Công văn 1931/BCT-DL

To: The Prime Minister

Following the Prime Minister’s direction regarding additions to the wind power development planning (hereinafter referred to as “the Planning”), the Ministry of Industry and Trade would like to report on the following matters:

I. Wind power development objectives and policies

I.1. Wind power development objectives in revised Power Planning VII

According to the revised Power Planning VII, wind power capacity shall reach approximately 800 MW in 2020, approximately 2.000 MW in 2025 and approximately 6.000 MW in 2030.

I.2. Policies

- The Prime Minister has promulgated Decision No. 37/2011/QD-TTg dated June 29, 2011 on provision of assistance in development of wind power projects in Vietnam (hereinafter referred to as “Decision No. 37/2011/QD-TTg) and Decision No. 39/2018/QD-TTg dated September 10, 2018 amending a number of Articles of Decision No. 37/2011/QD-TTg (hereinafter referred to as “Decision No. 39/2018/QD-TTg).

- The Ministry of Industry and Trade has promulgated Circular No. 02/2019/TT-BCT dated January 15, 2019 on wind power project development and power purchase agreement for projects thereof (hereinafter referred to as “Circular No. 02/2019/TT-BCT”) that came into force on February 28, 2019.

II. Criteria for appraisal and approval of additions to the Planning

Based on incentive policies for wind power project development and with the aim of transparency, some basic criteria applicable to appraisal and approval of proposed additions to the Planning include:

- Feasibility of the plan for connection with the national power grid.

- Wind potential at the site of the proposed project.

- Suitability of the proposed project with the local land use plan and planning, with a focus on avoiding use of forest land (especially natural forest) and mines and reserves of minerals (such as titan).

- Land use efficiency of the proposed project.

- Financial capacity and experience of the investor of the proposed project.

III. Revised orientations of strategy for national energy development by 2030 with a vision towards 2045 regarding wind power development and review of wind power development size based on planning milestones

III.1. Revised orientations of strategy for national energy development by 2030 with a vision towards 2045 regarding wind power development

On February 11, 2020, the Politburo promulgated Resolution No. 55-NQ/TW on orientations of strategy for national energy development by 2030 with a vision towards 2045 (hereinafter referred to as “Resolution No. 55”), which specifies the circumstances and causes; direction viewpoints, objectives and visions; and main tasks and solutions for the energy sector. This document shall act as the beacon for regulatory bodies, mass organizations, socio-political organizations and relevant parties to perform and cooperate in their tasks.

Regarding the renewable energy sector, Resolution No. 55 provides the following guidelines:

1. Direction viewpoint: “…prioritize utilization of renewable energy, new energy and clean energy".

2. Main tasks and solutions: “Devise breakthrough policies and mechanisms to encourage robust development of renewable energy sources, which will provide alternatives to fossil fuels. Prioritize wind and solar energy for electricity generation…. Establish and develop a number of renewable energy centers in suitable regions”; “Encourage development of rooftop and floating solar panels. Formulate assistance policies and breakthrough mechanisms for development of offshore wind energy in connection with implementation of Vietnam’s marine strategy”.

III.2. Calculation of wind power development size by 2025 and 2030

According to updates on the progress of power source projects included in the revised Power Planning VII, most thermal power projects are 1-2 year(s) behind schedule, especially coal-fired power projects in the South scheduled to complete in 2018-2021 such as Long Phu I, Song Hau I, Song Hau II; Long Phu III; O Mon III and IV, power plants fired by gas from Ca Voi Xanh field (unable to determine the time upon which gas from Block B and Ca Voi Xanh fields reaches shore), etc. In addition, Vietnam has decided to suspend investing in Ninh Thuan nuclear power plant until 2030. As equilibrium equation calculations predict power shortage in the South, it is necessary to calculate and incorporate new power sources to ensure sufficient power supply nationwide.

Multiple directions for power source development have been proposed to balance demand and supply in the upcoming period such as renewable energy development (especially wind and solar power); power import from neighboring countries; acceleration of thermal power projects and addition of new thermal power sources, especially proposed LNG-to-power projects.

According to the overall report on the revised Power Planning VII made by the Institute of Energy in February 2020, capacity needed for 2021 - 2030 demand and supply balance for both basic and advanced options is forecasted as follows:

Table 1: Capacity proportion for 2021 - 2030, basic option

Table 2: Capacity proportion for 2021 - 2030, advanced option

 (*) Large amounts of wind and solar power are added to the 2021-2023 period to cover thermal power projects falling behind schedule.

