Vietnam’s Energy Sources

February 3, 2014 | 1914 GMT

Vietnam's Energy Sources


A Vietnamese nuclear official has confirmed Prime Minister Nguyen Tan Dung’s announcement earlier this month that the construction of the country’s first nuclear power plant, the 4,400-megawatt Ninh Thuan 1 will be delayed. Construction was set to begin in 2014 but now may not begin until 2017 or 2018, following concerns about safety and efficiency. Dung said national energy company PetroVietnam will need to build a 5,000-megawatt, natural gas-fired power plant complex to provide electricity in place of the nuclear plant. Since this plant would have been Vietnam’s first, Vietnam will also suffer a delay in the energy security that nuclear power is eventually supposed to bring. The Japanese plan to build Vietnam’s second nuclear plant will also be delayed. Vietnam’s electricity demand is increasing rapidly (the average yearly growth rate has been over 12 percent for the past decade) and nuclear postponement reinforces the prospect of Vietnam having to import more energy to satisfy its growing electricity needs. Hanoi already imports hydropower from Laos and China, a strategic dependency it hopes to limit. Vietnam is also attempting to ramp up coal-fired power production, aiming to increase generation capacity from 6,000 megawatts to 36,000 megawatts by 2020. Coal reserves are already well developed, although concentrated in the north, as opposed to the south where electricity demand is rapidly growing. Vietnam will likely become a net coal importer over the second half of the decade in order to meet its demand for coal-fired power.
In addition to coal, Vietnam will also need to increase its natural gas imports. The cost to build a natural gas-fired power plant is half as much as the price of a nuclear plant, which in this case was expected to range from $8 billion to $10 billion to construct. Natural gas plants could be built much more quickly and with existing domestic know-how. However, Vietnam’s increasing demand for natural gas comes at a time when the resource is in short supply. Natural gas shortages affect not only the power grid but also industrial and fertilizer consumers, compounding the problem. Finding a solution will require significant investment in the development of offshore natural gas fields and associated infrastructure to bring the natural gas onshore. Vietnam is also likely to need significant future investment in the construction of regasification terminals to enable the import of liquefied natural gas. Hanoi will try to increase imports of hydropower, coal and liquefied natural gas to make up for the share of future power supply that was ultimately projected to come from nuclear sources. This energy profile will put pressure on Vietnam’s ability to maintain trade balances and secure its maritime supply chain. Nevertheless, Hanoi hopes that buying time now will give it a greater capability to pursue nuclear power in future.