ASX coal shares have had an excellent run over the past year or so. Vietnam recently announced its energy plans, which could have a significant impact on the sector.
As we can see on the chart below, the share prices of Whitehaven Coal Ltd (ASX: WHC) and New Hope Corporation Limited (ASX: NHC) are both up by at least 25% over the last year.
A lot of investors might say that coal doesn't have a good outlook considering the global effort for decarbonisation and lowering the use of fossil fuels.
There are two potential positives for the sector. First, energy prices are higher following the Russian invasion of Ukraine as the world looked for alternative energy sources. ASX coal shares have seen significant profit improvement during this period.
But, in the longer term, while western countries are seeking to reduce their coal usage, it has been projected that Asian countries may increase their coal usage as the energy needs increase.
Vietnam recently released its energy plan to 2030, it's an important energy growth market with a population of almost 100 million.
Vietnam's energy plans revealed
According to reporting by Nikkei Asia on the energy plans, coal use in Vietnam is expected to rise over the rest of this decade.
In 2050, the country wants to reach net zero emissions and not use coal. However, Vietnam's plan is to increase coal energy production capacity to 30,000 megawatts by 2030. This plan will mean that the percentage of the power mix made by coal will decrease, but it will increase in nominal terms from around 20,000 megawatts of coal-fired energy generation.
However, according to reporting by the Australian Financial Review, in 2016 the 2030 plan was for 55,300 MW of coal energy generation. In 2021, the energy plan reduced the projection to 40,600 MW for 2023. Earlier this year, Vietnam was reportedly planning for 37,000 MW of coal power generation for 2030.
So, while coal power generation is still expected to substantially increase, the rise is going to be less than what ASX coal shares were expecting.
Vietnam is planning to step up its wind and gas power generation by 2030.
Foolish takeaway on the ASX coal shares
Higher demand from Vietnam should be helpful for the coal price, but things aren't quite as optimistic in the long term for ASX coal shares as they were last year.
Even so, the companies are still expected to pay huge dividend yields over the next year and a half. According to Commsec, New Hope could pay grossed-up dividend yields of 19% and 16% in FY23 and FY24, respectively.
Whitehaven is projected to pay grossed-up dividend yields of 13.3% in FY23 and 10.1% in FY24.
