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11 February 2019

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Vietnam

As Vietnam is a developing country, the demand for energy, particularly for electricity to meet socioeconomic development requirements, is tremendous. Local power consumption has jumped sharply in the past 15 years, with about 9.5 per cent hike a year in actual production output, and is forecast to continue rising quickly in the next 15 years.

Local power consumption grew by an average 13.07 per cent per year during 2006-2010, and about 11 per cent during 2011-2015, placing Vietnam among the countries posting the highest power consumption growth in the world. The current high growth rate of power consumption, which almost doubles the country’s GDP, attests to qualms over the low efficiency of power use in Vietnam.

Therefore, we have confronted lots of challenges, such as the huge pressure to ensure energy security, efficiency, and conservation, the need to upgrade infrastructure, and developing new renewable energy sources as the country’s fossil sources are gradually becoming depleted, and environmental protection requirements are increasingly stringent.

How could we surmount these challenges to ensure the national energy security from the angle of the regulatory system?

With a view to ensuring the national energy security and mitigating pollution levels, the Vietnamese government has worked out long-term development orientations and strategies linked to sustainable development. These are geared towards modernisation, assuring sufficient supply of preliminary energy sources, energy efficiency, and conservation, in parallel with developing safe and renewable energy sources. According to our energy master plan development scenarios, in the future coal-consuming industries will continue developing robustly despite limited domestic coal power production capacity, leading to an imbalance of coal demand and supply. In this context, importing coal to feed industries becomes imperative. Introducing policies on long-term coal imports then proves crucial to ensure stable production for these industries, particularly the power sector.

The plan also shows that local coal production can hardly meet the growing demand of power plants. Vietnam envisages importing more than 70 million tonnes of coal for power production by 2030.

In addition, by 2024, gas sources in the south-western and south-eastern regions are forecast to gradually run out, falling short of the burgeoning industrial demand, insufficient to meet development requirements from related industries. Therefore, it is important to offset the gas shortage with imported liquefied natural gas (LNG) sources. Vietnam must take into account these factors to achieve its energy security targets.

The current prevailing trends in the global energy industry are ensuring energy efficiency and conservation, and applying environmentally- friendly technologies, looking to develop a low-carbon economy, green industries, and changing current production and consumption models for sustainable ones.

Vietnam has and will continue paying due heed to these measures in the future to achieve its targets of energy security and sustainable development.

Power is essential for socioeconomic development. What orientations are there for the power sector to ensure this in the future?

The revised National Power Development Plan for the period of 2011-2020 with vision towards 2030 has set forth the targets of ensuring a sufficient and stable power supply for socioeconomic development and ensuring energy security. While working towards these goals, assorted domestic and external resources will be mobilised for power development to ensure a sufficient power supply at a growing quality and to keep power costs at rational levels.

It is also important to effectively mobilise diverse preliminary energy sources and step up the use and development of renewable energy sources in power production, gradually increasing the proportion of power produced from renewable energy sources to contribute to ensuring energy security, mitigating climate change implications, protecting the environment, and developing the economy and society in a sustainable manner.

To meet the ever-growing power demand, which will be increasing at an estimated 11 per cent until 2020 and at 7.5-8.5 per cent during 2021-2030, the power sources to meet this demand must be enormous.

In light of the approved power plan, the total combined power capacity of local power plants will amount to about 129,500 megawatts (MW) by 2030, of which about 27,800MW will come from hydropower, 28,000MW from renewable energy sources, 19,000MW from gas-fired power plants, about 2,000MW from imports, and around 55,000MW from coal-fired thermal power plants. Besides developing sources, we need to develop a transmission and distribution network on the national grid to ensure safe, reliable, and economical transmission from power centres to local loading centres and customers. The quality of power supply needs to be gradually improved as well.

In addition, Vietnam must develop a power generation market and present suitable pricing policies with enhanced transparency to attract investors in order to diversify investments and trading methods.

Smart energy is a fresh global trend. How has Vietnam availed itself of smart energy technology?

Increasingly, modern life has paved the way for humanity to access smart devices through the birth of the Internet of Things, including smart energy applications. Smart energy is a general concept describing the application of smart technology in the fields of energy conversion, storage, transmission, and controlling energy consumption. Vietnam has been and is deploying a smart grid and smart metering programmes in power system operation and management.

Like other smart grid programmes around the world, the two core targets of this programme in Vietnam are improving energy usage efficiency and developing renewable energy resources. To achieve these goals, in parallel to executing investment construction projects, Vietnam needs to build and complete the regulatory framework for smart grid development; enhance the capacity of relevant individuals and corporate stakeholders engaged in the programme, and foster research and development of smart grid applications.

