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Vietnam relies on sun and wind instead of coal

Until 2018, the sun and wind led a shadowy existence to cover the energy needs in Vietnam. However, a lucrative feed-in tariff has lured the operators of solar systems. However, the success of solar energy poses a dilemma for the government in Hanoi.

A solar array on a rooftop in Vietnam on November 4, 2019.

Thomas Imo / Photo library / Imago

At the COP26 world climate conference in Glasgow at the end of last year, the Vietnamese Prime Minister Pham Minh Chinh surprised the delegates with ambitious goals. His country wants climate neutral by 2050 be (“net zero”), he said. And to fulfill this ambitious plan, Vietnam wants to increase the share of sun and wind in electricity generation to more than 50 percent by 2045. At the same time, the Southeast Asian country is gradually breaking away from the previously dominant coal.

Vietnam still relies on coal for electricity generation

Production of electricity, in terawatt hours

Harbingers of climate change in Southeast Asia

According to that National Power Development Plan (PDP8) the rulers in Hanoi for the period up to 2030 and an outlook up to 2045, no more new coal-fired power plants are to be built with immediate effect; and the share of coal in the energy mix is expected to fall to almost 10 percent by 2045.

Vietnam will thus become a pioneer in the fight against climate change in the ten-country Association of Southeast Asian Nations (ASEAN), which by 2025 will Share of renewables in the primary energy supply to 23 percent want to increase. 2020 was in Asean almost every third installed electricity capacity is a coal-fired power plant; the share of sun and wind was not even 9 percent.

Time is of the essence in Southeast Asia as the region is already feeling the effects of climate change. According to the United Nations Climate Change Council (IPCC), the average temperature rose by around 3 degrees between 2009 and 2019 compared to the period 1950 to 1980; and the temperature range has widened by about 2 degrees.

Southeast Asia faces higher rainfall, more intense tropical cyclones, increased flooding and rising sea levels. Such perspectives are disastrous for seaside and sinking cities like Bangkok, Manila or Jakarta.

NZZ editor-in-chief Eric Gujer talks to climate expert Brigitte Knopf about the possibilities, effectiveness and difficulties of climate programs and energy transitions.

NZZ standpoints

Climate changes also have a negative impact on harvests. Food prices will be with increased severe weather events increase, food safety is at risk. The actionism of the Indonesian and Malaysian governments during the war in Ukraine shows how nervously the governments in Southeast Asia react to such developments.

Food prices are getting higher all over the world

Index for specific foods

Food price index

Cooking oil price index

Jakarta had temporarily halted palm oil exports, causing further turmoil in the already strained edible oil market; Kuala Lumpur imposed an export ban on chickens in early June. The rulers suspect that rising food prices and shortages will lead to unrest and political stability at risk might guess.

The Vietnamese people grumble

Vietnam faces a huge challenge in the coming years when it comes to converting its energy supply. The country is likely to continue to grow rapidly, the population is increasing, industrialization and urbanization are progressing. The demand for energy will continue to rise sharply. Between 1991 and 2019, when coal dominated the energy mix, annual CO2-Output already increased by more than 1500 percent to 282 million tons.

Coal has an impact on the Vietnamese carbon footprint

Annual CO2 emissions by fuel, in million tons

With increasing prosperity, however, the demands of the Vietnamese grow. You are aware of the dangers of air pollution resulting from the emission of fossil fuels. Parallels to China are unmistakable. Those in power in Beijing also had to react to the growing murmurs of the growing Chinese middle class under the smog and herald an energy transition.

Vietnam’s per capita greenhouse gas emissions are low

In tons

With the rapid expansion of solar and wind capacities, China was the inspiration for Vietnam. In 2011, Beijing introduced the feed-in tariff (“Feed-in tariff”) for solar energy and thus triggered a boom. Hanoi followed six years later. All solar systems commissioned by June 30, 2019 may supply their electricity to the state-owned energy supplier Vietnam Electricity (EVN) for 20 years. for 93.5 dollar sell per megawatt hour. “The feed-in tariff was lucrative,” says Pham Hung Tien, deputy head of the office of the liberal Friedrich Naumann Foundation in Vietnam.

She leveled the hitherto almost non-existent solar energy the rise in the Southeast Asian country. In 2018, the installed capacity was just 105 megawatts. At the end of 2020 it was already 16.5 gigawatts. Within three years, Vietnam has installed as much solar capacity as Australia did between 2000 and 2020. In terms of installed solar capacity, Vietnam comes out on top in the worldwide ranking now in ninth place.

The transmission network as a bottleneck

However, it is all that glitters is not gold. The Vietnamese government is leaving investors in the dark as to how the feed-in tariff will continue. However, uncertainty is poison for future projects. In addition, according to Tien, there is an imbalance between power generation and transmission in southern provinces such as Ninh Thuan and Binh Thuan, where most of the solar capacity is located due to favorable sunshine. Vietnam becomes a victim of its own success. “Solar system operators report that sometimes they can only sell 30 to 40 percent of the electricity they produce to EVN because the transmission grid is overloaded,” says Tien.

Those in power in Hanoi are aware of the problem and assume an annual investment of 15 billion dollars will be required to bring the network into shape. This also requires private investors. For them, however, the fixed state network usage fees – i.e. the fee for using the electricity grids – are too low at just 100 Dong per kilowatt hour. They wrote red numbers with it. Tien is also banking on the liberalization of the transmission grids, otherwise the status quo would hamper the expansion of solar and wind power in Vietnam, he adds.

And as a next step, Vietnam should also use the opportunities offered by wind power. According to the scientists Thang Nam Do and Paul Burke from the Australian National University, the Southeast Asian country has considerable potential for offshore wind energy. It is said to amount to up to 475 gigawatts within 200 kilometers of the coast. “This is the largest potential of its kind in Southeast Asia and is equivalent to roughly six times Vietnam’s total installed power capacity last year,” Do and Burke write.

Based on solar energy, the Vietnamese government introduced a lucrative feed-in tariff in 2018 for all wind turbines commissioned before September 30 last year. However, the pandemic thwarted the plan. Many of the planned plants were not completed on time.

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