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Created on: 2018-02-15 09:35:25
Last update: 2018-04-19 14:15:10
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About Nghi Son 2 coal power plant
Nghi Son 2 is a proposed coal-fired power station located in Tĩnh Gia district, Thanh Hoa province in Vietnam. Nghi Son 2 will be build next to the existing power station Nghi Son 1. It will consist of two turbines, each with a capacity of 600 megawatts, and will be developed by a consortium consisting of Marubeni Corporation and Korea Electric Power Company (KEPCO). The project will use supercritical technology and the emissions intensity has been estimated at 890-900g CO2/kWh. It will be fuelled by anthracite coal from the Hon Gai – Cam Pha coal mine in the Quang Ninh province of Vietnam.
- In March 2013, the Vietnamese Ministry of Industry and Trade awarded a contract to build Nghi Son 2 to a consortium consisting of the Marubeni Corporation and the Korea Electric Power Company (KEPCO). The power station was scheduled to come online in 2018.
- The Environmental Impact Assessment was completed on February 5, 2015.
- In November 2016, Vietnam’s Ministry of Industry and Trade approved a new contract for Marubeni and KEPCO, after construction had not started as scheduled. The project cost was estimated at USD 2.3 billion, 50% coming from Marubeni & KEPCO, and 50% coming from a consortium of banks. The first unit was scheduled to come online by September 2019 and the second by March 2020.
- In June 2017 the investment license was issued.
- In November 2017 KEPCO finalized the USD 2.3 billion power purchase contract with Electricity of Vietnam. KEPCO said the project will be completed in 2021.
What must happen
The Vietnamese government should stick to its Paris Agreement goals and withdraw their permission to build all new coal-fired power plants. This step was already announced in January 2016 by Prime Minister Nguyen Tan Dung, however, it should also include Nghi Son 2. Banks and financial institutions should avoid financing the plant and implement policies to withdraw any finance for new coal plants. The finance should be redirected to more sustainable, decentralized renewable energy.
Human rights and social issues
Coal-fired power generation in Vietnam is already a significant threat to public health, and the construction of the Nghi Son 2 plant will further expand already existing problems. A 2017 study by Harvard University has estimated that air pollution from similar existing plants is responsible for 4,300 premature deaths in 2011. The same study has also estimated that by 2030 there will be 19,220 excess deaths per year due to coal pollution in Vietnam. Social issues will also result from the adverse effects on local farming land and aquaculture.
The air-pollution impacts of coal power plants including Nghi Son 2 pose serious risks for the health and life of local people, especially children. For example exposure to pollution of CO2, mercury and arsenic can lead to lung injuries, nerve diseases and cardiovascular infections.
The Nghi Son 2 power plant will emit double the CO2 per unit of power generated than the average power plant in Vietnam. It will use outdated supercritical technology, which has an estimated efficiency rate of 38.5% compared to 43.3% for the more advanced ultra-supercritical technology. It will emit roughly 10 times as much SOx as power plants using ultra-supercritical technology. The emission of SOx, combined with the emission of fine dust, NOx, CO2 and mercury will severely impact the air quality. The support of supercritical technology is against policies of the Japanese government to which JBIC must adhere.
The methodology for drafting Environmental Impact Assessments is flawed, which has led to pollution in the past. Minister for Resources and Environment, Hong Ha, has said that “current regulation on EIA has proved unfeasible, making it hard to have high-quality EIA reports”. The EIA released by JBIC earlier this year has already been conducted 2015 and is therefore out of date and has not been acted upon expeditiously.
Local aquaculture will most likely be affected because of the use of sea water for cooling and the discharge of heated water back in the sea.
In May 2016 a study was published by the Vietnam Sustainable Energy Alliance (VSEA), in cooperation with the WWF, according to which Vietnam can receive 100% of its electricity demand from renewable energy.
Doosan has started construction on Nghi Son 2
According to Pulse News South Korea’s Doosan Heavy Industries & Construction Co. has finally commenced the delayed construction of Nghi Son 2 after it received an advanced payment of $170 million for a $1.6 billion deal it won in 2014.
The project exists of two 665 megawatt thermal power generation plants in the city of Thanh Hoa. Doosan, Korea’s largest power plant equipment maker, will aim to complete the construction by July, 2022.
Financial close reached on project
The 1,200 megawatt Vietnam coal plant gets funding, but Standard Chartered pulls out over climate policy conflict. The London-headquartered bank withdrew from the US$1.87 billion coal-fired power plant’s financing consortium, but eight other banks, including Singapore’s OCBC and DBS and Malaysia’s Maybank, ensured the deal was closed (eco-business.com).
The project requires an investment of approximately USD 1,869 million. The project sponsors, KEPCO and the Marubeni Corporation will finance the project on a 80:20 debt to equity ratio. KEPCO announced that 75% of the project's first year will be financed by the Korean Export-Import bank (KEPCO), through project financing. JBIC has signed a loan agreement for USD 560 million in project finance.
The loan is co-financed with the Export-Import Bank of Korea (KEXIM), Sumitomo Mitsui Banking Corporation, MUFG Bank, Ltd., Mizuho Bank, Ltd., Shinsei Bank, Ltd., Oversea-Chinese Banking Corporation, Ltd., DBS Bank, Ltd., and Malayan Banking Berhad, with a total co-financing amount of approximately USD 1,869 million. JBIC and KEXIM provide political risk guarantee for the portion of the loan financed by private financial institutions.
Standard Chartered, which was initially listed as one of the co financiers of the project, withdrew from the final deal, with indications that this was because the project was in violation of its policies.
The Nghi Son 2 project is sponsored by KEPCO, Marubeni Corporation and Tohoku Electric Power.