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Vietnam will construct its first hydrogen plant, but coal will remain its primary energy source

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The Vietnamese business TGS Green Hydrogen wants to invest approximately $840 million to build the nation’s first hydrogen plant. The plant is anticipated to be constructed in the southern province of Ben Tre, with construction anticipated to begin in June 2022 and conclude in 2023.

The plant will produce around 24,000 tons of hydrogen, 150,000 tons of ammonia, and 195,000 tons of oxygen yearly, with the capacity to double in the future. Hydrogen will be collected from water using electrolysis powered by renewable energy, making it green energy.

Hydrogen’s primary advantage is its adaptability, as it may be used for energy storage and as a fuel. It can also be utilized as a raw material in the steelmaking, chemical, and refining industries throughout the industrialization process.

In terms of energy storage, hydrogen can be created in places with an excess of renewable energy, transformed into hydrogen, and then transferred to energy-hungry regions. Hydrogen, when produced from clean power, is therefore viewed as a catalyst for the global transition to sustainable energy. However, the technology is still very costly and in its infancy of development.

As a regional manufacturing powerhouse, Vietnam must increase its energy generation to 146,000 MW by 2030, boosting renewable energy and decreasing its reliance on coal.

The country had installed the most electricity capacity in ASEAN, 76,620 MW, with renewables accounting for 24 percent of this total. 30 percent of the nation’s energy comes from coal, 30 percent from hydroelectricity, 15 percent from gas and oil, and one percent from wind.

Vietnam has pledged to achieve carbon neutrality by 2050 at the COP26 United Nations climate summit in November 2021.

Vietnam’s green energy potential

Rapid economic expansion, a growing middle class, and investments in manufacturing and industry have led to an unprecedented demand for power in Vietnam. The government predicts that energy consumption would increase between 10 and 12 percent year through 2030, indicating one of the most rapid increases in Asia.

The government is planned to spend about US$148 billion on the energy network and power generation, which will surpass the expansion in demand. Foreign investors may benefit from the country’s intention to increase its energy capacity through the use of renewable energy.

Vietnam has already achieved considerable strides in developing its renewable energy capacity, particularly in the field of solar photovoltaic (PV) systems. PV capacity climbed from 86 MW in 2018 to 16,600 MW in 2021, representing four percent of the nation’s total energy output.

However, there are restrictions to solar’s growing potential. Vietnam must invest in its electricity grids to attain their full potential, as they are currently constructed for much larger power sources, such as thermal plants and hydropower, due to the intermittent nature of solar energy. Moreover, high solar outputs (especially during the day) might overload provincial systems, compelling Vietnam Electricity (EVN), the national electricity provider, to restrict solar production.

Wind energy has considerable potential as a scalable substitute for coal. In the southern provinces, average wind speeds can reach as high as 10 m/s, making Vietnam’s terrain a great fit for wind energy. In addition, the country’s 3,000 kilometers of coastline provide prospects for offshore wind power.

The World Bank predicted that Vietnam’s offshore wind energy potential might reach 500GW by 2030. In addition, Vietnam will contribute 66 percent of the total new wind capacity to be developed in Southeast Asia by 2030. This explains why wind energy accounts for only 1% of the nation’s overall energy generation. This is due to the fact that the average total installation costs for offshore wind power can exceed $3,200 per kilowatt, which is much higher than the average total cost of a solar panel, which is $900. Additionally, few original equipment manufacturers (OEMs) develop wind power technology in Vietnam, resulting in a two-year average building period.

Vietnam’s energy shortage and rising imports of coal
In the near and medium future, Vietnam will continue to rely on fossil fuels, primarily coal, despite progress in diversifying renewable energy sources. The administration has warned of electricity shortages this summer as a result of the disruption in coal supplies and increased commodity costs resulting from the Russia-Ukraine conflict and trade flow disruptions caused by the pandemic.

Numerous EVN power stations have been shut down due to a lack of coal, and the country has increased its coal output target for 2022 from 39 million metric tons to 41 million metric tons. In the first four months of 2022, the state-owned coal mining company Vinacomin produced 14.9 million tons of coal, a 10 percent increase from the previous year. This accounted for 90% of Vietnam’s total coal production during the period in question.

Vietnam became a net importer of coal from a net exporter of coal about a decade ago, with Indonesia and Australia supplying the majority of the coal — each country generates more than 500 million metric tons of coal yearly — to meet its power generating needs. Nguyen Hong Dien, Vietnam’s Minister of Industry and Trade, claimed that the government will have to import between 18 and 25 million tons of coal in 2022 to meet domestic demand for energy and fertilizer production.

Vietnam expects to boost annual coal imports to around 46 million metric tons by 2025 and 123 million metric tons by 2045 in response to rising import prices.

Nedim Husomanovic

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