Resolution No.55-NQ/TW dated February 11^th, 2020 on “Vietnam's national strategic orientation for energy development to 2030, vision to 2045” with new, strong and breakthrough perspectives ensuring solid national energy security, at the same time is an important prerequisite for the development of national energy. In Vietnam, the energy intensity (the energy used to produce a unit of GDP) is much higher than in other countries in the region, 2.5 times higher than the world average. This partly shows that the demand for energy in Vietnam is huge. Meanwhile, the power sector is facing many difficulties, according to statistics, there are 47 out of 62 large capacity power projects, most of which are coal-fired thermal power plants, which are behind schedule with Power Master Plan VII - national power planning. The main reason is the lack of capital and lack of consensus and agreement on coal-fired thermal power in some localities, as well as Power Planning VIII, is still in the drafting stage. In the context of increasingly depleted resources, increasing pollution, the search for new sources of energy, ensuring energy security is a "current" issue - an urgent requirement and the goal of the article.

Keywords: Coal power; Energy; Energy security; Renewable energy; Solar power; Thermal power; Wind power.

1. Development trend of various types of energy in the world

In the world today, the number of newly built coal thermal power plants in countries has decreased by 84% since 2015 and 39% in 2018, while the number of complete factories out of business has more than halved since 2015. More than 100 financial institutions have blacklisted coal-fired power plants and have taken political action to demand a quick cut in the growing carbon footprint.

The two top crowded countries, that are China and India account for 85% of the total global coal power capacity (2005), but 2018 also saw reduced record in granted licenses for coal-fired power plants, by nearly 90% of total licenses. India plans to close coal power plants with a total capacity of up to 48GW, mainly subcritical technology factories, which do not have enough equipment to meet the new pollution standards.

In North America, the US is the leading country in closing coal power plants with a total capacity of 17.6GW (in 2015 the US closed a record of 21GW). The ratio of gas power to coal power output has continuously increased over the past 20 years. By the end of 2018, gas power production was 61% of coal power output, up 15% compared to 1999, and 138 coal-fired power plants were closed in the US for more than 10 years. In 2018, the EU also closed factories with a total capacity of 3.7GW. More than half of the countries in the EU have committed to ending the use of coal by 2030.

Many investment groups and power companies in Japan are withdrawing from coal-fired power projects. Japan will raise the target for the contribution of renewable energy to the power output structure to 22-24% by 2030. Currently, 13 offshore wind power projects with a total investment capital of up to 2,000 billion Japanese yen are undergoing environmental impact assessment. Many Japanese investors are deciding to turn to invest in major renewable energy projects in Asia. At the same time, Japanese banks and trading groups also started to stop investing in coal, selling stakes in Australian coal mines and canceling plans to build coal-fired power plants. According to energy analysts, this signals “the dawn of the high calorific coal” in Asia.

Thailand is the leading country in ASEAN in solar power generation with 2.7 million kW of solar power in 2017, 84 times higher than in 2007. In the 2018-2037 period, the country aims to increase solar PV capacity to 12,725 MW by 2027, which includes 10,000 MW of rooftop solar power and 2,725 MW of floating solar power in hydropower reservoirs. The Indonesian government is planning to develop a geothermal capacity to 10 GW by 2025.

Germany - one of the top coal consumer - will close all 84 coal-fired power plants over next 19 years to meet international commitments in the fight against climate change. In the short term, Germany will close 24 coal-fired power plants with a total capacity of 12.5 GW by 2022. The Federal Government and representatives of 16 states in Germany agreed in principle on the Renewable Energy Law (Erneuerbare-Energien-Gesetz - EEG) reform plan to reduce dependence on coal and nuclear power. According to this plan, it will increase the share of electricity produced from renewable energy to 40-45% by 2025 from about 25% today. For wind power, set a limit of 2,500 MW, of which the system of marine wind parks will reach 6.5 MW by 2020 with a maximum annual increase of 1.5 GW.

