PPA Nhon Trach 3&4 – paving the way for LNG power development
Nhon Trach 3 and 4 Power Plants located in Nhon Trach District, Dong Nai Province are a national key project, assigned by the Government to Vietnam Oil and Gas Power Corporation (PV Power), a member unit of Petrovietnam, as the investor, with a total investment of 1.4 billion USD, capacity of 1,624 MW. This is the first LNG-fueled power plant project in Vietnam, using modern gas turbines with the highest capacity and efficiency today. It is expected that when officially generating commercial electricity, the project will add more than 9 billion kWh of commercial electricity/year to the national power system.
In the process of investing in a power plant project, the power purchase agreement (PPA) is one of the most important contracts, along with long-term power purchase commitments (Qc) and determining the electricity price framework. These are important factors for projects to be implemented smoothly, effectively and move towards commercial operation.
As the first LNG power plant project in Vietnam, the PPA negotiation process for the Nhon Trach 3&4 project was very difficult because there was no precedent. Signing the initial PPA contract will help PV Power to soon sign a gas purchase agreement (GSA) associated with the annual LNG purchase volume, confirmation period, stable gas delivery plan with the most reasonable gas price. In addition, the project's PPA contract is also a prerequisite for international credit institutions to consider lending capital to PV Power to implement the project.
After a long process of PPA negotiation since 2019 with many exchanged opinions, with the close direction and support of Ministries, Departments, Branches and Petrovietnam, and close coordination of EVN, the PPA negotiation process between PV Power and the Electricity Trading Company (EVNEPTC), the unit authorized by EVN, took place in the spirit of ensuring the harmony of interests of the parties and national interests.
The signing of the PPA contract for Nhon Trach 3&4 Power Plant project not only marks an important milestone and condition for the Project to enter commercial operation but also "paves the way" and guides the negotiation of PPA for other LNG-powered power projects in Power Plan VIII.
Promote the development of electricity projects
According to Power Plan VIII, the structure of gas-fired thermal power sources (natural and LNG) by 2030 will reach more than 37 thousand MW, equivalent to nearly 1/4 of the total power source capacity, accounting for the largest proportion in the power source structure.
Conclusion No. 76-KL/TW on the implementation of Resolution No. 41-NQ/TW, dated July 23, 2015 of the Politburo on the orientation of the Vietnam Oil and Gas Industry Development Strategy to 2025, with a vision to 2035 and some orientations for the new period also orients the development of the gas industry to play a fundamental role, while prioritizing the development of gas-fired thermal power, LNG power projects as well as aiming to build integrated energy centers of gas - LNG - electricity and other forms of green energy and renewable energy.
To ensure the implementation of the Oil and Gas industry development strategy in the spirit of Conclusion No. 76-KL/TW, in line with the energy transition trend, Petrovietnam and EVN also signed a memorandum of understanding on the supply of LNG from the Vung Ang LNG warehouse to the Quang Trach II LNG Thermal Power Plant.
The Quang Trach II LNG Thermal Power Plant Project invested by EVN is part of the Power Plan VIII approved by the Prime Minister. It has converted fuel from coal to LNG and increased capacity from 1,200MW to 1,500MW.
The Memorandum of Understanding between Petrovietnam and EVN was signed to maximize the capabilities and take advantage of the strengths of the two Groups as well as the member units of Petrovietnam and EVN to cooperate in supplying stable and long-term regasified LNG from the Vung Ang LNG warehouse project to the Quang Trach II LNG Thermal Power Plant project in accordance with the progress and implementation plan of the Power Plan VIII.
It can be affirmed that the signing of PPA Nhon Trach 3&4 and MOU on LNG supply are the first steps in realizing the spirit of Conclusion No. 76-KL/TW, Power Plan VIII as well as creating motivation for future gas-fired power projects to have a basis and basis for implementation, towards ensuring national energy security in the new period and energy transition goals, implementing the Government's Net Zero commitment.
