Electricity-thirsty Vietnam’s transition to cleaner energy and renewables continues to speed up as foreign investors get involved to help the Southeast Asian nation phase out coal-fired power generation by 2050.
To this end, Japan’s Shizuoka Gas has recently said that it will acquire a 25% stake in My Son-Hoan Loc Viet Solar Energy JSC, the owner of the 50-megawatt (MW) My Son-Hoan Loc Viet solar power plant in Ninh Thuan province, a renewables hub on Vietnam’s central coast. This is Shizuoka Gas’ first business investment in the country.
With roughly US$57 million in investment capital, the plant has been in commercial operation since June 2019, with its projected annual power generation in fiscal year 2024 to be approximately 78 million kilowatt-hours (kWh), equivalent to the annual power consumption of around 40,000 average Vietnam households.
The Vietnamese government aims to almost double the country’s power generation capacity by 2030 compared with the 2022 level, and increase the proportion of renewables in the country by 29% by 2045 compared with the 2020 level, according to Vietnam’s Eighth National Power Development Plan currently in use.
Meanwhile, Tokyo Gas says the Japanese corporation and its partners, namely Kyuden International from Japan and Truong Thanh Vietnam Group, are already in a position to start construction of a US$2 billion liquified natural gas (LNG) power plant in the northern province of Thai Binh by the third quarter of 2025.
Tokyo Gas executive vice-president Toshihide Kasutani, in his meeting with Thai Binh province’s chairman Nguyen Khac Than last week, said the joint venture was nearing completion of its investment procedures. The partnership received an investment licence for the project in late 2023 in Tokyo at the Japan-Vietnam Economic Forum held during a visit to Japan by Vietnamese Prime Minister Pham Minh Chinh.
The joint venture is in the process of building a detailed investment plan, Kasutani says, and mobilizing resources for the construction of the power facility, designed to annually provide 10 billion kWh to the national grid.
As scheduled, the national grid will get supply from Nhon Trach 3 and Nhon Trach 4 power plants in Dong Nai province next to Ho Chi Minh City later this November.
Nhon Trach 3 and Nhon Trach 4, Vietnam’s first LNG-to-electricity plants, are expected to add 1,624MW of capacity to the country’s electricity network, and will play a crucial role in ensuring its energy security. PV Power of state-run group Petrovietnam is the main investor of the two facilities, with a total investment of US$1.4 billion.
This September, Citi and ING Germany closed a US$521.5 million loan for PV Power, with export credit agency cover provided by Korea Trade Insurance Corporation (K-Sure) and Swiss Export Risk Insurance. The 12-year debt financing is supporting the completion of the two plants.
Nhon Trach 3 is due to begin commercial operations in April 2025, while Nhon Trach 4 is set for commercial operations three months later.
Meanwhile, the first of the four power transmission lines designated to link the two plants to the national grid is scheduled to operate on November 15, according to Dong Nai officials.
Citi has been working with PV Power to support the US$1.4 billion project since 2020, according to Citi Vietnam, and jointly provided a US$300 million short-term loan in the financing, finalized this September.
K-Sure also has its own activities in Vietnam. The official export credit agency of South Korea announced this June that it would provide up to US$1 billion in financing when Korean companies win contracts in Vietnam, with Petrovietnam in a huge natural gas project in the southern Vietnamese waters.
Up to US$12 billion is estimated for Petrovietnam and its partners to invest in the project, which will be carried out in three stages – gas field development, pipeline construction and gas-fired power plant building.
The site for the planned power plants is O Mon Power Centre in Can Tho City, the Mekong Delta’s hub.
K-Sure explains that this proactive financial support for Vietnam, the first of its kind being extended to a Southeast Asian country, is because Vietnam is South Korea’s third-largest export destination and considered to be of significant strategic importance.
At present, the Export-Import Bank of Korea (Kexim) finances a 3 gigawatt and US$3 billion LNG-to-power complex to be built in Long An province next to Ho Chi Minh City. The province is part of the Mekong Delta.
Kexim signed a memorandum of understanding in June 2023 to fund the project, to be developed by VinaCapital GS Energy, a joint venture between South Korean firm GS Energy and VinaCapital, Vietnam’s largest investment and asset management firm.
Site clearance for the 90-hectare complex has been completed while GS Energy is completing the required investment procedures for a ground-breaking ceremony.
As planned, the first phase (Long An 1 plant) should start operations at the end of 2025, and the second phase (Long An 2 plant) is set to go online at the end of 2026. LNG supplies for both should come from the Thi Vai LNG terminal and storage centre in Ba Ria, Vung Tau province, Vietnam’s oil and gas hub.
To date, Vietnam has to import all LNG, with the US being the largest provider. Thi Vai LNG centre, Vietnam’s unique operational LNG terminal till now, is operated by PV Gas, another Petrovietnam firm.
