In addition to a few projects that are making efforts to complete construction as soon as possible, there are many power source projects that are not progressing and are waiting for mechanism issues to be resolved to realize the set goals and plans.
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| New projects in gas power, offshore wind power, onshore wind power are all very little moving. |
The national power system currently has an installed capacity of about 85,000 MW, of which 16,700 MW is solar power, 5,900 MW is wind power, and 5,688 MW is small hydropower. Because there is no accompanying battery storage system, these power sources are greatly affected by the weather, making power production unstable 24/7 throughout the year like coal, gas, and large hydropower sources with annual storage reservoirs.
In 2021, the maximum load capacity of the entire system (Pmax) reached 43,518 MW, in 2022 it reached 45,434 MW and in 2023 it reached 46,348 MW, meaning growth only fluctuated around 1,500 MW/year. However, entering 2024, the system Pmax reached more than 49,500 MW, an increase of about 3,000 MW compared to 2023. This growth rate is equivalent to the period before the Covid-19 pandemic.
The above reality requires new power sources to ensure the requirement of "electricity being one step ahead, creating conditions for economic development".
Sparse construction projects
360 MW is the scale of 2 units of the Ialy Hydropower Plant Expansion Project invested by Vietnam Electricity Group (EVN), with a total investment of nearly 6,400 billion VND. Started in June 2021, this project is in the final stage of construction to generate electricity from 2 units in the fourth quarter of 2024. Thus, it will take about 3 years to add 360 MW of electricity to the system.
Although the initial implementation phase was not favorable, the Hoa Binh Hydropower Plant Expansion Project, also invested by EVN, with a capacity of 480 MW, is currently entering the peak construction phase with the goal of generating electricity in mid-2025.
Normally, it takes about 2-3 years to complete and approve the Feasibility Report and necessary legal documents for an LNG power project. Next, it will take 2-4 years to negotiate the Power Purchase Agreement (PPA) and arrange loans, depending on the capacity, experience and finance of the investor. The average construction time to put a plant into operation with a capacity of about 1,500 MW is 3.5 years.
The project started in January 2021, after being stopped for a whole year to deal with issues related to the incident and seek approval from the authorities to continue construction. To get 480 MW of new electricity to add to the system, the Hoa Binh Hydropower Expansion Project will need more than 4 years.
Started in December 2021, as planned, Quang Trach 1 Thermal Power Project (scale of 1,403 MW) will generate electricity from unit 1 in June 2026 and from unit 2 in December 2026.
At first glance, the capacity of the Quang Trach 1 Thermal Power Project seems larger, and the construction time is only 4 years, but after careful investigation, this project was first started in July 2011, that is, 13 years ago. However, because the old investor could not implement it, the project was handed over to EVN in October 2016 for further implementation and it was not until December 2021 that construction officially began, after being approved by the relevant authorities.
Among the power projects that are accelerating construction to reach the finish line are the Nhon Trach 3 and 4 LNG Thermal Power Plant Projects of the Vietnam Oil and Gas Group ( Petrovietnam ).
Approved in February 2019, by March 2022, the Engineering – Procurement – Construction – Installation – Testing and Acceptance Contract (EPC Contract) for Nhon Trach 3 and 4 Projects was signed with the goal of Nhon Trach 3 Power Plant officially generating commercial electricity in November 2024 and Nhon Trach 4 Power Plant officially generating commercial electricity in May 2025.
In addition to the above-mentioned power projects under construction, there are currently no power projects with significant capacity under construction to soon add new power sources to the system.
Removing mechanisms to accelerate clean power projects
According to the Power Plan VIII, the total capacity of gas-fired power plant projects invested in construction and put into operation by 2030 is 30,424 MW (23 projects). Of which, the total capacity of gas-fired power plants using domestically exploited gas is 7,900 MW (10 projects), the total capacity of gas-fired power plants using LNG is 22,524 MW (13 projects).
According to information from the Department of Electricity and Renewable Energy (Ministry of Industry and Trade), apart from the Nhon Trach 3 and 4 Gas Power Projects, most gas power projects in the investment preparation process have not made much progress.
Due to the time-consuming procedures, there are not many gas-fired power projects that can be put into operation before 2030, including O Mon Power Center, Nhon Trach 3 and 4 Power Plants, and Hiep Phuoc Power Plant, with a total capacity of about 6,000 MW.
The remaining projects can only be put into operation by 2030 with the condition that the Power Purchase Agreement (PPA) is negotiated and loan capital is arranged before 2027.
The main reason why these LNG power projects have not yet made a breakthrough is because private investors have not yet clearly seen the effectiveness to boldly invest, with the current and drafted mechanisms.
Not only gas power projects, new projects on offshore wind power and onshore wind power are also moving slowly. The pilot research project on offshore wind power development to serve domestic electricity demand that the Ministry of Industry and Trade launched in July 2024 shows that from now until 2030, no MW from this source of electricity will be added to the system.
Many experts believe that the investment rate for offshore wind power is large, about 2.5 - 3 billion USD/1,000 MW, the implementation time is 6 - 8 years from the beginning of the survey. Currently, Vietnam has not yet had any offshore wind power projects granted investment policies and assigned to investors for implementation.
Besides, Vietnam does not have a complete and accurate database on wind speed surveys and wind potential in each region, each locality as well as the whole country and the current status of terrain and seabed depth.
According to EVN, the selling price of electricity from offshore wind power plants is quite high, around 11-13 US cents/kWh. In addition, because there are no offshore wind power projects, it is unclear what investors' requirements are regarding output commitments, PPAs, foreign currency conversion and related financial issues.
Since there are no offshore wind power projects in Vietnam, it is not possible to fully evaluate the system of norms, construction unit prices, surveys, and designs related to this project. Therefore, it is necessary to review and develop and promulgate according to regulations.
In particular, due to the fact that there are too many issues in implementing offshore wind power projects that have not yet been specified in policies and mechanisms, the Ministry of Industry and Trade believes that selecting international investors to implement pilot projects may have many unforeseen difficulties and complications and proposes assigning large state-owned enterprises in the energy sector to implement the pilot projects.
Nearly two months after the Ministry of Industry and Trade reported on the offshore wind power situation as above, Equinor - the giant energy corporation controlled by the Norwegian State - has canceled its investment plan in Vietnam's offshore wind power sector and will close its office in Hanoi, even though it was just opened in May 2022.
Previously, at the end of 2023, Orsted - a company with a controlling stake in the Danish Government - also decided to stop playing in Vietnam to pursue other plans. At that time, Orsted said that the mechanism for selecting investors as well as the mechanism for selling electricity would be direct commercial negotiations based on ceiling prices, or competitive bidding on prices, or buying and selling at fixed prices, which was unclear, causing certain concerns, because it was difficult to forecast a stable source of revenue from the project.
Not only LNG power projects, offshore wind power projects face challenges that are unknown when they will be solved, onshore wind power projects and solar power projects are also moving slowly. The main reason is that current policies are unclear, or not attractive to private investors.
To achieve the current total system capacity of 85,000 MW, the electricity industry has spent 70 years building and developing. Therefore, the goal of increasing capacity to 150,489 MW by 2030, which is nearly double the current level in the next 6 years, without attractive and breakthrough policies, it will be difficult to realize the set goals and plans.
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