Desire to switch from coal-fired energy
The fuel transition roadmap looks to widen prospects for cleaner types of fuel

Investors are required to submit a fuel conversion plan report to the Ministry of Industry and Trade (MoIT) by July 15. As a result of the commitment to net-zero emissions, Minister of Industry and Trade Nguyen Hong Dien expected coal-fired power plants to change the fuel they use.

The global energy crisis, which has raised coal prices since early 2022, has prompted several investors in the energy sector to call for the replacement of coal-fired power plants with alternative fuels. “Electricity of Vietnam (EVN) intends to convert fuel for some units of the enlarged Uong Bi and Quang Ninh thermal power plants,” said Nguyen Tai Anh, EVN’s deputy general director.

EVN is a major investor in coal-fired power in Vietnam, with 36 units totalling 12,633MW of installed capacity. Two units have operated for over 20 years with a capacity of 600MW; four units have operated for roughly 40 years with a capacity of 440MW; and four units have followed suit for nearly 50 years with a capacity of 100MW. By 2030, EVN will have four additional 20-year-old units with a total capacity of 1,230MW.

The research and testing process is causing Anh to be concerned about the limitation of ammonia and biomass fuel supplies, which is failing to ensure a stable and long-lasting operation. However, the new blended combustion technology is the biggest task for EVN’s fuel conversion plan.

“The globe has not yet mastered the ammonia combustion and blending technology. It is currently in its trial phase,” Anh said. “In Vietnam, no factories have yet tested ammonia co-firing, or assessed its economic, technical, and environmental impact on people.”

According to numerous investors, Vietnam lacks a mechanism to facilitate the transition from coal to biomass and ammonia. They have questions about the fact that the price of biomass is higher than the price of coal, which will affect the cost of producing electricity. The financial viability of the project is also low, and the service life of machinery and systems that have been in operation for many years will impact the time required for capital recovery.

In the meantime, the proprietors of build-operate-transfer coal-fired thermal projects, such as Nghi Son 2, Vinh Tan 1, and Duyen Hai 2, have reservations about the provisions of the signed power purchase agreement. These investors have issues with whether, if fuel is converted, the cost of manufacturing will be greater than the price stipulated in the power purchase agreement, how the remainder of the contract will be executed, and who will bear the extra expenses for technology conversion and fuel conversion costs.

Ngo Tri Thinh, general director of Vinacomin Power Holding Corporation, stated that the government and the MoIT need to have particular guidelines on planning material areas, financial support, and selling prices for electricity in order for investors to successfully convert.

According to Thinh, the firm has signed an MoU with foreign collaborators for cooperation in the development of initiatives utilising biomass fuel while simultaneously researching coal-biomass combustion technology at its facilities. Vinacomin Power Holding Corporation operates and manages six coal-fired power facilities with a combined capacity of 1,735MW.

Nevertheless, some coal-fired project executives view the MoIT’s fuel transition roadmap as positive because it widens out prospects for biomass fuel, a potential field in Vietnam, while preventing the need to phase out all coal-fired power projects, ensuring international emission commitments, Thinh said. “These individuals believe that technology will become less expensive in the future. However, it is essential that the concept of technological neutrality be defended based on emissions targets that can be attained through the transition to alternative fuels.”

The prime minister’s Decision No.500/QD-TTg dated May 15 and the Ministry of Industry and Trade’s Official Letter No.3606/BCT-DL dated June 12 directed coal-fired power plants that have been functioning for 20 years to convert to biomass and ammonia fuels while the price is reasonable and to cease operation of plants with a lifespan of over 40 years if it is not feasible to convert fuel. Utilising agricultural, forestry, and wood processing by-products, promoting afforestation and environmental remediation in Vietnam, and developing biomass power with a potential of approximately 7,000MW are the goals stated in the Power Development Plan VIII.

Nguyen Hong Dien - Minister of Industry and Trade

Coal-fired thermal power plants in operation must undergo fuel conversion to lower carbon emissions in line with the roadmap, guarantee that they fulfil the government’s commitments to the international community, and adhere to Decision No.500/QD-TTg approving the Power Development Plan VIII.

Nonetheless, the conversion of coal fuel to biomass and ammonia fuel must be accompanied by a suitable plan and road map, ensuring CO2 emissions in accordance with the road map to which Vietnam has committed international partners.

Likewise, it must not compromise energy security or guarantee electricity supply for socioeconomic development. Therefore, MoIT advises investors to investigate and evaluate exhaustively and comprehensively all impacts in all disciplines in order to develop implementation-specific programmes and solutions without detriment or harm to all objects involved in fuel conversion.

Hans Hochreiter - President Biogas Hochreiter GMBH

Vietnam is an agricultural nation with favourable conditions for the development of biomass energy, but there are no contemporary biomass power models. We want to be the first to address this issue, but we are also aware of the challenges that will arise when developing biomass power initiatives in Vietnam.

Therefore, we are not doing it alone. Cooperation with local partners is how this form of energy is developed in Vietnam.

The scale of the Vietnamese market has no bearing on our business strategies. Importantly, Vietnam must enact a law on biomass electricity and implement an appropriate pricing mechanism for biomass electricity. These not only motivate investors to get involved with biomass power but also provide livestock enterprises with an incentive to develop biomass energy sources.

Over the past 38 years, Biogas Hochreiter GMBH has established more than 2,500 biomass energy initiatives in a variety of countries. Currently, we are looking into the investment climate and technical conditions in the central province of Quang Tri for the potential implementation of Vietnam’s first production line.

Le Thi Thoa - Team leader Climate Protection Project GIZ Energy Support Programme

Biomass energy has numerous advantages, such as a feed-in tariff with no time limit and the capacity of all biomass power facilities remaining unchanged. However, biomass power generation materials are heavily reliant on agricultural production, which results in seasonal agricultural byproducts, whereas wind and solar energy materials are natural and do not require purchase.

The crucial question is how to forecast the purchase price of biomass energy’s basic materials. This remains a challenging issue for investors. Currently, bagasse is still the primary source of biomass power, but due to challenges faced by the sugar industry over the past few years, the capacity has fallen dramatically, resulting in a decrease in bagasse production.

It can be tough for investors to approve raw material consumption contracts in order to finalise loan documents at banks due to difficulties with raw material sources. Once the basic materials become unstable and there is no electricity available to sell to EVN, it is impossible to induce the bank to invest capital.

Source: VIR