Japan’s Nihon Toyo and Vietnam’s Power Engineering Consulting JSC 2 (PECC2) have entered into a collaboration for a trial production of biomass pellets. Nihon Toyo, a subsidiary of the Japanese conglomerate Toyo Group, and PECC2, a division of the Vietnamese utility Vietnam Electricity (EVN), are joining forces to establish a production line that employs a high-temperature, high-humidity hydrolysis machine. This machine will be used to create solid fuel from waste materials.
During the signing ceremony, Nihon Toyo’s chairman, Koshio Katsuhiko, expressed optimism about the partnership with PECC2. The aim is to explore the power generation market by combining biomass pellets with coal as a fuel source. Tran Dinh Nhan, CEO of EVN, welcomed this collaboration and encouraged Nihon Toyo to further investigate coal-fired power generation in alignment with Vietnam’s newly-approved Power Development Plan VIII (PDP VIII).
Katsuhiko also put forth the idea of collaborating in other domains. This includes offering technical services for power plant operations, as well as supplying fuels such as coal, oil, and LNG to power plants in Vietnam.
In recent developments, Idemitsu Green Energy Vietnam, a subsidiary of Japan’s Idemitsu Kosan, inaugurated a wood pellet factory in Vietnam’s south-central province of Binh Dinh. The factory, located in Hoai Nhon town, has an annual production capacity of 120,000 tons of green energy pellets, destined for export to Japan.
The increasing focus on the circular economy in Vietnam, coupled with forthcoming government support policies, is creating a conducive environment for business growth, according to Atsuhiko Hirano, a representative of Idemitsu Kosan.
Moreover, in July, Japanese renewable energy company Erex and local partner Sakura Green Energy JSC commenced the construction of a biomass fuel plant in Vietnam’s northern mountainous province of Yen Bai. This facility, spread across three hectares, is designed to produce 150,000 tons of wood pellets and 305,000 tons of wood chip products annually, with an investment of VND474.8 billion (€18.3 million).
The number of wood pellet exporters in Vietnam has decreased from 152 in 2022 to 119 as of May 2023, as exports to major markets like Japan and South Korea experienced a significant reduction. South Korea and Japan were the two primary markets for Vietnam’s wood pellets, accounting for 95% of export revenue.
In the first five months of the current year, Vietnam earned $151.06 million (€138 million) from exporting 871,356 tons of wood pellets to Japan. The Japanese market demonstrated stability compared to the South Korean market, with long-term orders spanning 10-15 years at export prices ranging from $145 to $165 (€132.5-150.7) per ton. Anticipated demand for pellets in Japan is projected to surge from the current eight million tons to 20 million tons by 2030.
