Tag: Coal

Thermal power plants in northern Vietnam are short of over one million tons of coal for power production for this and next month, which could intensify electricity shortage in the region.

Vietnam’s coal imports surged to a record high in the first half of the year, showing its rising reliance on coal-fired power plants.

The global price of coal has doubled since the beginning of 2016 and could result in Vietnam spending an additional $1.27 billion per year on the fuel by 2021, new analysis has revealed.

The current market price of thermal coal has risen to $100 per ton, twice the amount recorded earlier last year, according to research from the Australia-based Institute for Energy Economics and Financial Analysis (IEEFA).

Last year, Vietnam imported a net volume of 12 million tons of coal, a staggering increase of 131 percent against 2015, and the country’s net coal imports will stand at 35 million tons per year by 2021, according to the International Energy Agency (IEA).

At current market prices, that would cost Vietnam $3.5 billion per year.

Compared with projections made last year, which said Vietnam would have to spend $2.8 billion at a predicted price of $80 per ton, the country will end up spending an extra $1.27 billion every year on importing foreign coal by 2021, the IEEFA calculated.

According to the institute, rising coal imports create commodity price and currency risks for Vietnamese electricity consumers that have a negative impact on the current account deficit.

“The doubling of the coal price from $50 in January 2016 to almost $100 today is largely as a result of a Chinese policy aimed at an orderly coal market transition by maintaining a degree of profitability for domestic Chinese coal miners, while the central government forges ahead with an accelerating transition to clean energy. China is set to install 50 gigawatts of solar in 2017 alone, a global record for a single country in a single year,” it said.

“The fluctuating market of 2017 illustrates the extent to which coal is a major threat to the health of the Vietnamese budget,” said Tim Buckley, director of Energy Finance Studies at the IEEFA.

“For countries experiencing significant sustained economic growth, it also further validates the imperative to diversify Vietnam’s electricity sector generation base to incorporate more alternative sources of domestic supply, namely renewable energy infrastructure, which continues to see cost reductions of more than 10 percent every year,” he was quoted as saying in a statement released on Wednesday by the IEEFA.

In Vietnam, which has switched from a coal exporter to a coal importer over the years due to overexploitation, the development of green-power projects has only just started and investors are still struggling due to low buying prices.

The Ministry of Industry and Trade in September asked the government to raise the buying price for wind power in an effort to help investors cover high input costs.

Tran Vinh Thong, an official from Thuan Binh Wind Power Joint Stock Company that operates a wind power plant in south-central Vietnam, told VnExpress in September that “the biggest problem about investing in wind farms is the low buying prices and the time it takes to recover the investment”.

The ministry suggested that the price should be lifted to 8.7 cents per kilowatt-hour (kWh) for wind energy projects on land and 9.95 cents per kWh for offshore plants.

Since 2011, the buying price for wind energy has stood at 7.8 cents for all land-based projects in Vietnam, with 6.8 cents paid by State-run power monopoly Vietnam Electricity (EVN) and the rest coming from the country’s Environment Protection Fund.

For the country’s only offshore plant in the southern province of Bac Lieu, the current price is 9.8 cents per kWh.

The total wind power capacity in Vietnam is predicted to reach 206MW this year, 456MW next year and 800MW in 2020.

The country is trying to generate enough energy to sustain national growth and to connect the millions of people who still do not have access to power, while gradually shifting towards clean and low-carbon energy.

Last year, the government revised down its output target for coal-fired power plants to 53.2 percent of the country’s total power generation by 2030 from the 56.4 percent previously projected.

Vietnam is aiming to produce 10.7 percent of its total electricity through renewable energy by 2030, mainly through solar and wind energy, up from 6 percent as previously planned.

Nguyen Anh Tuan, a senior energy official at the industry and trade ministry, told VnExpress in June that the government had raised the buying price for solar power from 7.8 cents to 9.35 cents per kWh, offered investors tax incentives and cut land use fees in an effort to reach this goal.

He said investors in wind power projects will likely have the same incentives in the near future.