Vietnam’s Ongoing Power Shortage
Vietnam is enjoying a period of unprecedented economic growth, with industry (manufacturing, information technology, and electrical products, to name three) and the agricultural sector leading the way. The economy is now growing at 8.5 percent.
But the country’s growth continues to outpace electricity supplies. And this grim situation is unlikely to be rectified until 2020. The country needs at least 13,000 megawatts of capacity, but only has about 12,000 MW, with 400 MW of that capacity coming from China.
And while G.D.P. over the past 18 years has grown six-fold to $645 per capita, up from $114 in 1990, electricity demand has grown faster, now 710 kilowatt hours per capita, up from 93 kWh in 1990. But even at that level, Vietnam has the lowest electricity consumption of any country in the Association of Southeast Nations.
Demand is expected to continue rising. Dr. Pham Khanh Toan, director of the Vietnam Institute of Energy, stated that demand for electricity is predicted to rise by as much as 17 percent a year over the next decade. And Vietnamese officials are admitting the problem will take years to resolve. “We will always be short of electricity from now through 2020 – not just this year or the next couple of years,” said Do Huu Hao, deputy minister of Industry and Trade, in April. “We have to pursue rapid economic growth while resources are limited.”
The problems are due in part to the weather. Poor rainfall has left Vietnam’s reservoirs barely half full, handicapping the country’s hydropower plants, which provide 37 percent of its electricity. Meanwhile, the population continues growing, estimated to rise by 1 million every year until at least 2020. A number of new coal and gas-fired plants are under construction but they are months behind schedule.
Plans for nuclear power are at least seven years away (and those plans are by no means certain), and that’s just for the commencement of construction. In a move that could make or break not just the energy sector but Vietnam’s very economy, plans have been announced for what some call a Western-style competitive electricity marketplace by next year. Although still in its infancy, the country may have a competitive power generating market by 2009, a competitive wholesale power market by 2014, and a competitive retail power market by 2020. While a model has not yet been determined, there is already concern that the new system will result in electricity that is too expensive for most Vietnamese.
The news comes amid reports that output will be boosted by a major Japanese utility that plans to build a coal-fired power plant in the country’s south. Toyota Tsusho Corp. may join forces with a Vietnamese counterpart for the project, which would use 5 million tons of coal a year and cost close to $3 billion. The plan would seem to make sense: it was announced this past month that Vietnam’s coal output last year jumped by more than 18 percent to 4.25 million tons, from 3.6 million tons.
Additionally, E.V.N., the national electric utility, has outlined plans to build 17 new coal-fired power stations by 2020. Coal accounts for 12 percent of Vietnam’s electricity generation, although that is expected to jump to 25 percent. But while coal accounts for the long-term plan, the short-term plan is to go outside its borders for supply. The Vietnam Electricity Board has announced plans to buy 3.5 billion kWh of power from China, a staggering 31 percent increase over last year’s levels, to address the country’s electricity shortage.