The world is running out of electricity. Vietnam, which relies on global manufacturing to drive economic growth is experiencing an increasing demand for electricity. 30% of Vietnam's total power generation relies on coal and, in recent years, it has relied highly on imported coal. Tight coal supplies have led Vietnam's state-run power plants to warn of possible power shortages starting in April.
Vietnam has two state-owned coal mining companies that produce coal and was originally a net exporter of coal. However, in the past decade, Vietnam’s domestic demand has increased significantly and it has also begun to import coal in large quantities, leaving only 50,000 tons of net exports. As COVID-19 disrupts local mine operations, domestic production cannot keep up with demand. Coupled with rising global fuel prices, Vietnam is facing a shortage of coal supplies.
According to data from Vietnam's largest electric power company (EVN), 43.6% of total power generation in February came from coal but EVN's power plants received only 5.85 million tons of coal in the first quarter, only 76.7% of the agreed-upon supply, forcing four major power plants to reduce their operating rates to 60-70% of their design capacity.
Power plants have not received coal partly because of domestic problems. Vietnam Coal Mining Industry Group (Vinacomin), one of Vietnam's two state-run coal miners, said as many as half of its miners were infected with COVID-19 in the last two months and only 20% of workers at some mines went to work at the end of last month. Imports have also been hindered. Vietnam’s coal mainly comes from Indonesia, Australia, and Russia. Current coal imports have only reached 7% of planned value in the first three months, resulting in the delivery of domestic and foreign blended coal less than 70% of targets.
The import problem festered mainly because the Vietnam Power Company delayed the approval of the price of the blended coal which caused Vinacomin to miss the opportunity to import more coal. Now the Vietnam Electricity Company has approved the price but a surge in global coal prices amid the Russian-Ukrainian crisis has made it difficult for miners to import it.
Vinacomin delivered 6.3 million tons of coal to power plants from the beginning of the year to March 14, 31% less than promised, amid worker shortages and soaring costs. For the Vietnamese government to limit coal exports, designated coal exporters must first ensure sufficient supplies for domestic use, limiting coal exports to 2 million tons this year.
Vietnam desperately needs stable power generation and has to run counter to its clean energy goals. In October last year, the Prime Minister of Vietnam said that Vietnam must get rid of coal and change the way of providing electricity, vowing that Vietnam will actively develop sustainable energy, strive to reduce coal-fired power generation, increase the proportion of clean energy to at least 20% by 2030, and increase the proportion of clean energy to 30% by 2045. Vietnam also pledged at the time to phase out coal-fired power generation and stop building new plants.
In recent years, with the boom in the production of renewable energy such as solar and wind power, many parts of Vietnam have indeed stopped building new coal power projects. At the same time, it has also caused a shortage of power supply. A Vietnamese government official said, despite the growth of renewable energy, coal-fired power generation will remain the country's main energy source for the next decade. The Vietnamese government also said it would restart the delayed construction of coal-fired power plants.
Renewable energy including solar, wind, and small hydroelectric power plants accounted for 15.8% of Vietnam's energy supply last year, while coal-fired power and hydropower accounted for 36.1% and 30.8%, respectively. In the 2021~2030 new energy development plan being drafted by the Vietnamese government, coal power will still account for 36%~37% of the total power supply, while the installed capacity of coal-fired power generation must be doubled in 2030 to ensure a safe energy supply.
(Image：Flickr/Nenad Stojkovic CC BY 2.0)