In 2012, the Ministry of Industry and Trade compiled and submitted for the prime ministerial approval a project on smart grid development in Vietnam. The project set forth the targets of building a relevant regulatory framework and standards to establish remote control centres. These allow closing or cutting off electric circuits as well as metering and collecting data through remote controlled electrical devices, unifying technical specifications, and defining the responsibilities of related sides associated with metering services in the power system.

State-run Electricity of Vietnam and power corporations have come up with a raft of concrete programmes, such as those associated with installing electric power meters and developing a remote metering data collection system, establishing remote control centres or devising pilot programmes on power load adjustment.

Several programmes have been deployed after the termination of a test-run period, such as National Power Transmission Corporation and power corporations at localities reviewing test run outcomes, and putting into operation unmanned control centres and transformer stations which matches the development orientations set out under the master plan on smart grid development. The initial results have been encouraging, attesting to the feasibility and reliability of the programme.

How do you perceive the trend of smart energy development in Vietnam? What awaits in the future?

The long-term development orientations and strategies presented by the Vietnamese government for the power sector are closely attached to sustainable development, gearing towards modernisation to ensure power efficiency and conservation, the development of new renewable energy sources, combined with the implementation of the smart grid programme and competitive power market development.

In the upcoming time, Vietnam will promote the application of smart grid technology to connect and stably operate new renewable energy sources, develop and operate advanced devices in order to integrate big volumes of hard-to-control renewable power sources to ensure the effective exploitation of these sources.

In the forthcoming period, we will continue carrying out programmes in the development pipeline, while simultaneously deploying several new programmes, such as using energy storage technology, in-house smart devices which can adjust energy consumption based on power supply situations, power price changes, or microgrid models.

When these programmes are on track, we will build up the infrastructure and the relevant regulatory framework for all members of society to apply, including power sector customers, with a focus on the application of modern technology measures, research and development of IT products, and energy efficiency software, connecting and developing renewable energy sources, as well as development trends of products and services for the building of smart homes and smart city models.

Renewables

Solar energy has great potential in VN but challenges remain

11 February 2019

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Vietnam

On a quiet street in HCM City, Tuan’s one-storey house is covered with sunlight dancing through the ceiling, interlaced with light and photoelectric panels.

The 3kW solar power system helps him save one-third of his electricity bill every month and the figure will be even higher if he can sell electricity to the Electricity of Vietnam (EVN).

The development of high technologies plus the state’s encouragement and awareness of ‘green living’ all have ignited a solar power movement in large cities.

Experts believe that distributed electricity generation, with numerous electricity generators connected to the national grid, can help ease the energy burden on Vietnam, with the annual growth rate of 8 percent for the next decades.

Germany, Australia, Canada and New Zealand use renewable power as major electricity generation sources with the proportion expected to reach 80-100 percent in the near future.

The World Bank said that the government needs $150 billion from now to 2030 for investment in electricity generation, transmission and distribution. The pressure will be mitigated if it can encourage investment from the private sector.

A scientist said Vietnam, like other companies, is striving to develop smart cities in the future. In such cities, high technologies will help connect small individual electricity generation sources to form flexible power networks.

Users will be able to watch the electricity output consumed and other information under SolarBK’s SSOC software.

However, in order to build smart grids in smart cities, Vietnam will have to overcome legal and technological problems. Because of administrative issues, some people still are not paid for the electricity they provide to the national grid because EVN requires people to provide invoices.

The other obstacle is unclear policy. No one knows what the renewable energy electricity price will be after June 2019.

Meanwhile, technologically, any time a household installs solar panel and joins the grid, this will cause some interference. Single interferences won’t cause problems but disasters may occur if the electricity grid cannot be designed in a way to be bear a high number of interferences.

According to SolarBK’s Mai Van Trung, the often-changing urban development program has made people hesitate to install solar power systems. It takes 10 years on average to take back investment capital.

Meanwhile, investors cannot calculate risks when other buildings arise and block sunlight.

Renewables

Vietnam’s proposes to extend the solar feed-in-tariff by two years

11 February 2019

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Vietnam

On 29 January 2019, the Vietnam Ministry of Industry and Trade issued the draft policy to extend the solar feed-in-tariff (FIT) eligibility until 30 June 2021. This is an extension of two years from the earlier 11/2017/QD-TTg. This extension is coupled with a shift from a single standardized FIT, to differentiated FITs based on the regions’ solar irradiance, installation type and commercial operation date.

