ENERGY – Power Development Master Plan 8 – Latest Update – Oil, Gas and Power

To print this article, all you need to do is be registered or log in to Mondaq.com.

The Prime Minister (PM) had issued official letter no. 182/LDCP (“OL182”) on June 10, 2022 for his advice on the approval of PDP8.

The context:
The Ministry of Industry and Trade (MOIT) has drawn up a plan to be submitted to the Prime Minister according to two scenarios, including the base scenario and the high scenario (towards Zero Carbon 2050). This structure aims to drastically reduce coal production, strongly increase onshore and offshore wind power; No development of solar energy: The development of LNG to replace polluted coal and hydroelectric energy sources has come to an end.

The Prime Minister has basically agreed to present the contents of the Electricity Development Plan VIII to the permanent government meeting as soon as possible so that this plan will be published soon in June. However, before the meeting of the permanent government, Prime Minister Pham Minh Chinh asked Deputy Prime Minister Le Van Thanh to ask the Ministry of Industry and Commerce to clarify the following main concerns:

1. Feasibility of PDP8: MOIT to clarify whether the latest draft PDP8 proposal is in sync with electricity generation and demand parameters. MOIT is requested to clarify the feasibility of planning, the most important of which by 2030 is to ensure the balance of electricity for electricity demand, resolutely not to let the electricity shortage pass.

2. Solar Power Development: MOIT to clearly substantiate its view regarding the capabilities and postponement of the development of solar power generation sources until 2030, and its alignment with Politburo Resolution 55-NQ/TW (“Resolution 55”).

According to the Draft Electrical Development Plan VIII, in 10 years (2021 – 2030) there will be no further development of solar energy, retaining the current 8,736 MW. The remaining number of projects already in the revised power development plan VII, with a total capacity of 6,200 MW, progress will be extended until after 2030.

However, at the end of May 2022, the Ministry of Industry and Commerce issued a written request for comments on the direction of dealing with the number of solar power projects that are to be extended until after 2030. As a result, the number of these projects is divided into two parts: 1,925 MW already included in the expanded energy development plan VII have been approved for investment and 4,120 MW of solar energy projects are included in the expanded energy development plan VII but not have not been approved for investment.

This request is different from previous reports from the Ministry of Industry and Commerce, so the Prime Minister asked this ministry to have a clear position on the proposed treatment direction of 6,200 MW of solar power projects above before consulting the government and the Prime Minister.

On the other hand, the Prime Minister also asked the Ministry of Industry and Commerce to clarify whether the non-development of solar energy until 2030 is contrary to Politburo Resolution 55 and the tendency to decline in the price of solar energy, to the development of integrated solar energy battery technology at a more reasonable cost, so does the non-development of solar really make sense?

3. Import of LNG: MOIT needs to clarify its explanations and calculations for the import of LNG fuel to align with the objective of Resolution 55. Additionally, the ongoing war scenario in different parts of the world may affect LNG fuel import and electricity pricing, making it volatile. The MoIT needs to clarify the plan to address these aspects for the development of LNG energy sources.

The MOIT is required to carefully consider the feasibility and efficiency of developing LNG energy up to 2030. Currently, the Draft Energy Development Plan VIII proposes that the development plan of this type of energy by 2030 is 23,900 MW, or 16.4% of the total energy source.

According to the calculations of the Ministry of Industry and Trade, the need to import LNG as drafted in the Electricity Development Plan VIII will be around 14 to 18 billion m3 by 2030 and around 13 to 16 billion by 2045, above the specific goal of Resolution 55 of the Politburo said that “sufficient capacity to import LNG of about 8 billion m3 by 2030 and about 15 billion m3 by 2045”.

On the other hand, due to the Russian-Ukrainian war, the price of imported LNG inputs varies from 15 to 20 cents/kilowatt, while our commercial electricity price is currently only 6 to 7 cents/kilowatt is a future obstacle to the signing of Power Purchase Agreements between the investor and Electricity Vietnam Group (EVN) as it will buy high – sell low.

In addition, the reliance of up to 16.4% on imported LNG by 2030 will expose us to the risk of importing high gas prices in the event of volatility in regional and international geopolitics by 2030.

In addition, LNG remains a fossil fuel by nature, only CO2 deflation by 50% compared to coal-fired electricity. And according to the trend of the 26th United Nations Climate Change Conference (COP26), financial institutions after 2025 will tend to stop financing LNG energy projects.

Therefore, government leaders request the Ministry of Industry and Commerce to carefully consider and deliberate the proportion of imported LNG electricity of 16.4%.

Disclaimer: This alert has been prepared and posted for informational purposes only and is not offered and should not be construed as legal advice. For more information, please see the full disclaimer.