With the abovementioned power production, in 2025, additional wind power needed for the basic option is 6.030MW and for the advanced option is 11.630MW.

The advanced option may be regarded as a plan for development of sufficient reserve sources of power in case of high demand, unfavorable weather conditions or late completion of other power projects.

IV. Update on Planning revision and proposed additions to the Planning

IV.1. Wind power projects added to the Planning and put into operation

Total capacity of wind power projects added to the Planning is approximately 4.800 MW, which is planned to be put into operation mainly in the Mekong Delta and South Central Coast by 2021. However, only 9 wind power projects with a capacity of 350MW have been put into operation so far.

IV.2. Proposed additions to the Planning

As of March 15, 2020, besides projects already added to the Planning, the Ministry of Industry and Trade has received proposals for approximately 250 wind power projects with a total capacity of 45.000 MW to be added to the Planning from provincial People’s Committees, which are classified based on their geographical locations as follows:

1. North Central Coast (including Ha Tinh, Quang Binh and Quang Tri): 51 proposed projects with a total capacity of 2.919 MW.

2. South Central Coast (including Binh Dinh, Phu Yen, Ninh Thuan and Binh Thuan): 10 proposed projects with a total capacity of 4.193 MW (793 MW if excluding Thang Long Wind offshore project).

3. Central Highlands (including Kon Tum, Gia Lai, Dac Lac, Dac Nong and Lam Dong): 91 proposed projects with a total capacity of 11.733,8 MW.

4. Southeast (Ba Ria - Vung Tau): 2 proposed projects with a total capacity of 602,6 MW.

5. Mekong Delta (including Tien Giang, Ben Tre, Tra Vinh, Hau Giang, Soc Trang, Bac Lieu and Ca Mau): 94 proposed projects with a total capacity of 25.541 MW.

Total number of projects and capacity of each region and province are provided for in Appendix 1.

V. Proposed wind power capacity to be added to the Planning by 2025

Based on the abovementioned calculation by the Institute of Energy, by 2025, additional wind power capacity to be added to the Planning for the basic option and for the advanced option is 6.030MW and 11.630MW respectively.

As 4.800MW of wind power capacity has been added to the Planning, the remaining wind power capacity to be added to the Planning by 2025 is 1.230MW for the basic option and 6.830MW for the advanced option.

Wind energy promotion is one of the main and suitable directions provided for by the Politburo in Resolution No. 55. On the other hand, short-term power shortage (2021 - 2024) is imminent while large thermal power projects continue to fall behind schedule or have yet to finalize their schedules, demand may rise and weather conditions might become unfavorable. Thus, the advanced option should be selected.

VI. Capacity of electrical grid infrastructure of provinces proposing wind power projects of high capacity

Results of assessment of capacity of regional electrical grids by 2025 (especially for North Central Coast, Central Highlands, South Central Coast and Mekong Delta) by the Institute of Energy (February 2020) are as follows:

V.1. North Central Coast

16 wind power projects with a total capacity of 638 MW of Quang Tri have been officially added to the Planning while 2.612 MW of wind power are pending approval. All of these wind power projects are located in the mountainous areas to the West of Quang Tri and planned to be put into operation before November 2021.

Calculation results show that the regional 110-220kV electrical grids are relatively capable of accommodating power generated by local power sources in normal operating mode. However, if either of the transformers of the Lao Bao 220kV substation (2x250MVA) encounters a problem, the other transformer will be overloaded. Quang Tri is capable of accommodating a maximum of 570 MW of additional wind power capacity (in normal operating mode).

Ha Tinh has proposed Ha Tinh HBRE Wind Farm project with a capacity of 120MW while Quang Binh has proposed B&T Wind Farm project with a capacity of 252MW, both of which can be accommodated by local electrical grids.

Thus, total wind power capacity that can be added to the Planning from this region is approximately 941MW. List of projects capable of being accommodated is provided for in Appendix 2.

V.2. South Central Coast

In Binh Dinh and Phu Yen, there are quite a lot of solar power projects, and 04 wind power projects are being proposed to be added to the Planning with a total capacity of 331 MW. Calculations reveal that it would be difficult to incorporate more capacity from wind power projects as the 220kV electrical grids of this area are quite weak.