Although the FIT is being extended until 30 June 2021, the overall rates have been reduced. The largest reduction is almost 30% lower for projects that achieve commercial operations between 1 July 2020 and 30 June 2021, in provinces with the best solar irradiance. This will motivate developers to meet the 30 June 2019 deadline to qualify for the rewarding $93.50/MWh feed-in tariff.

The proposed FIT is also differentiated by region, based on the solar irradiance for each province/municipality. The government has proposed lower FIT rates for regions with better solar resources and higher rates for poorer irradiance regions. This differentiated rate aims to spread out solar development more evenly across the country.

Figure 1: Heat map of solar PPAs in Vietnam

Renewables

Renewable energy-led pathway vital for Vietnam

11 February 2019

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Vietnam

Renewable energy could become Vietnam’s lowest-cost option to meet its energy needs, according to a whitepaper released by global management consulting firm McKinsey & Company at a press conference held on January 23.

renewable energy led pathway vital for vietnam

At the press conference

‘Exploring an alternative pathway for Vietnam’s energy future’ evaluates how Vietnam could meet its growing energy demand at the lowest cost, with the least impact on public budgets and the least risk.

“As one of the 18 outperforming emerging economies we identified globally, Vietnam needs more capacity to meet the rapidly growing energy demand it requires for sustainable growth. The path Vietnam chooses to build this capacity will have far-reaching implications on GDP growth potential, trade, environmental performance and energy security,” said Marco Breu, managing partner, Vietnam, McKinsey & Company.

The research found Vietnam’s significant natural endowments of solar and wind power combined with a drop in the capital costs of solar and wind over the past five years – 75 percent decrease in solar costs and 30 percent decrease in the costs of wind – strongly positions renewable energy to be a more affordable source of electricity than thermal generation.

Vietnam’s current power plan requires an investment of roughly 150 billion USD by 2030 in additional generation assets and grid infrastructure. The power-generation investments focus largely on coal (about 45 additional gigawatts by 2030) and to a lesser extent renewable energy (18 gigawatts by 2030).

Antonio Castellano, partner and co-lead, electricity and natural gas practice, Southeast Asia, McKinsey & Company

The research suggests that a renewable energy-led pathway could help Vietnam’s power sector perform better than the current trajectory because overall power costs between 2017 and 2030 would be reduced by 10 percent, primarily driven by savings in fuel costs resulting from a move away from high levels of fuel-intensive thermal generation.

Greenhouse gas and particulate emissions would be reduced by 32 percent and 33 percent respectively between 2017 and 2030. This would also boost health and economic productivity.

In addition, the renewable energy-led pathway relies on 28 percent less total fuel and 60 per cent fewer imports. This would reduce Vietnam’s reliance on fuel imports and fossil fuels.

“There is no silver bullet that will solve Vietnam’s energy challenges. The ability to meet rapidly growing demand while keeping costs low will depend on the creation of financial and regulatory infrastructure that make the market attractive to capable renewable energy developers,” said Antonio Castellano, partner and co-lead, electricity and natural gas practice, Southeast Asia, McKinsey & Company.

The whitepaper also discusses the keys that could unlock a renewable energy-led pathway. These include creating suitable market conditions for renewable energy development, building the country’s capabilities to deliver large scale renewable energy projects and expanding natural-gas generation’s role in the country’s power plan.

“This is a watershed moment for Vietnam. Renewable energy is potentially the lowest-cost option for Vietnam to meet its energy needs. Actions taken today to help lay the groundwork for renewable energy development would offer the country the prospect of a less expensive, cleaner and more secure future,” he added.

Theo VNS/VNA

Renewables

Solar Philippines enters India market

11 February 2019

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Philippines

SOLAR PHILIPPINES Power Project Holdings, Inc. has entered the renewable energy sector in India with the construction of a 500-megawatt (MW) solar farm, its top official said.

“We already have our first project in India,” Leandro L. Leviste, president of Solar Philippines, told reporters last week, but declined to give details because of the issues faced by his proposed minigrid franchise in the Philippines.

“Ayaw lang namin guluhin ang kuwento (We just don’t want to muddle the story),” he said, when asked to elaborate. “But this year we’ll have around 500 MW of projects in India.”

Mr. Leviste first disclosed in May last year his company’s plan to venture in India, which he described as having a favorable regulatory environment.

Asked about his company’s partner in India, he said: “We don’t do partnerships in India. The beauty of India is the very low barrier to entry to develop grid-connected power projects in solar parks, as what they are called, with land and transmission provided by the government.”

