Analysis-Vietnam considers greener energy but relies on coal to avoid power outages

By Francesco Guarascio and Khanh Vu

HANOI/HOA BINH, Vietnam (Reuters) – The lights are off and the air conditioning is broken at the headquarters of Vietnamese state electricity provider EVN, as the country’s main power company tries to “set an example” for avoid a repeat of last year’s crippling disasters. power outages, an official told visitors.

But many businesses around Hanoi, the Vietnamese capital, appear to be ignoring the call to save energy, keeping decorative but otherwise useless neon lights lit all night outside high-rise buildings.

Difficulties in reducing consumption illustrate the challenges facing Vietnam a year after sudden outages caused losses of hundreds of millions of dollars for multinational manufacturers investing in the Southeast Asian country.

Vietnam is pursuing a patchwork program of energy-saving measures, grid upgrades, regulatory reforms and a massive increase in coal-fired power, in a bid to avoid power shortages, according to officials. government data and interviews with officials and experts.

But Trinh Mai Phuong, EVN’s communications director, explained during a media visit that even the biggest infrastructure upgrade underway, a new billion-dollar transmission line connecting the country’s center to the north highly industrialized and hit hard by power outages last year, could not be achieved. to be enough.

“I wouldn’t say it’s a game-changer,” he said of the line that could be completed as soon as this month, noting that electricity consumption is expected to reach record levels in the coming weeks as the country prepares for new heat waves.

Growing demand for electricity makes it increasingly difficult for Vietnam to meet its climate change commitments while still providing enough electricity to satisfy large investors such as Samsung Electronics, Foxconn and Canon.

Broader sector-wide reforms are needed in the long term, foreign investors and analysts say.

EMERGENCY MEASURES

In the short term, Vietnam is relying mainly on coal to provide enough reliable electricity. It may be just enough – or not – but either way it could mean a blow to the country’s commitments to reducing its dependence on fossil fuels.

Coal consumption increased massively in the first five months of 2024, with coal-fired power plants accounting for an average of 59% of electricity generation, surpassing 70% on some days, according to EVN data.

That’s up from nearly 45% in the same period last year and 41% in 2021, when Vietnam began developing plans to reduce coal that persuaded international donors to commit $15.5 billion to help phase out the fuel.

With a new coal-fired power plant coming online in 2023, coal accounted for 33% of total installed capacity last year, up from 30.8% in 2020, pushing Vietnam further away from its goal of reducing this capacity to 20% by 2030.

Energy conservation is another key pillar of the plan. EVN and its local units have encouraged energy-intensive customers, including foreign manufacturers, to save energy through tailored measures, especially during peak hours.

But it jeopardizes Vietnam’s reputation as…

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