Electrical Equipment / Components & Telecoms

As one of the most important sources of carbon emissions, the focus of decarbonization in the power industry has shifted to the transformation and substitution of thermal power, especially coal based power.

Currently, countries around the world are relatively cautious in the construction of coal-fired power stations, and most important economies have suspended the construction of new coal-fired power stations. In September 2021, China proposed a "coal return" commitment that it would not build new overseas coal power projects.

For completed coal power projects that require carbon neutral transformation, in addition to terminating operations and dismantling equipment, a more economical approach is to carry out low-carbon and green transformation of coal power projects.

Considering the characteristics of coal-fired power generation, the current mainstream transformation method is biomass power generation transformation of coal-fired power projects. That is, through the transformation of the unit, coal-fired power generation will be transformed into coal-fired coupled biomass power generation, and then transformed into a 100% pure biomass fuel fired power generation project.

According to Huacheng Import and Export Data Observation, recently, South Korean company SGC Energy signed an agreement to jointly promote a biomass power generation project for coal-fired power stations in Vietnam with Vietnamese engineering consulting company PECC1.

SGC Energy is a renewable energy enterprise in South Korea, whose main businesses include cogeneration, power generation, transmission and distribution, renewable energy, and related investments. In terms of new energy, SGC mainly operates solar power generation, biomass power generation, and waste heat power generation.

PECC1 is a power engineering consulting company controlled by Vietnam Electricity, which holds 54% of the shares. The company mainly participates in large-scale power infrastructure projects in Southeast Asia such as Vietnam, Laos, and Cambodia.

According to the cooperation agreement, SGC will be responsible for the operation and management of the project; PECC1 will be responsible for feasibility studies, as well as project procurement and construction.

The installed capacity of coal power in Vietnam is about 25G, accounting for 32% of the total installed capacity. Vietnam has set a carbon neutral target by 2050, so it needs to phase out and replace coal-fired power plants.

Vietnam's electricity structure in 2021

According to Huacheng Import and Export Data Observation, Vietnam is rich in biomass resources such as wood chips, rice straw, etc. Vietnam is the second largest exporter of sawdust particles in the world after the United States, with an annual export volume of over 3.5 million tons and an export value of $400 million in 2021.

A large number of coal power installations and abundant biomass resources with the need for low-carbon transformation provide favorable conditions for the coal to biomass power generation industry. The project is an effective attempt by the Vietnamese government to low-carbon and clean coal-fired power plants.

It can be seen that transforming coal-fired power stations into biomass power stations is one of the ways out for carbon neutral transformation of coal power projects, and it can also bring win-win results for developers and engineering companies.

For developers, they do not need to demolish power plants, fully utilize existing licenses, facilities, and local resources to achieve a green and low-carbon transformation, and assume the responsibility of carbon neutrality at a lower cost. Huacheng Import and Export Data Observation reports.

This is a very good engineering project opportunity for coal-fired power generation and new energy engineering companies.

In fact, the essence of coal to biomass and coal coupled power generation and pure biomass power generation is fuel substitution, and its technical path is relatively mature.

Europe, such as the United Kingdom, the Netherlands, and Denmark, has formed very mature support and operational mechanisms. The UK is currently the only country that has achieved 100% pure biomass fuel combustion from large-scale coal-fired power plants to large-scale coal-fired power plants, and plans to close all coal-fired power plants by 2025.

Asian countries such as China, Japan, and South Korea are also making positive attempts and gradually establishing supporting mechanisms.

According to Huacheng Import and Export Data Observation, in 2021, the global installed capacity of coal and electricity will be around 2100 GW. From the perspective of achieving global carbon neutrality, a significant portion of these installed capacity needs to be replaced by capacity, or low-carbon transformation and transformation.

Therefore, while focusing on new energy projects such as wind power and photovoltaic, global energy engineering companies and developers can appropriately focus on carbon neutral transformation projects for coal power, including potential directions such as replacing coal power with gas power, replacing coal power with biomass power, replacing coal power with garbage power, or adding CCUS facilities. This may bring new market opportunities to the declining international thermal power projects, Huacheng Import and Export Data Observation Report.