Vietnam, a rapidly growing manufacturing hub in Southeast Asia, is set to rely heavily on coal-fired power plants next year to meet its surging electricity demands, according to a statement by the government on Monday (Nov. 18). Amid efforts to diversify its energy mix, regulatory obstacles and delays in alternative energy projects have left coal as a mainstay in the country’s power generation strategy.
The government projects that coal-fired power plants will operate at a utilization rate of 6,400-6,500 hours annually in 2024. This marks a significant workload for these facilities, reflecting the growing electricity needs of a nation experiencing rapid industrialization and urbanization.
Power consumption in Vietnam is forecast to rise by 11-14% next year, fueled by the demands of its burgeoning manufacturing sector and population growth. Vietnam Electricity (EVN), the state utility company, reports that coal-fired plants accounted for 48.7% of the country’s total electricity output of 256.7 billion kilowatt-hours during the first 10 months of 2023. This underscores coal’s pivotal role in sustaining the nation’s energy requirements.
“The mobilisation rate of coal-fired power plants will remain high, especially in the northern area,” the government noted in its statement. Northern Vietnam is home to many energy-intensive industries, further exacerbating the reliance on coal-based power in the region.
Vietnam has ambitious plans to transition toward renewable energy, aiming to leverage offshore wind, solar power, and liquefied natural gas (LNG) as part of its energy mix. However, regulatory hurdles have slowed progress, putting these goals at risk.
Vietnam boasts significant potential for offshore wind energy, thanks to its extensive coastline and favorable wind conditions. The government has set targets to expand its offshore wind capacity to meet growing energy needs while reducing emissions. Yet, investors have cited complex approval processes, inconsistent regulations, and lengthy timelines as major barriers to project development.
Similarly, LNG power projects, once seen as a cleaner alternative to coal, have faced their own set of challenges. High infrastructure costs, global market fluctuations, and supply chain issues have limited the expansion of LNG facilities. These obstacles have left Vietnam struggling to shift its energy reliance away from traditional fossil fuels.
Coal-fired power has been a cornerstone of Vietnam’s energy strategy for years, driven by the availability of domestic and imported coal supplies. While this dependence has supported the nation’s economic growth, it has also drawn criticism due to its environmental implications.
The International Energy Agency (IEA) estimates that coal is the most carbon-intensive energy source, contributing significantly to greenhouse gas emissions. Vietnam’s coal power sector is no exception, with the country ranked among the world’s top emitters due to its reliance on coal energy.
However, coal remains a reliable and cost-effective option for meeting Vietnam’s immediate energy needs. As the country seeks to maintain stable power supplies for its growing industries, the government has directed coal-fired power plants to finalize coal supply plans by the end of 2023 to ensure uninterrupted operations in 2024.
Vietnam faces a delicate balancing act between ensuring energy security and pursuing sustainable development. On one hand, coal provides a dependable power source critical to supporting industrial growth and economic competitiveness. On the other, the environmental consequences of coal power run counter to Vietnam’s climate commitments under the Paris Agreement.
Vietnam has pledged to achieve net-zero emissions by 2050, aligning with global efforts to combat climate change. The country has also joined initiatives to phase out coal in favor of renewable energy. However, achieving these goals will require substantial investment, policy reforms, and international cooperation.
Despite the challenges, Vietnam has made strides in renewable energy development, particularly in solar power. The country experienced a solar boom between 2019 and 2021, driven by generous feed-in tariffs. Today, Vietnam ranks among the top solar energy producers in Southeast Asia. Expanding this momentum to other renewable sectors could help reduce dependence on coal in the long term.
Energy experts and environmental advocates have weighed in on Vietnam’s energy strategy, emphasizing the need for a balanced approach to meet immediate demands while planning for a sustainable future.
Nguyen Hong Hai, an energy policy analyst, noted: “Vietnam’s reliance on coal is understandable given the urgency of its energy demands, but the country risks locking itself into a high-carbon trajectory unless it accelerates the development of renewables.”
ASEAN Energy Outlook 2023 highlighted Vietnam as a key player in the region’s energy transition but cautioned that delays in regulatory reforms could hinder its progress.
The global community, including major trade partners like the European Union, has also called on Vietnam to prioritize clean energy investments. These partners have linked environmental performance to trade incentives, underscoring the economic benefits of a greener energy portfolio.
- Policy Recommendations for Vietnam’s Energy Future
To navigate its energy challenges, Vietnam could consider the following policy actions: - Streamline Regulatory Processes
Simplifying approval processes for renewable energy projects would encourage investment and accelerate development timelines. - Enhance Public-Private Partnerships
Collaborating with private sector players and international organizations could unlock funding and technical expertise for renewable energy projects. - Diversify Energy Sources
Expanding the use of LNG, solar, and wind energy would reduce over-reliance on coal and improve energy security. - Implement Carbon Pricing
Introducing carbon pricing mechanisms could incentivize industries to adopt cleaner energy solutions and reduce emissions. - Invest in Energy Storage
Advanced storage technologies, such as batteries, could address the intermittency issues associated with renewable energy sources.
As Vietnam heads into 2024, the heavy utilization of coal-fired power plants reflects the country’s pressing need for reliable electricity. While this strategy supports immediate industrial and economic goals, it also highlights the challenges of transitioning to a sustainable energy future.
With the right mix of policy reforms, investments, and international collaboration, Vietnam can position itself as a leader in Southeast Asia’s clean energy transition. However, achieving this vision will require bold actions to overcome the entrenched reliance on coal and unlock the full potential of renewable resources.