According to a report by the energy consulting company Rystad Energy (Norway) announced on May 27^th, 2019, the total investment in renewable energy projects in Asia - Pacific (excluding China) will reach more than $30 billion by 2020, higher than the total investment in oil and gas projects in the region and this trend will continue to strengthen in the coming years. India, Australia, Japan, Vietnam and South Korea will be the top destinations for cash flows to invest in renewable energy projects. Rystad Energy says renewable energy investments in Asia are supported by incentive policies by governments across the region such as solar and wind subsidized tariffs. As Asia moves towards renewable energy, major companies in the industry are forced to embrace the trend of investing in developing renewable energy.

In 2018, for the first time, India recorded a greater investment in solar than coal. The plummeting cost of solar panels as well as preferential policies by the Indian government in recent years has made solar power a bright star in the energy industry in the second-most populous country in the world (IEA, 2018).

The Institute of Energy Economics, Japan (IEEJ, 2019) forecasts higher gas consumption than any other energy source. Gas will overtake coal in the mid-2030s to become the second-largest source of energy consumption after oil, with the focus on the transition from coal to gas. Global gas demand will increase by 50% in the period 2014-2040, and double that of oil. Asia will be the main growth driver for natural gas demand in the future with an average annual growth rate of about 3-4.3%, China and India account for about 30% of the increase (IEA, 2020).

Vietnam has the best opportunity compared to other countries in the world to transform into clean energy. As for wind power, there are currently 66 projects with a capacity of 6,493 MW, which are suggested by investors to add their plans to enjoy the price that is considered attractive at 8.5 US cent/kWh for land projects and 9.8 USD/kWh for offshore projects in 20 years with deadline of commercial operation before November 1^st, 2021, according to Decision No. 39/2018/QD-TTg. Currently, there are 16 projects with a capacity of 1,190 MW added to planning after the issuance of Decision 39/2018/QD-TTg. As of March 2020: 78 projects with a capacity of 4.8 GW were added to the plan; 11 projects with a capacity of 377 MW have been operating and generating electricity; 31 projects with a capacity of 1.62 GW have signed Power purchase agreement (PPA) and are expected to come into operation in 2020-2021; also, 250 projects with a capacity of 45 GW are proposed to be added to the power master plan.

For solar power, before the Prime Minister's Decision 11/2017/QD-TTg on encouraging the development of solar power projects in Vietnam, only 5 MW of solar power was in operation (including 1 MW is grid-connected and 4 MW is located in remote areas, on rooftops). However, the price of 9.35 US cent/kWh has made only 332 solar power projects with a total capacity of more than 26,290 MW, equivalent to 22,300 MW, registered to the Ministry of Industry and Trade in 1 year to add to the Master Plan. Over the past two years, the country's electricity system has seen a boom in investment in solar power projects (from April 2019, the system has only 4 solar power plants with a total capacity of less than 150 MW in operation, but by the end of June 30^th, 2019, the country has 81 solar power plants that have completed required tests to get certified on commercial operation dated – COD). The boom of solar power, tens of times higher than the adjusted Power Master Plan VII, has led to a series of consequences such as forced reduction of wind power, projects waiting in line while the grid is overloaded…

Theoretically, Vietnam could develop up to 9.1 million MW of renewable energy. However, in reality, the development of renewable energy in Vietnam is still very limited due to difficulties in capital, technology, and electricity purchase and sale market…

2. Energy security issue

Currently, Vietnam has a total operating coal power capacity of 17GW, of which 1.8GW will be added in 2018. Besides, Vietnam has 33GW in the pre-construction phase, of which 10GW has been licensed. In the past 5 years, coal capacity increased by 75%, equivalent to 13GW. This is the fastest growth rate among countries with coal capacity over 4G. It is expected that by 2030, Vietnam will have more than 70 coal-fired power plants with a total capacity of 55,300 MW. Funding for these projects comes mainly from China, Japan and Korea. Notably, while Japanese banks have tight fiscal policies for coal power projects, capital from China is increasing strongly, up to about 14GW of coal power is funded from China. Thus, in the next 10 years, Vietnam will at least double the current number of factories and total coal-fired power capacity.

