Some good news.
First, OCBC (Oversea-Chinese Banking Corp, and no, it's not a Chinese State-owned bank), SE Asia's second largest lender, has said it will stop all new lending for coal power stations.
From Bloomberg:
Oversea-Chinese Banking Corp. said two Vietnamese coal-fired power plants will be the last it finances as it increases funding for renewable projects.
“We won’t do any new coal-fired power generation plants in any countries, except for the power projects that we are already in, or we have committed to,” Chief Executive Officer Samuel Tsien said in an interview at its Singapore headquarters Monday. “We hope that by doing this, we are encouraging the governments to do facilitating, arrangements for the countries to move from coal to renewable.”
At least 100 major lenders have put restrictions in the past five years on mines that produce coal and power plants that burn it, according to a February report from the Institute for Energy Economics & Financial Analysis. Their decisions reflect the rising recognition of coal’s role in climate change, and the potential for the fuel and facilities that rely on it to become obsolete before investments in them are paid off.
OCBC can’t backtrack from its earlier commitment to two projects in Vietnam, said Tsien, who declined to identify the developments. OCBC was among lenders for the 1.2 gigawatt Nghi Son 2 power station in Vietnam, the Straits Times reported in April last year. The lender also co-funds the Van Phong 1 project, according to Market Forces, a climate advocacy group.
The bank, which decided on the financing strategy this quarter, hasn’t engaged in discussions on coal-fired power plants over the last two years, according to Tsien.
Meanwhile, OCBC is stepping up efforts to finance renewable energy projects, an area the bank sees as a profitable business, Tsien said. It’s currently funding more than 20 solar farms in Malaysia, as well as wind projects in Australia and Taiwan.
Falling costs for renewable energy mean that building new solar plants may become cheaper than continuing to operate existing coal projects by 2027 in Vietnam, 2028 in Indonesia and 2029 in the Philippines, according to an October study by Carbon Tracker, a London-based non-profit think tank funded by several groups and charities, including Bloomberg Philanthropies. Renewable generation capacity will rise to about 100 gigawatts in Southeast Asia in 20 years from 8 gigawatts currently, consultancy Wood Mackenzie Ltd said in October.
Note this:
Falling costs for renewable energy mean that building new solar plants may become cheaper than continuing to operate existing coal projects by 2027 in Vietnam, 2028 in Indonesia and 2029 in the Philippines
This means that any coal power station built now (remember, they take 5 to 7 years to construct) will be immediately uneconomic even before they start operation. And existing coal power stations, which are built to last at least 30 years, will also be uneconomic. That's before depreciation and loan repayments.
Second, Vietnam has acknowledged that it has superb wind resources.
The sea from Quy Nhon to Ho Chi Minh City is considered one of the areas with the greatest potential for offshore wind power production in the world, with average wind speeds of 7-11 metres per second, experts have said.
The assessment was provided at a roundtable discussion on the development of offshore wind power in Vietnam with Dutch experience, held by the Dutch Embassy in Vietnam in collaboration with the Vietnamese Ministry of Industry and Trade (MoIT) in Hanoi on April 9.
Speaking at the event, Do Duc Quan, Deputy Head of the MoIT’s Electricity and Renewable Energy Authority, said that the demand for energy in Vietnam, especially electricity during 2020-2030, would be huge, as energy demand is increasing, while energy supply is and will be facing challenges, amidst traditional energy sources such as hydropower, coal, oil and gas that are gradually depleted and difficult to develop.
In such context, considering the exploitation of renewable energy sources, the Vietnamese government aims to produce 10.7% of electricity from renewable sources by 2030. It targets that the total wind power capacity will reach about 1,000 MW by 2020 and 6,200 MW by 2030.
Currently, Vietnam’s total installed wind power capacity is about 190MW, with four wind farms onshore and near shore with a capacity of 6 MW to 100 MW each, while an additional of 263 MW of wind power is under construction and 412 MW is in the process of appraisal approval. Approximately 4,236 MW have been approved, raising the total registered wind power capacity to 10,729 MW.
With great advantages in wind power, especially the sea area from Quy Nhon city, in Binh Dinh province, to HCM City, offshore wind energy in Vietnam has yet been fully exploited. Meanwhile, the Netherlands is one of the top five countries in the world in research and development of offshore energy. The Dutch experience would be useful to Vietnam in selecting the optimal solution for the development of offshore wind power in the most appropriate way, Quan emphasised.
[Read more here]
Offshore wind is for obvious reasons more expensive than onshore wind. But it compensates for this by being more regular and stronger.
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| Source: WindMinds |
Vietnam also has reasonable solar resources. According to the trusty NREL/PVWatts calculator, 5 kW of panels even in the north of the country (Hanoi) will produce 5679 kWh/year. Further south, in Ho Chi Minh City, that same configuration would produce 7223 kWh/year. For comparison, in Columbus, Ohio it would produce 6498 kWh/year, about the same as where I live, in Victoria.
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| Source: ResearchGate |
SE Asia is made up of several fast-growing economies. It's important that their high growth in electricity demand isn't filled by coal. It looks as if renewables will help prevent that. There is no question that coal is on its way out. But avoiding 2 degrees C of warming requires that we stop building new coal power stations now, and then start closing them down as fast as we can.
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