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Renewables

Transforming Vietnam into a regional energy powerhouse

27 August 2019

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Vietnam

Vietnam’s energy sector has seen tremendous growth in the last decade. Generation capacity has grown at approximately 10 per cent each year and the country has achieved 99.2 per cent access to electricity – one of the highest rates in the region.

Looking ahead, Vietnam has also pledged its commitment to the Paris Climate Agreement, setting a target to reduce greenhouse gas (GHG) emissions by 8 per cent by 2030, a number the country believes could increase to 25 per cent if it receives additional foreign investment and support.

The BCG Group believes there are eight things that need to happen to unlock economic value in the range of $30 billion in annual GDP impact by 2030.

Drive cost-competitiveness and greenhouse gas reductions in Vietnam’s oil and gas sector;
Drive energy efficiency across the energy value chain;
Develop a vibrant renewable energy (RE) sector and foster a regional RE champion;
Manage and de-risk under- or over-investment in grid infrastructure;
Develop and accelerate the petrochemicals agenda;
Unlock the full potential of domestic gas;
Provide policy, regulatory, pricing, and investment certainty;
Accelerate technology adoption and Industry 4.0 to enable these priorities.

Transforming Vietnam into a regional energy powerhouse

This agenda will require substantial investment – potentially of approximately $100 billion through 2030. However, with this will come new jobs and business opportunities for local firms and investors as well as more sustainable energy sources for the country as a whole.

Local players will have the opportunity to innovate and create new ventures related to renewables, energy efficiency solutions, and technology and digital solutions focused on the energy sector.

Vietnam has four things that can help drive the country’s ambitious energy agenda. Firstly, a successful history in developing the energy sector. Secondly, strong potential in renewables. Third, large potential in domestic gas. And fourth, a national commitment to sustainable development.

Vietnam has done this before, and it has done it well. Historically, it has a strong track record of growing its energy sector.

The BCG Group believes Vietnam should increase its focus on the renewables space. Wind and solar have significant potential but remain relatively untapped.

Total resource potential for solar has been estimated at 204 to 734GW, while the estimated range for wind is from 27 to 133GW.

Even assuming the lower end of these estimates, Vietnam has more than 200GW of renewable resources, or four times the current installed capacity potential, which it could exploit. A constant flow of international investment in the renewables sector is testament to its potential.

We also see gas as a key source of energy. Today, gas accounts for 48 per cent of Vietnam’s total oil and gas resources but only 6 per cent of this reserve is under production or development, while 76 per cent remains unexplored.

There have been many challenges to increase domestic production, forcing the country to become a net importer despite domestic resources. We feel that there are policy, regulation, and pricing levers that Vietnam can employ to maximize its domestic resources. One suggestion would be to enhance conditions to attract upstream oil and gas investments.

This would include taking a closer look at its fiscal attractiveness and measuring it in relation to key factors that are important to investors in upstream gas. Another suggestion would be to re-examine and possibly restructure the gas market in some areas.

The fact that Vietnam has a deep commitment to sustainability will help promote this agenda.

Among the eight recommendations BCG outlines, energy efficiency initiatives at scale will be particularly important to drive both unit cost reductions and GHG emission reductions.

We see three areas of focus being critical, the first being implementation of demand-side management practices. This refers to initiatives and practices that encourage energy consumers to optimize their energy use. Vietnam currently has the lowest energy efficiency level in the region.

Second, policy and regulatory incentives to provide fairer market conditions for renewable investments that reduce barriers to investment in renewable power generation. Third, leveraging technology at scale to support energy efficiency.

A number of digital solutions can enable better demand-side management, create efficiency in energy supply, and promote transparency in the energy system to inform policy changes.

Saudi Aramco, the world’s largest oil and gas company, publicly describes its competitive positioning as the lowest cost and lowest carbon intensity player. Lower cost and lower carbon intensity will be sources of competitive advantage in the future.

Energy efficiency initiatives in core oil and gas operations will help drive both cost efficiency and lower carbon emissions.

What is important to recognize is that there are many potential initiatives across the value chain and the wider economy. The key for Vietnam’s energy industry is to drive these ideas at scale.

This will require oil and gas players in the country consider the strategic positioning of energy efficiency at scale, think through the appropriate approach to manage the investment program, and rethink organizational models to make it happen.

