Forum on Energy’s Emerging Market Series takes a country-by-country look at the future of nuclear power in emerging markets. While many are rolling back their use of nuclear energy in the wake of Fukushima, there still seems to be a clear effort by emerging nations to make nuclear energy a major part of their future. Vietnam, the United Arab Emirates, Jordan, China, Turkey, India and Finland are just a few of the nations Forum On Energy will highlight in its Emerging Market Series.
Economic growth in Vietnam is outpacing the country’s ability to supply sufficient energy for its industrial, agricultural and household consumer needs. The past decade has seen electricity demand rise by 15 percent annually. To help meet this demand, the country has increased its investment into various energies, including adding nuclear power to address frequent blackouts and grow its energy reserves. But critics question whether Vietnam can build up its human resources capabilities to the level needed to manage a regulatory system capable of safely operating and regulating nuclear power.
Source: Economist Intelligence Unit, Vietnam: Energy Report, 27 June 2013
Vietnam is in the midst of emerging from an era of socialist, centrally-planned economy into one that incorporates a fuller range of private, public and foreign ownership. The electricity market is controlled by the state-owned monopoly, Electricity of Vietnam (EVN), and most foreign investment is impeded by red tape. Gradual changes to Vietnam’s trade policies — including, notably, the country’s entry into the World Trade Organization in January 2007 — have eased the risk to foreign investments in retail, agriculture and other sectors, which has had an effect on the countries tremendous economic growth.
Vietnam’s energy demand is driven by industrial load growth. Even residential consumption also heavily increased with rising incomes and dramatically increased electricity access in Vietnam. Electricity access climbed from around 51 percent for households in 1995 to above 90 percent in 2010.
“Daily life is punctuated by brownouts which analysts say will intensify unless officials reform a state-dominated power market and entice foreign companies to build more power plants,” according to The Economist.
However, Vietnam’s rapid economic growth could be jeopardized by energy poverty, should demand overwhelm supply. As a countermeasure, since 1995 Vietnam has pursued an “all-of-the–above” energy strategy, which involves expanding consumption of hydropower, natural gas, coal and bio fuel consumption and adding nuclear to the energy mix.
In July 2012, an amendment to Vietnam’s 2004 electricity law reaffirmed a long-stated plan to create a competitive electricity market. According to The Economist, “the government is scrambling to raise the roughly $5 billion in investment it needs each year to meet the soaring energy demands of Vietnam’s 90m people.”
Electricity prices also remain low in the country. “Vietnamese law requires EVN to sell much of its electricity at an unprofitable average of seven cents per kilowatt-hour. It means the company racks up debts with fellow state behemoths supplying coal and gas. A senior EVN executive recently told a state-run newspaper that losses between 2009 and 2011 exceeded $940m and that a 5% price rise in August will hardly improve things.”
However, increasing electricity rates are also expected to be incredibly unpopular with both industry and homeowners. They could also accelerate the country’s already overbearing rate of inflation.
The Energy Supply Mix
The total installed capacity of Vietnam electricity grid stood at 21,000 mwe in 2012, with the government expecting that to exceed 65,000 mwe by 2020. The Economist Intelligence Unit judges this estimate to be overly ambitious, and that the actual capacity will be 48,500 mwe by 2020.
Below is a look at the state of other energy sources in Vietnam:
Hydropower — Hydropower is a major part of Vietnam’s energy mix, but the fact that it depends on rainfall means there are also electricity shortages. The country intends to expand its hydropower facilities to the equivalent of 5,677 k tonnes by 2020, up from 3,493 in 2013.
Natural Gas — Natural gas is primarily utilized for industry and household electricity consumption, with the country actively growing the number of its oil and gas-fired power plants
Coal — There’s no question that demand exists for Vietnam’s coal resources, primarily bitumen and anthracite. The problem is there isn’t much of it to go around and it’s not expected to me a major energy mix component going forward. In 2012, BP’s Statistical review of World Energy reported that Vietnam held 150 million tonnes of coal in reserve, which is low relative to worldwide reserves. The threat of a coal shortage means that the Economist Intelligence Unit thinks that the use of coal in proportion to other energies will fall.
Sources: Economist Intelligence Unit, Vietnam: Energy Report, 27 June 2013
In 2008 Vietnam legalized nuclear power, with planning for the first nuclear power plant starting in 2009. The Vietnam Atomic Energy Commission thinks that nuclear power could become 20 percent of the country’s energy requirement by 2020. Companies from the United States, Russia, Japan and South Korea are competing for opportunities to be part of Vietnam’s nuclear energy build.
Russia — Four nuclear power plants will be built in Ninh Thuan, each with an installed capacity of 1000 mwe. The first plant, Ninh Thuan 1 is expected to begin construction in 2017. Russia has agreed to lend U.S. $8 billion to 9 billion in order to build it. Russia will also train EVN staff, as well as supply and reprocess all the fuel. The nuclear wastes will be returned to Vietnam.
Japan — In late 2010, Japan and Vietnam agreed for Japan to build a second nuclear power plant at Vinh Hai in Ninh Thuan province, with up to 85 percent of the financing and insurance to be covered by JAPC and the International Nuclear Energy Develeopment of Japan Co. Ltd. (JINED). JINED is a consortium of METI, nine utilities and three manufacturers (Mitsubishi, Toshiba and Hitachi). The agreement took effect in January 2012. The two countries have also reached agreements to build a nearby second plant nearby. The World Nuclear Association reports that a PWR appears likely and the reference plant will be Hokkaido’s Tomari 3, an 866 MWe unit. The parties have agreed to accelerate cooperation on this project, but no contract has been signed.
United States — U.S. Secretary of State John Kerry and his Vietnamese counterpart, Pham Binh Minh, signed the so-called 123 Agreement on peaceful nuclear co-operation in October 2013. The agreement allows American companies to develop nuclear power in Vietnam, and U.S. officials estimate that nuclear energy industry in country could be worth U.S. $50 billion by 2030. The deal, which is required under U.S. law before for any American companies to export nuclear equipment to the country, has been under discussion for several years, as the United States has been racing to catch up with Japan, Russia and South Korea in a global fight to sell nuclear power technology to developing nations.