of renewable energy. It fueled half of the country’s electricity output in 2022, up from just a quarter a decade earlier. But upgrades to the power grid haven’t kept up.
A revamping of the whole power grid is needed, Lolla explained. “With a plan that integrates renewables holistically into the system,” Lolla added. The plan, he said, will probably result in electricity price hikes in the short term, but will stabilize the prices and power supply over the long run.
“PDP8’s emphasis on expansion and modernization of the grid also helps as it means fewer outages, enhanced grid stability and overall improved energy reliability for households and businesses,” he said. “First and foremost, it means increased access to clean energy and reduction in emissions for the consumers.”
Associated Press video journalist Hau Dinh contributed from Hanoi, Vietnam.
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