Vietnam plans to continue to develop new coal-fired thermal power projects with estimated capacity of 43GW by 2030. Our expectation is that there will be a shift in the market in Vietnam towards gas and renewables compared to coal.

The economics of renewable energy sources has been steadily improving and is expected to continue to improve. Developing renewables at scale further improves renewable economics.

Globally, we have observed that leading renewable players who are competitive outside their home markets have successfully leveraged scale and experience to compete on price while maintaining high returns.

We spoke earlier about the potential of domestic gas in Vietnam. In addition, Vietnam plans to import LNG at a time when the global outlook on LNG prices are favorable towards buyers.

These factors, coupled with Vietnam’s sustainability commitments, can drive much higher renewable energy and gas-powered generation growth in the country, while reducing the contribution of coal over time. VN Economic Times

Renewables

Nuclear power could solve Vietnam’s energy problems

27 August 2019

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Vietnam

At the forum “Energy Efficiency for Vietnam’s Industry to Develop Sustainably” held by the Ministry of Industry and Trade on August 21, Mr. Nguyen Quan Nguyen, Minister of Science and Technology, spent time speaking about nuclear power in Vietnam.

According to Mr. Quan, traditional energy sources have been exhausted and Vietnam is importing more coal and liquefied petroleum gas. Thermoelectricity causes a lot of problems and many people oppose it because of its pollution. Hydropower has run out of medium and large capacity. Renewable electricity has potential but its efficiency is low and unstable.

Although the National Assembly has stopped considering nuclear power, Minister Nguyen Quan said that to ensure energy security, it is necessary to think of an alternative energy source – nuclear power.

“I worry that we have to return to nuclear power,” said Nguyen Quan.

Citing Japan, according to Minister Nguyen Quan, after the tsunami, Japan canceled its nuclear power program and closed more than 50 nuclear power plants.

“But someday they will have to develop nuclear power with safer technology, higher levels of automation and efficiency. In Vietnam, we still have to prepare the plan,” said Nguyen Quan.

Given that there is no basis for Vietnam to make nuclear power safe and sustainable, Mr. Nguyen Quan expressed his wish that the Ministry of Industry and Trade with the Ministry of Planning and Investment and the Ministry of Finance supported the Ministry Science and Technology implementing a rapid construction of a nuclear engineering center with a Russian research reactor to help replace the research response in Dalat. This is not only a place for research but also a source of training staff for Vietnam’s nuclear industry.

“In science and technology, Vietnam is the leading country in ASEAN in nuclear technology. Vietnam’s nuclear reactors are very effective and bring many benefits. Therefore, Vietnam should construct a new nuclear science and technology center, not only for research, but also to train high-quality human resources, so that one day we will make nuclear power and we have enough qualified staff,” Mr. Nguyen Quan said.

“In the era of industrial revolution 4.0, people could control a nuclear power factory from hundreds of thousands of kilometers away, even from space. It is possible to invite foreign investors to work for Vietnam but the safety staff and operators must be Vietnamese,” said Nguyen Quan.

Concerning the training program for nuclear power operators, according to former Minister Nguyen Quan, the training program should continue. Because this team not only serves nuclear power but also all other economic sectors that use nuclear energy.

Agreeing with Mr. Nguyen Quan, economic expert Tran Dinh Thien said that it is recommended that nuclear power should be rebuilt.

Deputy Minister of Industry and Trade Hoang Quoc Vuong said: “Nuclear power is a big problem for the country. The Central Economic Committee is directing research to advise the Party and the Government on policies in line with the development of energy in general, including nuclear power and how to meet the demand for country’s energy and solve many other issues.”

Electricity/Power Grid

Myanmar e-sports players battle power outages

27 August 2019

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Myanmar

ESports star Myint was on the cusp of victory when the screens went dark in the Yangon cafe where he competes, costing him thousands of dollars in missed prize-money and denting his reputation.Myanmar’s gaming scene is mushrooming, but frequent power cuts are holding players back in the emerging democracy.

But, Myanmar is at risk of missing out a medal event in the Southeast Asian Games in November with power cuts, few personal computers and a dearth of resources to support travel and competition abroad holding homegrown champions back.Myint Myat Zaw, a 21-year-old player also known as “Insane”, said he has lost about 40 matches due to blackouts, making it difficult to earn a slot abroad where cash prizes are now in the tens of millions of dollars.

