PDP8 marks a boost for Vietnam power sector

The PDP8 has boldly taken into account other flexible power sources including pump-storage hydropower. Photo: Son La hydropower plant.

>> Outlook for power consumption growth

Following the strong promise made at COP26 and the current COP27 to achieve a "net-zero" objective by 2050, the Vietnamese government has turned its focus from PDP7 revision to a more aggressive green transition in PDP8. As a result, the PDP8 official has been evaluated more thoroughly, taking into consideration more complicated power sources.

According to Mr. Nguyen Duc Tung, analyst at VNDirect, PDP7 and PDP8 would be developed to satisfy the economic development scenario of 7% GDP growth and 9% power demand increase between 2021-2030. However, in order for Vietnam to meet the 2022 Just Energy Transition Partnerships (JETP) accord, the capacity structure has shifted toward greener solutions:

The energy sources will become the key spearhead for gas-fired power throughout the 2021-30 period, with a CAGR of 26%, the greatest growth among peers, and accounting for 27% total capacity. Gas-fired power, like coal-fired power, must convert a portion of its input to hydrogen combustion after 20 years in order to accelerate the clean transition. Gas-fired power development will decline at a 4% CAGR from 2030 to 50, accounting for 15% of total power generation in 2050F.

Wind power will become the primary aim in both the short and long term, owing to Vietnam's vast potential for RE electricity, especially now that Vietnam has a clear motivation to satisfy JETP requirements in order to acquire green capital. Onshore wind power will expand at a 25% CAGR between 2021 and 2030 and a 6% CAGR between 2030 and 2050, accounting for 14% and 13% of total capacity between 2030 and 2050, respectively.

On the other side, the first 6,000MW of offshore wind power will be installed in 2030F, followed by a 15% CAGR in 2030-50F, accounting for 16% of total capacity.

>> Gas-fired power to rebound from its low base

For solar power, the energy sources will postpone under excessive growth over 2020- 2021 period. However, the PDP8 still encourage unlimit   ed growth of solar power for self-use purposes. Therefore, solarpower will grow modestly over 2021-2030 then thriving at 12% CAGR from 2030F onward, accounting for 33% total capacity in 2050F.

The official PDP8 eventually removed a total of 13,220MW of coal-fired electricity, thereby ending the coal-fired era. Furthermore, the revised plan has taken into consideration 6,800MW of coal-fired power that is experiencing capital arrangement challenges by raising reserve from a bigger proportion of wind and gas-fired electricity. After 20 years of operation, 40-year-old power plants will be decommissioned, while new plants will progressively convert a portion of their intake to biomass and ammoniac.

Coal-fired electricity would rise 2% CAGR over 2023-30F and subsequently fall -1% CAGR over 2030-50F, accounting for 19% and 4% in 2030-50F, respectively, according to the official PDP8.

Hydropower capacity rises at a 1% CAGR from 2021 to 2050 as energy sources potential has been exhausted, leaving just a narrow window of opportunity for small and medium hydropower. The PDP8, on the other hand, has aggressively considered various flexible power sources such as pump-storage hydropower, battery energy storage, and biomass. Mr. Nguyen Duc Tung believes that these new sources will improve the long-term dependability of Vietnam's electricity grid.