Deepening Regional Power Collaboration to Enable a Successful Energy Transition in Vietnam

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Langcang- Mekong Energy &Power Cooperation Research Center, CSG
July. 2023
Deepening Regional Power Collaboration to Enable a
Successful Energy Transition in Vietnam
©CSG 2023. All Rights Reserved
Huang Yu

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document is permitted without the prior written permission of CSG.

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CONTENTS
01 China's Energy Transition Vision
02 Vietnam's Energy Transition Vision
03 Opportunities and Challenges in
Vietnam's Energy Transition
04 Suggestions

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China's Energy Transition Vision
u Status of energy supply and demand in China
Primary energy production - 4.66 Btce
Supply
67.40%
6.30%
5.90%
20.40%
Coal Oil Gas Nuclear/Wind/Solar/Hydro
Total energy consumption - 5.41 Btce
Demand
56.20%
17.90%
8.40%
17.50%
Coal Oil Gas Nuclear/Wind/Solar/Hydro
Ø GDP energy intensity reduced by 0.1%
Ø Carbon emissions per unit of GDP reduced by 0.8%
Total Power Capacity - 2.57 TW
Ø Thermal power - 1.33 Billion kW
Ø Hydro power - 0.41 Billion kW
Ø Nuclear power - 55.5 Million kW
Ø Wind/PV - 0.76 Billion kW
Total Power Generation - 8693 TWh
Total electricity consumption - 8640 TWh
Ø Annual growth - 3.6%
Ø Per capita electricity consumption - 6116 kWh
Maximum load - 1.29 TW
Data source: China National Bureau of Statistics

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Source: China Renewable Energy Development Report 2022
152 GW newly added installed capacity of renewable energy throughout
2022, accounting for 76.2% of the newly added power generation capacity.
Total capacity is more than 1.2 TW. The proportion of renewable energy
installation has increased to 47.3%.
RE Capacity
RE
Generation
The annual power generation of renewable energy in 2022 is 2700 TWh,
accounting for 31.6% of the total electricity generation in China.
u Status of Renewable Energy in China
RE installed capacity in China accounts for
35.6% of the world's total RE installations
The production of wind turbine components and complete
machines has accounted for over 50% of the global market
share, and the photovoltaic industry provides over 70% of
the global market's components
New Technology
u Manufactured the world's largest offshore wind turbine with single
unit capacity of 16 MW
u The Jieyang Shenquan Second Offshore Wind Power Project is now
generating with the world's largest commercial wind turbine with
single unit capacity of 11 MW.
u The use of Flexible DC Transmission Technology

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u Prospects for China's Energy Transition
In 2030 carbon emission peaking
In 2060 achieving carbon neutrality
65%Energy intensity reduction
over 25%Share of non-fossil over Total Energy
Consumption
6 bcmAdditional forest stock volume
1.2 TWTotal capacity of wind and solar
Targets by 2030
“ Promoting the Progressive Shift from Dual Control of Energy
Consumption to Dual Control of Carbon Emissions”
“ Deepening the Reform of the Power System and Accelerating the
Construction of a New Type of Power System”
u Power sector is the main force when it comes to reaching
carbon emission peak and carbon neutrality targets.
u Gradually reduce the proportion of traditional energy through
planned and divided steps based on the safe and reliable
replacement of new energy.
u Improve the regulation of total energy consumption and
intensity, turning to total and intensity regulation of carbon
emissions
u Accelerate the construction of a novel power system and
ensure energy security

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u China's Power Transition Targets
accelerated transition period
（current-2030）
overall formative period
（2030-2045）
Consolidation period
（2045-2060）
Supply Wind/PV installed capacity> 40%
power generation > 20%
New energy become the main
power source of installed capacity
New energy become the main
power source of power generation
structure
Grid
User
Storage
The form of the large power grid is
further expanded
Transformation of power grid to
flexibility, intelligence and
digitalization
Deep coupling and coordination of
power and energy transmission
electrification level of end-use
energy >35%
Low-carbonization, electrification,
flexibility, and intelligent reform on
the user side
Highly flexible interaction between
the power consumption side and
the power system
Meet the daily balance adjustment
needs of the power system
Satisfy the need for balanced
scheduling on time scales above
daily
Cooperative operation of multi-type
energy storage covering the whole
cycle

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CONTENTS
04 Suggestions

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Vietnam's Energy Transition Vision
u Vietnam's Energy Transition Targets
“National Green Growth Strategy 2021-2030”
“National Green Growth Action Plan 2021-2030”
Greenhouse Gas Emission Reduction Target
9% ↓ by 2030
Net Zero Emission Target
achieve net zero by 2050
u Reduce greenhouse gas emissions per unit of
GDP
u Promote green transition of the economy and
society
u Advocate green lifestyles
u Promote sustainable consumption

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Vietnam's Energy Transition Vision
u Vietnam's Power Plan
The PDP8 presents that -
u Vietnam's long-term objective is to form an energy ecosystem based
on renewable energy.
u The proportion of wind power and photovoltaic power altogether in
the national installed capacity will reach over 30% by 2030 and 60%
by 2050.
u Stop adding new coal-fired power after 2030
u Continue to promote interconnectivity with Southeast Asian
countries and the Lancang-Mekong region power grid
u Planned to build 2.4 GW of pumped storage and 300 MW of battery
storage by 2030
u Developing hydrogen energy as an important path away from fossil
fuels
Low-carbon Power Development Focusing on Non-hydro RE
capacity
generation
271.1 TWh
Ø Present situation Ø Planning

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CONTENTS
04 Suggestions

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Opportunities and Challenges in Vietnam's Energy Transition
u Advantages and opportunities
Ø Energy resource reserves
u Abundant resources of coal
u Rich water resources, but mostly developed
u Long coastline and abundant wind power
resources
Ø Location and connectivity advantages
u Bordering China, Laos, and Cambodia
u 220 kV power interconnection with China, Laos, and
Cambodia
u Differences in energy structure with neighboring
countries, providing opportunities for resources
complement between countries.