He plays Dota 2, which, in Shanghai, hosted its equivalent of the champions league this weekend, boasting a record $34.3 million prize pool. But Dota 2 tournaments are rare in Myanmar, he said, making it difficult for him to earn a living from the game.

For gamers, a dingy internet cafe has long been the typical venue to battle it out with players from other countries. But that has started to change as cheap SIM cards hit the markets and smartphone use soars.

“We can play anywhere, anytime,” said Myint Myat Aung, a mobile gamer who competes on PlayerUnknown’s Battleground (PUBG) for Singapore-based eSports team Impunity. Last month, Impunity, with more than 400 other teams, took part in a PUBG tournament hosted by Samsung Galaxy at a Yangon mall.

Staring into smartphones, players took down their opponents with sniper rifles, the action projected onto a large screen as spectators cheered. The prize pool for the tournament was around $7,000, an immense sum in a country where the average income is less than $1,300 a year.

“Access to stable electricity and internet are crucial when it comes to competitive gaming,” said Jeremy Jackson, market analyst for eSports research firm NewZoo. “Undoubtedly, greater smartphone penetration will allow more people access to the mobile competitive gaming landscape.”

In a country that has produced few international athletic stars, eSports offers players a way into a global community and a chance to make a steady salary, especially for those competing in ultra-popular mobile games.Both Dota 2 and Mobile Legend — a fantasy battle game designed for smartphones with more than 3 million users in Myanmar — will be part of the competition.

Others

Sapura Energy vows to expand business in Brunei

27 August 2019

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Brunei Darussalam

BANDAR SERI BEGAWAN – Malaysian oil and gas firm, Sapura Energy, has pledged to continue growing its business in Brunei as the company marked 25 years of operation in the sultanate.

Sapura provides offshore oil and gas drilling services to Brunei Shell Petroleum. Its rig, dubbed Sapura Pelaut, has drilled 178 wells for BSP over the past quarter century.

During a ceremony to mark its silver jubilee on Monday, CEO of Sapura Drilling, Raphael Siri, underlined the company’s commitment to tap into local suppliers as it mulls possible partnerships in order to grow its business in the country.

The company has spent US$15 million into procuring equipment and services in Brunei over the past three years.

We will continue this strategy as we expand our business in Brunei, Siri said, adding that maximising economic spin-off from the energy sector was in line with the government’s local business development policy.

Norzaidi Zahidin, Sapura Drilling’s director of drilling operations in Brunei, said as the company marks its silver jubilee, knowledge transfer is the biggest contribution Sapura has made to the economy.

“When it comes to investment, most people look at capital expenditure in the country to build buildings, plants and factories,” he said.

“But as a drilling contractor, we are a service provider. Part of the key strategy of our current and future expansion is to have more Bruneians [in the workforce].”

Sapura Drilling said local hires have increased from 30 percent to 80 percent after it acquired business from another drilling contractor in 2013. Norzaidi said 70 percent of key positions are held by locals.

The company added that it has plans to completely localise its Brunei workforce, making it 100 percent local.

Sapura Energy operates in over 20 countries, including China, Australia and the US, employing 13,000 people.

Eco Friendly Vehicle

Indonesia to relax import rules for completely built unit in electric vehicles segment

27 August 2019

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Indonesia

To accelerate the entry of electric vehicles in Indonesia, the government of President Jokowi Widodo plans to allow manufacturers to bring completely built units or CBU parts.

With this plan, the government hopes the sale of these vehicles in the market will stimulate the buyers to own them.

But the chair of the Indonesian Automotive Industries Association (Gaikindo), Yohanes Nangoi criticised the move. He reminded the government not to be careless in deciding on these issues that may cause the domestic automotive manufacturers to be unsettled.

He told Kompas the association is worried that with this policy, in 10 or 15 years, the country will import everything, thus disrupting the manufacturing process.

He said Gaikindo does not want the automotive industry to die.

Nangoi said if the goal is only to test or build a market, it is ok. But there must be continued monitoring and supervising, he said.

Some people used the ‘do not buy a car in a sac’ terminology to describe the liberalisation of the importation of CBU cars.

They say the government should put a cap of two years for the importation of CBUs but must also promote the local manufacture of electric vehicles.

TOYOTA

According to Reuters, Toyota has to invest $2 billion in Indonesia over the next five years. Part of this commitment is to produce Electric Vehicles or EVs.