In the two years of 2019-2020, Vietnam plans to put into operation approximately 7,000 MW of new electricity. In which, coal-fired thermal power plants are about 2,488 MW, hydroelectric plants over 30 MW are 592 MW, and the rest are renewable energy projects (3,800 MW). However, oil-fired thermal power sources need to be operated with a capacity of 1.7 billion kWh in 2019 and 5.2 billion kWh in 2020, respectively. If the generating sets do not meet the requirements for operational reliability or lack of fuel (coal, gas) for electricity generation, the risk of power shortage will arise in 2020. Although the maximum amount of oil-fired power sources has been mobilized, the system is expected not to meet the load demand, there will be a power shortage in the South with an expected shortage of 3, 7 billion kWh (2021) to nearly 10 billion kWh (2022) and an expected peak in 2023 with 12 billion kWh, and gradually decreases later.

The electricity industry is facing with the reality of no backup, no new major sources of electricity and no easy import of electricity. Since there is a 20-30% power backup in the years 2015-2016, there will be almost no backup in 2018-2019 and in the period of 2021-2025, there will be a shortage of power supplies. The problem is due to the slow progress in power supplies. The shortage mainly takes place in the years 2020-2021, with a total capacity shortage of over 17,000 MW. Currently, there are 62 large-capacity projects with over 200 MW being invested in different forms, 15 projects are on schedule, 47 projects have been behind schedule or have not yet determined progress. In which, Vietnam Electricity (EVN) led with 13 projects behind schedule or delayed. PetroVietnam (PVN) has 8 key projects with a total capacity of 11,400 MW, which is also slow, unable to compete according to the progress of the adjusted plan, even some projects are requested to be handed over to other investors.

Securing fuel sources for power generation is currently considered the first risk at projects. While the commercial coal production capacity of Vietnam Coal - Minerals Corporation (TKV) by 2035 will only reach 42 to 50 million tons/year, while consumption demand, especially thermal power, is at 52 - 128 million tons/year. By 2030, Vietnam may have to import 70-90 million tons of bituminous and sub-bituminous thermal coal/year. This will be a big challenge for national energy security.

While coal is facing challenges in meeting the supply source, the source that is expected to be gas also faces many difficulties from mining and importing. Gas sources such as the Southeast for the Phu My thermal power cluster will also decline after 2020. By 2023-2024, it is expected that there will be a shortage of 2-3 billion m³/year. The Southwest gas source supplying to the Ca Mau power plant cluster will also be in shortage from 2019 with a shortage of 0.5 billion-1 billion m³. PVN is currently negotiating with Malaysia to buy more gas to supplement this shortage.

It is also very difficult to expect foreign investment in the power sector. Currently, only 4 BOT power plants are put into production; 14 other projects are still under negotiation and most of them are behind schedule. A series of large power projects cannot be implemented or are confused with current problems, at least it takes 3.5 - 4 years to be implemented. With this fact, not only from 2020 to 2021, severe power shortage will occur, but also continue for many years to come.

While it is difficult for large domestic sources to accelerate progress, imported electricity sources are expected to rapidly increase the electricity supply. However, it must go through negotiation and need to negotiate quickly and settle reasonable prices. That is not to mention if we expect that the proportion of imported electricity accounts for 10% of the system, with the current installed capacity of nearly 50,000 MW, or in 2025 it is 96,000 MW, the demand for imported electricity from 5,000 - 10,000 MW/year is seen as a big challenge

3. Some basic solutions for the coming time

The main difficulties and challenges that the energy sector of Vietnam will face include: (i) Limited domestic primary energy supply leads to a growing dependence on imported fuels, especially fuel for power generation; (ii) The high growth rate of energy demand puts pressure on the energy sector's infrastructure, requiring large investment capital in the context of high public debt and unsatisfactory privatization; (iii) The challenge of the environmental impacts of energy supply operations will increasingly increase due to rapidly increasing domestic energy demand, accompanied by a rapid increase in the share of fossil fuel sources, particularly especially coal in the energy supply structure. In the coming Power Plan VIII, there should be specific solutions and strong breakthroughs to ensure the target of power source capacity as well as a power output.