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u Challenges
low-cost
high-security
low-
carbon
contradiction between safety, affordability,
and sustainability in the process of energy
transition
“Impossible Triangle”
The challenge of “Impossible Triangle” of energy development become more
serious during energy transition

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u Challenges
uChallenge 1: Security and Stability Risk
Randomness
Intermittency
Fluctuation
The output of renewable energy is irregular
and difficult to predict
In extreme weather or at night, some
renewable energy have no output
Renewable energy is influenced by various
factors, resulting in random fluctuations in
output
u Anti-peaking characteristics
Time periods with higher renewable energy output typically
have lower power loads, making it different to replace
conventional power plants.
u Low Guaranteed Capacity
The system still needs to configure a large number of
conventional stable power supply to ensure reliable generation
during peak demand hours.
u Low equipment utilization and low transmission efficiency
Due to the characteristics of renewable energy, the utilization
hours of renewable power plant is lower than traditional units,
meanwhile, the utilization efficiency of renewable energy
transmission lines is also relatively low.
u Challenging the safe operation of the power grid
The large-scale integration of renewable energy have higher
requirements for the security and stability of the power grid

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u Challenges
uChallenge 2: High cost of new energy development
High investment cost on the generation side High investment cost of supporting facilities
Renewable Power plant construction cost
Offshore wind power - 2300-2800 USD/kW
PV power - 500-550 USD/kW
The cost of power supply construction has decreased, but
the decrease is limited
Cost of Guaranteed Capacity
It is necessary to ensure the power supply such as coal power
to provide capacity backup for renewable energy.
Cost of Energy storage device
New construct pumped storage and electrochemical energy
storage.
u Investment in Power Plant Construction in China in 2022 - 103.6
billion USD
Cost of Grid Integration of Renewable Energy
Due to the mismatch of location between demand and
supply, coupled with the randomness of wind power
and photovoltaic power generation, higher
requirements are put forward for the supporting
construction of energy transmission channels.
Cost of Operation and
Management
The large-scale new energy power generation units and
supporting power grid components will greatly increase the
operation and maintenance costs.
u Investment completed in the construction of the national
power grid project in China in 2022 - 69.5 billion USD

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CONTENTS
04 Suggestions

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Mutually Beneficial
Open and Inclusive
Open entry to all revelant parties
Sustainability Energy Security
Marketing Operation
Follow local and international rules,
laws and regulations
Highly consider environmental and
energy efficiency issues
Promote the establishment of bilateral or
multilateral cooperation mechanism
Establish a regional energy security concept
based on respecting countries' core interests.
Suggestions
Principles of Power Cooperation

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uSuggestion 1: Strengthen the regional interconnection and construction of regional power market
Reference to Typical Regional Joint Electricity Market
Ø European Regional Power Market
u Joint clearance, decentralized operation and scheduling
u Must be based on close power network connections and
resource complementarity
u Starting from some countries, the market scope gradually
expands
u Some countries can achieve more extreme power
structures
Currently, Vietnam has formed power interconnection with China, Laos,
and Cambodia through 13 transmission lines
Fully utilize the advantages of the large installed capacity and large
power grid scale from the surrounding region, and achieve mutual
power supply through interconnection.
1
Establishing a regional electricity market mechanism, making it
possible for Vietnam to purchase auxiliary services from
neighboring countries.
2
Further promote high-voltage power grids interconnection,
increase cross-border transmission capacity within the entire
region.
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Suggestions

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uSuggestion 2: Improve Power market mechanism, Creating a favorable investment environment
Three markets
operate
synergistically
Reference to Typical National Power Market
Ø the experience of China's power market reform
u High cost power pricing guidance mechanism
u Green electricity trading mechanism
u Cross provincial and cross regional transaction
mechanism
u Working on Green certificate trading system
Further improve the electricity market mechanism
in Vietnam, leverage the government's regulatory
role, and effectively alleviate the cost of various
regulatory power sources
1
Creating a favorable business model and
investment environment to attract investors from
around the world to enter the new energy market in
Vietnam
2
Increase investment in the development of
regulatary power sources and mitigate costs by
reflecting their auxiliary service value
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Suggestions

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Suggestions
u Suggestion 3: Strengthen the layout of the new energy industry, technological innovation and talent cultivation
Accelerate the introduction
of international new
energy funds, technologies,
equipment, and talents.
1
2
Gradually cultivate Vietnam's
own new energy industry, and
continuously reduce the costs of
new energy manufacturing,
construction, and operation.
Carry out industrial cooperation
with other countries.
2
2
Strengthen the construction of
supporting power systems
including cross regional
transmission and intelligent
digital grid.
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