Power generation development plan Source: Ministry of Industry, October 2007
The Ministry of Industry has formulated a National Energy Policy for the 2006-2015 period, emphasizing the need to diversify the country’s energy mix whilst maximising the use of local energy reserves.
development of energy infrastructure and enhancement of long-term energy supply;
development of energy in consideration of environment;
restructuring the energy sector’s structure and opening up the market for energy; and
enhancement of international energy cooperation.
Projected total capacity, capacity mix and capacity additions Capacity Additions to Vietnam Power System (2000-2015)
From 2011 to 2015, IPPs’ share of investment in new capacity will increase to a level roughly equal with EVN’s.
Projected Total Capacity and Planned Capacity Mix
Hydropower development is still given a top priority given its ability to provide low-cost base load, but the masterplan also promotes the development in gas- and coal-fired plants.
Renewable energies only account for 3% of total supply by 2010 and 4% by 2015.
6 17,938 15,325 8,756 4,947 1,750 4,250 Total 3,000 --- 2,700 150 1,465 2,385 Natural Gas 10,200 10,400 4,194 900 210 600 Coal 4,738 4,925 1,862 3,897 75 1,265 Hydro Non-EVN EVN Non-EVN EVN Non-EVN EVN 2011-2015 2006-2010 2000-2005 Type of Plant 100% 59,467 100% 24,454 Total 1% 595 2% 489 Imports 4% 2,379 3% 734 Renewable 16% 9,595 27% 6,595 Natural Gas 46% 27,149 27% 6,549 Coal 33% 19,750 41% 10,087 Hydro % MW % MW 2015 2010 Type of Plant
Hydroelectricity development has historically received high priority in Vietnam due to its ability to provide base-load at relatively low cost. Almost half of the total electric generating capacity is currently provided by hydropower.
Nonetheless, the share of hydro in total power production will decrease considerably in the coming decades. Even so, hydropower will continue to play a vital role in Vietnam’s capacity mix
Source: Ministry of Industry, October 2008 9
Coal-fired power plants in northern Vietnam Source: Ministry of Industry, October 2008 10
To facilitate investment in new generation, nearly $10 billion of the planned $29 billion in investment is expected to come from non-EVN projects, including domestic and foreign private sector investment in BOT or BOO projects.
Increased involvement of private foreign and local players
In view of the very substantial investments needs, which Vietnam cannot easily meet on its own, and of the requirement for state-of-the-art technologies, the modernisation of Vietnam’s energy sector will necessitate an increased involvement of private foreign and local players.
Foreign commercial firms are already active in various parts of the energy sector.
EDF, Sumitomo, TEPCO: Phu My 2.2 gas combined-cycle power plant (715 MW)
BP, Sembcorp, Sojitz, Kyushu Electritric: Phu My 3 power plant
Malaysia's Jaks Resources Bhd: Hai Duong thermo power project (1,200 MW)
Malaysia's Janakusa Group: Duyen Hai 2 project
China's Southern Power Grid: Vinh Tan 1 project (1,200 MW)
Hong Kong's One Energy: Vinh Tan 3 (2,000 MW) and Vung Ang 2 projects
Electric power generation and distribution sectors are open to investment from other domestic investors as well as to foreign players, under various forms, including IPP, BOT projects, and joint-ventures.
IPPs already today generate some 10% of total power supply. Over the next 10 years, it is expected that up to 20% of generating capacity will be in the hands of foreign-invested IPP, BOT, and JV projects.
Private investment in IPP should lead to a boom in deregulation with the emergence of key local players.
Since July 2006, EVN has privatized many of its subsidiaries and converted others to limited liability companies , including most power plants and distribution companies, retaining, however, majority shares in the new entities.
EVN has successfully privatized more than 40 subsidiaries to date.
Phat Nguyen Indochina Infrastructure Management Floor 10, Capital Place, 6 Thai Van Lung, District 1, HCMC, Vietnam [email_address] www.indochinacapital.com This presents the author’s view and does not necessarily reflect Indochina Capital’s