- In the period 2020-2030, to ensure a stable supply for socio-economic development, it is still necessary to develop coal-fired thermal power projects, gas thermal power, renewable energy, and import electricity at the appropriate rate (Vietnam is importing about 1,000 MW from China and Laos, and is expected to buy about 3,000 MW and 5,000 MW by 2030). The most important issue when building a new coal-fired power plant is to use advanced technology to ensure environmental standards and to have an effective solution to use ash and slag.

- Encourage the development of rooftop solar power projects in the southern region to reduce supply pressure. Approve additional projects being submitted to ensure the proposed schedule.

- Continue to build and issue new mechanisms to support the development of renewable energy sources (wind power - especially offshore wind power, biomass, geothermal...). In the long term, there should be a reasonable electricity price mechanism to attract domestic and foreign investors.

- The government needs to supplement the development of grid projects. At the same time, urge the units to speed up the progress and construct the related power grid projects, contributing to releasing the capacity of solar power plants. The Ministry of Planning and Investment shall soon promulgate documents guiding the Law on Planning to facilitate the adjustment and supplementation of source and grid project planning.

- From an economic perspective, to ensure energy security in the coming years, a new approach is needed. Accordingly, in parallel with ensuring the supply to have enough electricity to use, it is necessary to adjust the power development strategy on both the supply side and the demand side based on price - regulated market. In addition, it is necessary to strongly encourage the private sector and adhere to the principles of a competitive - open - transparent market.

- Study and complete financial mechanisms and mobilize special capital for investment in power sector development. Review and adjust regulations on control and coordination in the electricity market. There are mechanisms to allow the development of on-site and self-sufficient power plants in industrial zones, clusters, export processing zones... Accelerate the implementation roadmap for the competitive electricity market, the mechanism of direct power purchase and sale contracts between producers and consumers, appropriate bidding mechanism, auction for energy supply, especially in renewable energy and new energy investment projects. There is a mechanism to encourage the attraction of non-state capital to invest in construction in the national power transmission system. The operation of an independent national power transmission system under the State's control is the spirit of Politburo's Resolution No. 55/NQ-TW dated February 1^st, 2020 of the Politburo on the orientation of Vietnam's national energy development strategy to 2030, with a vision to 2045.

- To continue to mobilize new non-state resources to invest in the energy sector in general and the power sector in particular, it is required that the electricity price mechanism must be more attractive and more marketable. The slow adjustment of electricity prices and not following market signals despite clear legal regulations is the reason why many private investors cannot participate in the energy industry even if they want to. Many power projects are scheduled for completion, but not reaching the destination as expected in the revised Power Master Plan VII, there are also deep reasons from economic efficiency and electricity prices, making the time for project negotiation and preparation to be longer than expected. According to the World Bank, the general experience in the world is to set prices that reflect costly and reasonably. Producers and consumers both aim to save energy and invest in more energy-efficient technologies

- Saving energy must become a national policy. Earth Hour is an initiative of the World Wildlife Fund (WWF) to raise public awareness about climate change and energy efficiency around the world. Earth Hour campaign is expected to continue to contribute positively to raising awareness of people in energy saving and environmental protection and responding to climate change.

References

1. Report by Greenpeace and Global Energy Monitor “Global coal power plants monitoring: Boom and depression in 2019”, March 29^th, 2019
2. Saigon Times Online, April 8^th, 2019.
3. Nguyen Dang Anh Thi: Conkhatdien; Dan tri online, January 7^th, 2020.
4. Neha Mathew-Shah; “It is only a matter of time before coal becomes the past all over the world”; Report from the Global Energy Monitoring Organization, April 1^st, 2019.
5. Nikkei Asian Review: "Green" movement in Southeast Asian energy corporations, April 18^th, 2019.