Ninh Thuan and Binh Thuan are the fastest to boost development of renewable energy sources in Vietnam. In 2018-2019, approximately 2. 391 MW of solar power and 200 MW of wind power from this area were put into operation. In addition, approximately 1. 000 MW of wind power and almost 600 MW of solar power have been added to the Planning but are not yet put into operation. Trung Nam solar power plant with a capacity of 450MW has also just been added to the Planning (energized together with Thuan Nam 500kV substation).

Binh Thuan proposes Thang Long Wind project (Ke Ga), an offshore wind power project with a capacity of 3.400MW, to be added to the Planning. As only wind power sources put into operation before December 2021 are considered, this project, put into operation in 2022 - 2027, is not qualified.

Calculations done for wind power projects located in Ninh Thuan show that, at the end of 2021, only when all transmission grids added to the Planning with the approval of the Prime Minister are put into operation (especially Thuan Nam 500kV substation and transmission lines) while the Di Linh - Duc Trong 220kV transmission line is separated will the local electrical grids be capable of accommodating an additional 340MW from wind power sources and Trung Nam solar power plant (Thuan Nam) (in normal operating mode).

List of projects in this region capable of being accommodated is provided for in Appendix 3.

V.3. Central Highlands

13 wind power projects in Central Highlands, with a total capacity of 368MW, have been approved as new additions to the Planning, while total capacity of wind power projects pending approval is 11.733,8 MW. In which, 71,3% of capacity (8. 368MW) are from wind power projects located in Gia Lai, 23% (2. 683MW) are from those located in Dak Lak and 3,9% (460MW) are from those located in Dak Nong. Kon Tum and Lam Dong propose only 1-2 project(s) with a capacity of 153,5MW and 69MW.

According to calculation results, in adverse operating conditions (noons during flood season, Central Highlands power sources operating at full capacity), Pleiku 2 500kV substation (2x450MVA) and Dak Nong 500kV substation (2x450MVA) already operate at full load in normal operating mode. Therefore, with only the wind power sources officially added to the Planning, there are already many risks to the operation of electrical grids of Central Highlands in 2021.

Available options to increase wind power capacity for Central Highlands by 2021:

1. Option 1: raise the capacity of Dak Nong and Pleiku 2 500kV substations to 2x900MVA:

If both Dak Nong and Pleiku 2 500kV substations have their capacity raised to 2x900MVA in 2021, 1.150 MW of wind power can be added to electrical grids of Central Highlands.

2. Option 2: raise the capacity of Dak Nong and Pleiku 2 500kV substations to 2x900MVA; and build a 41-km Chu Se - Pleiku 2 220kV transmission line:

If the 41-km Chu Se - Pleiku 2 220kV transmission line (AC500 or 2xAC330 cross section) is finished early, an additional 250MW can be accommodated, increasing the total additional capacity for Gia Lai and Dak Lak to approximately 1.400MW for 220kV grids. The Chu Se - Pleiku 2 transmission line is a part of the Pleiku 2- Krong buk double-circuit transmission line, which has been added to the Planning (2016-2020) and the feasibility study report of which is being formulated. Thus, in order to accelerate construction of this transmission line, suitable measures must be taken to ensure it is put into operation in synchronization with wind power projects in 2021.

If the second circuit of the Doc Soi - Quang Ngai 220kV transmission line is put into operation in 2021, an additional 200MW can be accommodated in Gia Lai.

Capacity of wind power projects (such as Ia Pet - Dak Doa project (200MW) and Ia Nam project (400MW)) can be accommodated if they are connected with 500kV grids. Projects shall be grouped together to utilize shared electrical grid infrastructure.

List of proposed projects is provided for in Appendix 4.

V.4. Mekong Delta

1. Currently, 32 wind power projects have been added to the Planning with a total capacity of approximately 2.000MW. If taking electrical grids approved to be added to the Planning by the end of 2021, electrical grids of Ben Tre, Tra Vinh and Ca Mau can accommodate power sources. For Soc Trang and Bac Lieu, some 110kV transmission lines (put into operation in 2021) shall be renovated sooner than as stated in the power development planning of each province (2026-2030).

With the abovementioned conditions, total wind power capacity that can be additionally accommodated is approximately 2.300MW.

2. In case of investment in new 110 kV transmission lines

Proposed 110kV grid projects:

- Build a 110 kV Ben Tre and 220 kV Ben Tre double-circuit transmission line with a length of 0.24 km and ACSR cross section of 2x240.

- Build a 110 kV Ba Tri - Giong Trom double-circuit transmission line with a length of 16 km and ACSR cross section of 2x185.