“So any company in the world, with no local ownership condition can come in and bill P2.00 per kilowatt-hour (kWh), and basta P2.00/kWh makakakuha ka ng kontrata (as long as it is P2.00/kWh, you’ll get a contract),” he added.

Mr. Leviste had said the solar power rates in India are in the range of P2 to P3/kWh, although the capacity at stake is in thousands of megawatts. That range compares to the P2.34 per kWh offered by his company to distribution utility Manila Electric Co.

“In the last tenders of India, they awarded more than a thousand megawatts to just one company in one go. So we’re hopeful that by bringing the cost of solar energy down to India levels in the Philippines, we’ll be able to convince utilities and policymakers to unlock that same volume,” he said in a previous interview.

He said every year, India awards around 20,000 MW of solar energy as the country targets to have a solar capacity of 100,000 MW by 2022.

For Solar Philippines, the target capacity in India is dependent on the number of contracts it signs in the Philippines as the balance of what has not been taken up of its solar panels will be filled by the overseas market, Mr. Leviste had said.

In the Philippines, the company has around 300 MW of solar energy, either operating or under construction, he said last year. He expected the number to reach 400 MW end-2018.

The company has a manufacturing plant in Sto. Tomas, Batangas that produced solar panels with an equivalent capacity of 800 MW in 2017. Its target output in 2018 was 2,000 MW. — Victor V. Saulon

Renewables

AC Energy to focus on existing expansion projects in Vietnam, Australia

11 February 2019

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Vietnam

MANILA, Philippines — AC Energy Inc., the energy platform of the Ayala conglomerate, is focusing on its over 700-megawatts (MW) renewable energy developments in Vietnam and Australia before finding its fifth market for its regional expansion.

The Ayala firm has recently bought a 25 percent stake in The Blue Circle Pte. Ltd. (TBC), a Singapore-based firm with assets across Southeast Asia, primarily Vietnam, Thailand, Indonesia and Cambodia.

However, the company is still busy in Vietnam and Australia, AC Energy president and CEO Eric Francia said. “There could be a fifth market, but depends on how things evolve,” he said.

For now, AC Energy’s existing markets are Australia, Indonesia, the Philippines and Vietnam. The company is planning to spend $200-to $300-million in the near term for its regional expansion.

“We have a very rich pipeline, our pipeline is focused in Vietnam, the Philippines and Australia,” Francia said.

In Vietnam, AC Energy is developing solar projects and is looking at possible wind projects.

“We’re currently building over 400 megawatts (MW) of solar, 410 MW to be exact,” Francia said. “But we’re also looking at wind in Vietnam. Right now, we are looking at projects somewhere in the 500 to 1,000 MW.”

The wind projects should be shovel ready by first quarter of 2020 to meet the deadline for the Feed-in Tariff (FIT) race.

“That’s imminent because there’s a deadline. We have to complete by November 2021. That means we have to start construction by first quarter of 2020, which means we have to deploy capital in the next 12 to 18 months,” Francia said.

Meanwhile, AC Energy has 3,000 MW renewable energy project developments located in New South Wales, Tasmania and Victoria. Currently, it is working on a 700-MW solar farm in New South Wales.

“In Australia, we hope to be shovel ready by the middle of this year, second quarter to be a little more on the hopeful side. We’re doing a 700 MW solar in New South Wales, that hopefully will be shovel ready in the middle of the year,” Francia said.

He said the solar project might be done in phases since it is going to require significant investment.

At home, AC Energy has laid down several projects but is constrained to develop these in one go because of the oversupply in the market.

“We have a strong pipeline here. But because of supply-demand situation here in the Philippines, we’re not planning to roll out aggressively our renewables, maybe 100 MW here and there over the next couple of years, nothing massive,” Francia said.

These bits of projects are solar developments in Luzon.

“We’re focusing now on solar. Modest size, 100 to 200 MW over the next one to two years is what we’re looking at as possible projects to be constructed here…in Luzon,” Francia said.

These projects will help AC Energy meet its 5,000-MW target by 2025, a ramp up from the previous target of 2,000 MW by 2020.

Based on its equity interest in power generation businesses, it owns approximately 1.7 GW of generation capacity in operations and under construction.

Last year, it generated 2,800 gigawatt-hours of energy, of which 48 percent was from renewable sources.

Electricity/Power Grid

Companies await electric vehicle regulation

11 February 2019

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Indonesia

Several companies have expressed their readiness to develop and operate electric vehicles although the government has not yet completed a regulation that would provide incentives for their development and adoption.

