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Linkou Power Plants in Taiwan employ Ultra Super Critical technology. (Photo: Taipower)
To adopt the increasing electricity demand, Southeast Asian countries have recently ramped up coal-fired power generation, raising industry concerns about violating government energy transition and decarbonization commitments. Recently, the Malaysian state-owned bank Export-Import Bank of Malaysia (EXIM Bank) announced a cross-sea investment in Vietnam's Song Hau 2 coal-fired power plant has received public notice.
This financing effort is led by EXIM Bank, with over 60% of the funds coming from ten Vietnamese banks, one of the banks is a major state-owned bank in Vietnam..
In response to criticism, the Vietnamese Ministry of Industry and Trade (MOIT) sent a letter on July 1 to the developer, Malaysia's Toyo Ink Group, terminating the development contract of the Song Hau 2 coal-fired power plant due to unresolved financial issues. This decision demonstrates uncertainty to the plant's development, and the subsequent treatment plan has not been declared yet.
What is USC technology, and why does EXIM Bank support it?
Song Hau 2 coal-fired power plant located in Vietnam's Hau Giang province, was developed by Malaysia's Toyo Ink Group under a Build-Operate-Transfer (BOT) partnership model, anticipated generation capacity of 2,120 MW.
EXIM Bank's decision to invest in overseas coal-fired power plants has raised questions. According to the bank, this coal-fired power plant will employ new Ultra Super Critical (USC) coal-fired generator units, which can effectively reduce the plant's carbon emissions, intended to support Vietnam's energy transition and reduce reliance on fossil fuels.
"Ultra Super Critical" refers to the parameters of the steam within the boiler of a coal-fired power plant, main steam and reheat steam temperatures exceed 566°C, and main steam pressures exceed 24.1 MPa. The higher the pressure and temperature within the boiler, the higher the coal combustion efficiency, resulting in reduced coal consumption and carbon emissions. However, industry experts believe that, compared to traditional coal-fired power plants, the efficiency range and low-carbon contributions of USC units are not yet clear.
In fact, many countries are no longer building traditional coal-fired power plants. Instead, they are seeking new technologies and advanced operational methods, such as mixing low-carbon fuels like ammonia, hydrogen, and biomass into existing coal-fired plants. Some countries are adopting USC units to reduce fuel consumption, carbon emissions, and water usage, and lowering overall maintenance and operational costs simultaneously.
It's not just Vietnam; Taiwan’s Linkou and Dalin power plants have adopted USC technology. In Malaysia, Malakoff's Tanjung Bin and Tenaga Nasional Bhd's Manjung 4 & 5 coal-fired power plants have also implemented this technology. Power plants in various countries are exploring cleaner methods for their power generators.
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Linkou Power Plant decommissioned its old units in 2014, replacing Units 1 and 2 with efficient Ultra Super Critical units that emit less pollution. (Photo: TaiPower)
The investment in Song Hau 2 sparks global debate
With a total financing of $2.68 billion, Song Hau 2 coal-fired power plant is one of the largest overseas fundraising efforts by EXIM Bank. However, this investment by this bank diverges from the commitments made by most global banks, which have pledged not to finance "new" coal-fired power plants but rather to help "existing" plants reduce carbon emissions or retire early.
EXIM Bank emphasizes that Song Hau 2 plant utilizes USC technology, which can "reduce pollutant emissions through cleaner combustion and has higher flexibility to support variable wind and solar energy, and accommodate carbon capture and storage requirements."
This highlights that, despite increasing investments in renewable energy in the process of energy transformation, many countries still cannot eliminate their reliance on coal-fired power in the short term. Malaysian banks believe that USC units can help countries like Vietnam address power shortages, thereby gaining more time to expand the supply of renewable energy and achieve a more effective energy transition.