Indonesia is aiming to start producing EVs in 2022 with a number of companies disclosing plans to invest in this segment.

Indonesia is also pushing for the development of battery production facilities to create a downstream industry.

Hyundai is also in the race to build EV plants in Indonesia.

In January, Indonesia said it is finalising a new EV policy that will offer fiscal incentives to foreign car makers, as it ramps up efforts to become a lithium battery hub. -/TISG

Others

Carpio sees nothing unconstitutional in TOR on PH-China joint oil, gas exploration deal

26 August 2019

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Philippines

Metro Manila (CNN Philippines, August 26) — There is nothing unconstitutional in the terms of reference (TOR) that the Philippines has signed with China on a 2018 memorandum of understanding (MOU) on cooperation on oil and gas development, Senior Associate Justice Antonio Carpio said Monday.

He said the document was signed by Foreign Affairs Secretary Teodoro “Teddy” Locsin and Chinese Foreign Minister Wang Yi, who will both also head the steering committee that will oversee the negotiations of all joint projects.

In a forum in Davao City last Friday, Carpio revealed that Locsin signed the TOR three weeks ago, but did not provide details.

“I have read the TOR, but I promised not to divulge the contents except to say that the TOR complies with the MOU,” Carpio told CNN Philippines in a message.

The Senior Associate Justice also told the forum that President Rodrigo Duterte and Chinese leader Xi Jinping could name the members of the steering committee that would supervise negotiations for all joint projects in their meeting this week.

READ: Carpio: PH signed terms of reference on joint oil and gas exploration deal with China

Duterte will hold talks with Xi on Wednesday during his working visit to Beijing. The President earlier said he would raise the controversial arbitral ruling on the maritime dispute in the South China Sea which favored the Philippines, the MOU, and other bilateral issues during his meeting with Xi.

Duterte has long pushed for a joint oil exploration with the Asian giant, under a 60-4O sharing arrangement, with the Philippines taking the bigger chunk.

A highly-reliable source told CNN Philippines that the TOR sets up the inter-governmental steering committee and inter-entrepreneurial working groups provided in the MOU signed in November last year. Government officials, relevant agencies, and other individuals from both the Philippines and China will be part of these groups.

READ: EXCLUSIVE: MOU for talks on joint oil exploration ‘without prejudice’ to PH, China legal positions

The working groups would consist of representatives from enterprises authorized by the two governments. Beijing had appointed the state-owned China National Offshore Oil Corporation (CNOOC) as its representative in all working groups. The Philippines,

on the other hand, will assign the company that has a service contract with the government. If there are no such enterprises, the Philippine National Oil Company – Exploration Corporation will represent the country.

The enterprises will nominate representatives who will be part of and lead the working group, which will have the authority to hold inter-entrepreneurial commercial and technical arrangements.

Under the TOR, which has been seen by CNN Philippines, the committee and working groups will hold a meeting every three months on agreed dates and venues.

With the signing of the TOR, Carpio said the two countries “can move forward by designating the members” of the committee and working groups.

If a working group is assigned to Service Contract 72 covering the Reed Bank, CNOOC could become a partner in the project with the Philippine firm, Forum Energy,

“If the MOU and TOR are implemented, then China impliedly admits Philippine sovereign rights in Reed Bank in exchange for China’s right to be a service contractor with 40 percent share in the income,” Carpio was explained.

This, he said, “can be the template for an agreement among all disputant states.”

Philippines is among six parties with overlapping claims over the strategic waters of the South China Sea, along with Vietnam, Malaysia, Taiwan and Brunei.

Others

Thailand wants to be South-east Asia’s power-trading middleman

26 August 2019

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Philippines

BANGKOK (BLOOMBERG) – Thailand is jump starting a decades-old plan to create a South-east Asia electricity super-grid, and wants to be the power-trading hub at the center of it.

The nation is set to triple the amount of electricity from Laos that it resells to Malaysia, while encouraging infrastructure upgrades stretching from Cambodia to Myanmar necessary for cross-border power trading, said Wattanapong Kurovat, director general of the country’s energy policy and planning office. The moves are part of Energy Minister Sontirat Sontijirawong’s efforts to make Thailand’s power system cleaner, cheaper and more efficient.

The trade is simple, Wattanapong said. Thailand would buy more electricity for its own national grid from Laos, which generates more than it needs from dams along the Mekong River and its tributaries. It would then have excess power in its own national grid that it could sell into Malaysia, Cambodia or Myanmar.