PT Bakrie & Brothers has announced that it would soon launch an electric bus, produced in cooperation with Chinese automaker Build Your Dreams Auto (BYD).

Bakrie and Brothers spokesman Bayu Nimpuno said in Jakarta on Sunday the company would import completely built up (CBU) vehicles from China, while “the company is preparing its own electric vehicles produced domestically”.

“We plan to sell [the buses] to provincial governments for city-based public transportation,” Buyu said as reported by kontan.co.id.

Meanwhile, BMW Group Indonesia vice president of corporate communication Jodie O’tania said BMW Indonesia had also expressed its readiness to develop a range of low-emission vehicles. He added that since 2014, BMW had introduced the i8 Coupe and i8 Roadster electric cars in Indonesia.

“We want to see the details of the regulations [on electric cars],” Jodie said, adding that learning from BMW’s experience in other countries, it was difficult to begin introducing fully electric vehicles and that many countries started with plug-in hybrid vehicles.

“If people have started to enjoy the economic value and environmental benefits, they will start to eye [fully] electric cars.”

PT Blue Bird head of investor relations Michael Tene also said the company was still waiting for the government to issue a regulation on electric vehicles. “To use electric cars, Blue Bird, as a company that abides by the law, will wait for the government’s regulation,” he added. (bbn)

Renewables

Renewables to eat up 21% of Thailand’s energy mix by 2028

11 February 2019

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Thailand

Strong government support is pushing reliance away from natural gas-fired power.

The capacity of non-hydro renewables may expand to 21% of Thailand’s total power capacity mix at 14,858 MW by 2028, according to a report by Fitch Solutions.

The report forecasted capacity growth in the renewables sector to be robust over the coming decade driven by the biomass and solar sectors as the Thai government ushers the country away from a heavy reliance on natural gas-fired power.

“This view is also informed by our expectation that coal-fired power growth will stagnate amidst popular opposition, meaning that there are ample opportunities for renewables as the Thai government seeks to deliver increased power sector investment to meet rising electricity demand in the country,” Fitch Solutions explained.

Also read: Thailand’s domestic gas production declines amidst changes in energy mix

Additionally, the report highlighted how local authorities are aiming to raise the share of renewable energy from 10% to 30% in the domestic power mix by 2037 through the country’s Power Development Plan (PDP2018-2037). The plan, which reaffirmed that feed-in-tariffs (FiT) will be available to new renewable power projects to support growth, will also allow peer-to-peer private electricity trading, particularly for solar power distribution.

The plan which was approved by the National Energy Policy Council is expected to take effect from Q2 2019.

“We see little scope for an alternative government to depart from the existing energy policy,” Fitch Solutions noted. The National Strategy Act, which came into force in August 2018, was written into the constitution to ensure policy continuation and implementation regardless of a change in government. Thailand’s parliamentary elections are scheduled for 24 March 2019.

Meanwhile, opportunities in Thailand’s renewable energy market will be supported by a strong demand for electricity on the back of continued economic growth, an increasing population and improving standard of living. The report added that Thailand’s power consumption is forecasted to grow at an average of 3.1% YoY.

Also read: Sembcorp to build 6.2MWp rooftop solar farm in Singapore

Fitch Solutions pointed out that Chinese solar manufacturers have been flooding the Thai market with solar equipment in recent years whilst setting up manufacturing capacity, as Thailand’s high solar radiation levels and large bio-waste from agriculture production provide good natural conditions for renewable energy.

“We forecast solar capacity to more than double between end-2018 and 2028, from 3GW to more than 6.7GW, whilst the biomass capacity will expand from 4GW to 5.8GW over the same time frame,” Fitch Solutions added.

Amidst the growth in renewables capacity, the sector is predicted to not grow fast enough to sustainably offset the country’s heavy reliance on gas for power consumption. The report highlighted that Thailand will still remain highly reliant on natural gas for power over the coming decade, making up nearly 70% of its power mix by 2028.

That being said, the country’s attractive investment environment for renewable energy was highlighted by a number of investments and financial deals closed in early 2019. State-run Electricity Generating Authority of Thailand (EGAT) is expected to start installing floating solar panels in five provinces in April 2019 and begin commercial operations in 202.

Likewise, the Asian Development Bank (ADB) invested an additional $160m (THB5b) into B.Grimm Power which is one of Thailand’s largest power producers on top of a $235, ;pam agreement in 2018 to enhance renewable energy capacity in the region.

“IRENA has also signed a Memorandum of Understanding (MOU) with ASEAN in late-2018 to provide technical support and tools for development and financing into renewable energy in the region,” Fitch Solutions added.

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