- Build a 110 kV double-circuit transmission line from Ben Tre 220 kV substation to My Tho 220 kV substation with a length of 15 km and ACSR cross section of 2x240.

Investment in theses transmission lines can accommodate an additional 755MW (mostly in Ben Tre).

3. In case some 220kV grid projects are added to the Planning

Proposed 220kV projects:

- Build a 5-km 220 kV double-circuit transmission line with ACSR cross section of 400 from Bac Lieu 220 kV substation that connects with the existing Ca Mau - Soc Trang 220 kV transmission line (single-circuit, ACSR-795MCM equivalent to ACSR-400). This 220 kV transmission line is not yet added to the revised Power Planning VII and power development planning of Bac Lieu.

- Add 2 220 kV feeders to Bac Lieu 220 kV substation (feeder expansion is currently difficult according to preliminary inspection).

After adopting proposed solutions, in normal operating mode, 220 kV grids can only accommodate an additional 200 MW from the wind power cluster(s) connected with the Gia Rai - Bac Lieu 220 kV transmission line.

List of projects in this region capable of being accommodated is provided for in Appendix 5.

V.5. Southeast

In Southeast region, only Ba Ria - Vung Tau proposes 02 projects (Cong Ly Ba Ria Vung Tau project (102,6MW, onshore) and HBRE Ba Ria - Vung Tau project (500MW, offshore)) to be added to the Planning.

List of projects in this region capable of being accommodated is provided for in Appendix 6.

V.6. Conclusion

Consolidating the above calculations and analyses, by 2021, with some proposed renovation, acceleration and works added to the Planning, electrical grids could accommodate approximately 7.000 MW (in normal operating mode).

This amount of capacity is relatively suitable for increased wind power capacity stated in the advanced option (an additional 6.830MW) with due consideration taken of the reserve amount in case some grid and source projects are unqualified.

VI. Proposed adding/acceleration of electrical grid projects for wind power project accommodation

Based on the above calculations and analyses, the following electrical grid projects need to be added to the Planning or accelerated to accommodate wind power projects:

1. Raise the capacity of Dak Nong 500kV substation from 2x450MVA to 2x900MVA.

2. Raise the capacity of Pleiku 2 500kV substation from 2x450MVA to 2x900MVA.

3. Build a 5-km Bac Lieu - Ca Mau - Soc Trang 220kV transmission line.

4. Accelerate construction of Binh Dai 220 kV substation and a 220 kV double-circuit transmission line from Binh Dai 220 kV substation to Ben Tre (250 MVA; 2x50 km) from 2031 - 2035 to 2021 - 2025.

VII. Propositions

With the abovementioned contents and analyses, as October 31, 2021 (the time limit after which wind power projects are no longer entitled to the mechanism provided for in Decision No. 39/2018/QD-TTg) draws nearer, to ensure transparency and effectiveness of the Government’s incentive policies for sustainable and effective development of renewable energy (especially wind power) so as to enrich the national power supply, implement Resolution No. 55 and achieve Vietnam’s CO2 reduction target in COP21, the Ministry of Industry and Trade would like to propose the following to the Prime Minister:

1. Grant approval for guidelines on revision of wind power development objectives by 2025 with the capacity of 11.630 MW to ensure sufficient reserve sources of power and power supply in case of high demand, unfavorable weather conditions or late completion of other power projects.

2. Consider and decide on additions to the Planning with connection plans and capacity accommodation requirements provided for in the lists in Appendixes 2-6 enclosed therewith.

3. Consider additions to the Planning and/or acceleration of synchronized electrical grid projects (provided for in Section VI) to accommodate proposed wind power projects.

4. Provincial People’s Committees shall urgently review land use plans/planning and other types of planning intra vires to initiate land repurposing procedure for renewable energy projects added to the Planning, prioritizing land with low economic value and potential for renewable energy development.

5. Ministry of Industry and Trade shall cooperate with provincial People’s Committees in expediting, inspecting and supervising renewable energy projects, especial wind power, that have been added to the Planning. In case a project is not launched as approved, strictly revoke the right to use the allocated land to avoid affecting other projects during the processes of considering additions to the Planning and connecting with the national power grid.

6. EVN shall direct its members to urgently invest in synchronized electrical grid projects to accommodate wind power projects.

7. Wind power projects not added to the Planning this time may continue to be considered, studied and appraised to be added to the revised Power Planning VII if qualified or to the Power Planning VIII.

For your consideration and direction./.