“We’re trying to move quickly to become the center of the region’s power grid,” Wattanapong said in an interview in Bangkok. “We already have the capacity and the infrastructure to support the vision to become the regional hub.”

The idea of connecting power plants and customers across South-east Asia has been pursued for more than 20 years, but stymied by issues including lack of government coordination and infrastructure funding.

International grids are rare outside Europe, and require solving technical and legal hurdles in addition to building expensive infrastructure. The benefits of success include increased energy security and opportunities to develop untapped renewable resources, according to the International Energy Agency.

HUB BENEFITS

Thailand already has existing grid interconnection with Laos and Malaysia. Since last year, Malaysia has been buying 100 megawatts from Laos through Thailand, and is looking to increase the volume to 300 megawatts, Wattanapong said. As well, border towns in Cambodia and Myanmar have been buying small amounts of electricity from Thailand, but infrastructure upgrades are needed to reach the scale comparable to connections with Laos and Malaysia, he said.

Being a hub would bring myriad benefits, Wattanapong said. Thailand could earn additional revenue from transmitting electricity across its power lines, address occasional capacity oversupply, and make better use of its existing infrastructure and power plants. By using its grid more efficiently, the cost of electricity in Thailand would be cheaper over the long-term, he said.

Improved interconnection could also justify building large renewable projects in developing countries that otherwise wouldn’t have demand to use them, such as hydropower in Laos or wind power in Vietnam, according to a 2017 IEA report.

HARMONIZATION, INVESTMENTS

“Thailand’s push for regional energy trading could be a step to increase security of supply and system resiliency, particularly as falling costs and higher government targets increase the volume of variable renewable energy generation in the Asean region,” said Caroline Chua, a BNEF analyst covering Southeast Asian power markets. “However, scaling up interconnection will require further regulatory harmonization and grid infrastructure investments which can be costly.”

Meanwhile, Thailand’s new minister is looking to revise its so-called Power Development Plan, a national energy guideline, and that could mean more renewable energy and electricity from small generators.

By the end of 2037, about one-quarter of Thailand’s electricity would come from so-called very small power producers, according to the plan. They would mostly generate electricity from biomass and solar plants for community use, and sell surplus power to the grid.

The country would also double the share of renewable energy and reduce shares of electricity generated from coal and natural gas, although the latter would remain the country’s largest energy source.

Coal

Sumitomo begins construction on 1.3GW coal-fired power plant in Vietnam

26 August 2019

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Vietnam

Sumitomo has started construction of the 1.3GW Van Phong 1 coal-fired power project in the Van Phong Special Economic Zone in Vietnam’s Khanh Hoa Province.

The company is involved in the power project through its wholly-owned subsidiary Van Phong Power Company.

The coal-fired Van Phong 1 power plant will include two 660MW power-generating units and is being built at a cost of JPY280bn (£2.16bn).

Sumitomo will complete the project on build-operate-transfer (BOT) model. Once complete, it will sell the electricity to Vietnam Electricity (EVN), the country’s state-owned power company, over a period of 25 years. The project is expected to reach commercial operation by the end of 2023.

As per Sumitomo, the demand for electric power has risen sharply in Vietnam and it is sharply in line with the rapid economic growth. Resolving the power shortages is expected to become a pressing issue for the country in the near future.

Vietnam aims to generate 129.5GW of energy by 2030

Under its revised National Power Development Plan VII originally formulated in 2016, the Vietnamese government is striving to meet power demand growing about 10% annually by increasing its power generation capacity to 96.5GW by 2025 and to 129.5GW by 2030.

Sumitomo, in a statement, said: “While the Group’s general policy is to refrain from building new coal-fired power plants, it has decided to make case-by-case assessments of projects deemed essential for the economic and industrial development of local communities that conform to policies established by Japan and the host country with due consideration for international efforts and trends toward mitigating climate change, and it was on this basis that this project was undertaken.”

In July, Sumitomo, in partnership with Electric Power Development (J-POWER) commenced offshore ground investigation to explore the possibility of developing an offshore wind power plant.

Sumitomo said that they are investigating around Hirashima and Enoshima islands off the coast of Saikai City, Nagasaki Prefecture.

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HUB BENEFITS

HARMONIZATION, INVESTMENTS

Vietnam aims to generate 129.5GW of energy by 2030

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