WSG Article: Key notes on the recent Report of the Ministry of Industry and Trade to the Prime Minister on the draft Power Development Plan VIII

Key notes on the recent Report of the Ministry of Industry and Trade to the Prime Minister on the draft Power Development Plan VIII

July, 2022 - Ramandeep Singh Bhamra

We would like to share with you a Power and Energy-related update to PDP VIII as below:

Per the Prime Minister’s instruction at Official Letter No. 182/LDCP dated 10 June 2022 on Power Development Plan (“PDP”) VIII, the Vice Prime Minister Le Van Thanh’s directives in June 2022, the Ministry of Industry and Trade (“MOIT”) has just reported to the Prime Minister under its Official Letter No. 3787/BCT-DL on the review of some contents of the PDP VIII (the “Report”). In this Report, the MOIT has made specific recommendations, wishing to be approved by the Prime Minister. In specific:

Solar:

The MOIT proposes to continue to allow the implementation to be put into operation in the period up to 2030 the projects, or the completed part of the project with a total capacity of about 452.62MW and the planned projects have been approved by investors with a total capacity of about 1,975.8MW but not yet operated. The reason of this proposal, according to the MOIT, is to avoid legal risks, disputes, and compensation for investors.

The MOIT also noted that these projects need to comply with the legal provisions on investment, and construction, closely follow the absorption capacity of the national power system and the ability to release the capacity of the power grid; comply with the electricity price mechanism at the time of operation, take responsibility for project efficiency according to the approved mechanism.

The MOIT also proposed to extend the progress of planned but unapproved projects with a total capacity of 4,136.25MW to the period after 2030. It further reported and suggested that “Annually, review and calculate the absorption capacity of the national electricity system and the ability to release local capacity and operate the economic safety of the system. In case of necessity, consider reporting to the government for allowing push to the period before 2030 if other sources are behind schedule to ensure electricity supply for the socio-economic development of the country and take advantage of the increasingly cheap price of solar power.”

LNG:

As for the LNG power planning, the Ministry of Industry and Trade affirmed that LNG projects expected to develop in the PDP VIII to 2030 with a total capacity of 23,900MW (accounting for 16.4%) are necessary.

The demand for LNG imports is expected to be 14-18 billion m3 by 2030 and 13-16 billion m3 by 2045, higher than the target of Resolution 55-NQ/TW stated “Sufficient to import the LNG with the capacity of about 8 billion m3 by 2030 and about 15 billion m3 by 2045”.

The MOIT proposes the Prime Minister consider the need to seek the guidance of the Politburo or the guidance of the Central Economic Committee on the above-mentioned targets before approving the PDP VIII.

The MOIT also selected the high scenario in the draft PDP VIII among the three forecast scenarios of electricity consumption demand by 2030 (i.e., low, medium and high). Per this high scenario, by 2030, total capacity of power plants would reach 145,930 MW (excluding rooftop solars and cogeneration sources). The proposed high scenario could be illustrated as follows:

In addition, notably in this Report, the MOIT proposes to separate solar power projects selling electricity to the national grid, solar power projects (wind power) in the form of self-production, self-use, not generating electricity on the grid; or solar power projects (wind power) produced by new forms of energy (hydrogen, ammonia). The MOIT suggests to the Prime Minister to allow and prioritize without limitation on the scale of the project capacity, regardless of the existing capacity structure of the planning the development of the form of self-production, self-use, not generating electricity on the grid; or solar power projects (wind power) produced by new forms of energy (hydrogen, ammonia…).

To recap the background, the draft PDP VIII was first submitted from the MOIT in March 2021 but was not approved because of shortcomings in term of scale of power source development, the structure of the electricity generation, power source, unreasonable regional balance. The first draft PDP VIII, if approved, could lead to a huge requirement for investment in inter-regional transmission grid. Then the Prime Minister asked the MOIT to recalculate the plan and update Vietnam’s commitments at COP26 to “reach net zero emissions by 2050”. The draft PDP VIII has been approved twice by the National Appraisal Council, but so far has not yet been approved by the Prime Minister.

The information provided here is for information purposes only, and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.