AES Corporation, the Virginia-based electric company, has agreed to sell the entirety of its equity interest on the Mong Duong 2 coal-fired plant in Vietnam, to a U.S.-led consortium, the company announced this week.
The agreement was done in December 31 and it is expected to be concluded by late 2021, or early 2022, as it is still subject to approvals, including from the government at Vietnam and the minority partners of the plant.
The selling of the Mong Duong plant is aligned with AES’ energy transition strategy, and a new investment portfolio in cleaner energy solutions; still Vietnam is an important market for AES.
Andrés Gluski, AES president and CEO spoke about the matter in the company’s statement. “We have had a very positive experience in developing, building and owning Mong Duong 2; Vietnam remains an important growth market for AES, where we look forward to contributing to the country’s transition to a more sustainable energy future.”
“In line with our global strategy to invest in renewables and LNG infrastructure, in Vietnam we continue to make good progress on the development of the 450 TBTU Son My LNG terminal with PetroVietnam (PVN) and the 2,250 MW Son My 2 combined cycle gas power plant,” he concluded.
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AES, Mong Duong and coal in context
Mong Duong 2 plant is owned by AES by a 51% equity interest; Posco Energy Company Limited owns it by 30%; and Stable Investment Corporation, a subsidiary of China Investment Corporation, owns it by the remaining 19%.
It was constructed in 2015 under a build-own-transfer contract. It had a 25-year Power Purchase Agreement with the state-owned Vietnam Electricity.
As we have reported previously, coal has lost competitiveness in front of natural gas and other cleaner alternatives, like renewable energy. During 2020’s first half, electricity sector consumed 30% less coal than prior year’s same period.
Companies like American Electric, Toshiba and Xcel Energy have been either retiring their coal plants, or withdrawing from them. A boost in LNG market, with exports reaching record highs, and the climate change and ESG agendas have been crucial factors for coal’s decline.
Still, a forecast by the International Energy Agency sees a 3% jump on its use in 2021, as demand will go up with economic recovery on power and industrial sectors.