LNG electricity solves the problem of electricity shortage
At a recent meeting of the Government Standing Committee with ministries and branches on the implementation of important projects of the Oil and Gas Group and Vietnam Electricity Group to ensure adequate electricity supply and ensure national energy security, Prime Minister Pham Minh Chinh said: According to calculations, for every 1% economic growth, electricity demand increases by 1.5%. In 2025, electricity demand will increase by about 12-13%, equivalent to an increase of about 2,200-2,500MW of capacity. The Prime Minister requested that there must be no shortage of electricity in 2025.
In addition to the additional power sources, LNG-fired electricity is a focus of investment. According to the orientation in Power Plan VIII, by 2030, the total capacity of LNG power plants can reach 22,400 MW, accounting for approximately 26.5% of the current installed capacity of the power system; annually producing approximately 83.5 billion kWh, accounting for approximately 29.6% of the electricity output in 2023.
However, up to now, among the 14 LNG power projects under the Power Plan VIII, only Nhon Trach 3&4 Power Plant (located in Phuoc Khanh Commune, Nhon Trach District, Dong Nai Province) is in the completion stage. This is a national key project, invested by PV Power, with a total investment of 1.4 billion USD, capacity of 1,624MW. When officially generating commercial electricity, the project will add more than 9 billion kWh of commercial electricity/year to the power system, bringing in revenue of 17,000 - 18,000 billion VND/year. It is expected that Nhon Trach 3 Power Plant will officially generate commercial electricity in November 2024 and Nhon Trach 4 Power Plant in May 2025.
Many other billion-dollar mega-projects are still in the preparation stage for construction. It is expected that in the third quarter of 2024, the Quang Ninh LNG Power Plant worth 2.272 billion USD will start construction. Most recently, the Nghe An People's Council has just approved a resolution on the list of land lots for bidding to select investors to implement projects in the area, including the Quynh Lap LNG Power Plant project with a capacity of 1,500 MW. The project has a total investment of about 2.15 billion USD and is expected to be put into commercial operation before 2030.
Problems that need to be solved
The representative of the Nhon Trach 3 & 4 Power Plant Project Management Board said that because this is the first LNG-powered power plant project in Vietnam, the negotiation process for the PPA was very difficult because there was no precedent. After a long process of PPA negotiations since 2019, the PPA of the Nhon Trach 3 and Nhon Trach 4 Power Plant Project was signed on October 4, 2024 between the Vietnam Oil and Gas Power Corporation (PVPower) and the Electricity Trading Company EVNEPTC.
However, according to PVPower, the signing of the PPA Power Purchase Agreement will only solve the immediate difficulties in putting the Project into commercial operation. In fact, due to the lack of a long-term commitment to annual power generation output (Qc), it is difficult to determine the annual volume of LNG purchased, affecting the economic efficiency of the Project. PVPower has proposed that the Government and the Ministry of Industry and Trade remove the difficulties and maximize the generation capacity to help PVPower negotiate and sign a long-term GAS purchase contract at a reasonable price.
Economist, Associate Professor, Dr. Ngo Tri Long commented: In the Power Plan VIII, by 2030, gas-fired electricity is considered the "pillar" of Vietnam's power source structure. "The advantages and urgency in implementing gas-fired electricity projects are clear. However, determining the price of gas-fired electricity and the mechanism for annual output consumption are the biggest barriers and problems that most gas-fired electricity projects have been facing for many years, with no solution yet," said Mr. Long.
At the discussion on the Electricity Law held in mid-October 2024, Mr. Dinh Duc Manh - Deputy Head of Gas Contract Department, Vietnam Gas Corporation (PV GAS) said that LNG power projects are being implemented in the direction of investing in separate LNG import warehouses, dispersed according to the configuration of one factory, one warehouse port, which will not be able to optimize costs to reduce electricity prices, and there is a risk that the projects will not be implemented in a timely manner, affecting national energy security.
Therefore, building more central LNG terminals (LNG hubs) across the country will save 2.8 billion USD (25%) of total construction costs. However, the draft revised Electricity Law does not have regulations on building thermal power projects using LNG in a chain linked to LNG hubs.
PV GAS recommends considering specifying in the Electricity Law (amended) the mechanism for building thermal power projects using natural gas and LNG in a chain linked to the LNG Hub to take advantage of existing infrastructure and ensure State efficiency.
If difficulties and obstacles are soon resolved, LNG electricity will truly become a key factor in the national energy system, ensuring stability and sustainable development for Vietnam in the future.
