Vietnam’s latest power development plan facilitates a smooth transition towards equitable and sustainable energy systems, aligning with global trends towards greener practices and the need to reduce emissions, said the European Chamber of Commerce (EuroCham).
The May 15 signing of the plan, better known as PDP VIII, marks a milestone for sustainable energy development and increased international investment in the country, the chamber said in a release.
“Many EuroCham members have extensive global expertise in developing, financing, and managing renewable energy projects. With a deep understanding of the infrastructure and requirements for generating and transmitting renewable energy, we are all dedicated to supporting Vietnam, local developers, and suppliers in their transition towards sustainability,” EuroCham chairman Gabor Fluit said.
“We eagerly anticipate collaborating with the government in any capacity and seizing every opportunity to contribute. I and the rest of the EuroCham team are 100% committed to realizing the targets of this plan.”
The PDP VIII assumes the responsibility of nurturing the growth and maturity of a comprehensive energy industry ecosystem, with a strong emphasis on renewable and emerging energy sources.
“This places Vietnam at the forefront of significant progress in its energy sector, demonstrating its dedication to a greener and more sustainable energy future.”
Central to PDP VIII is the extensive development of renewable energy sources for electricity production. Renewable energy sources, including hydropower, solar power, wind, and biomass, are projected to experience a nearly twofold increase, accounting for about 50% of energy capacity by 2030.
Looking ahead to 2050, renewable energy sources will soar, constituting 69.8% of power capacity and generating an impressive 80.5% of total electricity production. By enhancing self-sufficiency in renewable energy production, PDP VIII aims to reduce the nation’s reliance on imported energy.
Coal power, which is currently a significant component in Vietnam’s energy mix, is set to decline from approximately 29% to 20.5% by 2030, while the contribution of natural gas will nearly double. Looking ahead to 2050, coal power sources will be almost completely phased out.
Gas power capacity will reach 40.3 GW by 2035, but its proportion will decline to 7% by 2050, as mixed gas and hydrogen power become more prevalent.
PDP VIII highlights the imperative to control greenhouse gas emissions associated with electricity generation, aiming to achieve a peak emission level of no more than 170 million tons by 2030.
The plan prioritizes safe and reliable power supply, with a focus on meeting the N-1 criteria for important load areas and the N-2 criteria for particularly critical load areas. By 2030, Vietnam is seeking to achieve top-tier reliability of electricity supply among ASEAN countries, with its electricity access index ranking among the top three.
However, to effectively stimulate private sector involvement, additional efforts are needed, EuroCham said.
Achieving this objective requires greater clarity, particularly in addressing economic aspects such as market design, grid upgrade plans, how to ensure satisfactory returns on investment, as well as implementation plans for the Just Energy Transition Partnership (JEPT), the chamber added.
“Furthermore, enhanced transparency and understanding of energy subsidies are essential. We eagerly anticipate further progress in these challenging but essential areas,” it wrote.
The approval of PDP VIII is an important step in completing the government’s formal framework to reform the energy system to meet the needs of the second quarter of the 21st century.
According to Tomaso Andreatta, chairman of the EuroCham Green Growth Sector Committee, the real work starts now in defining the legal tools for implementing the plans, unifying the authorization processes through a single gate, financing an extremely ambitious investment plan that surpasses the national capabilities by several times, changing the decision processes of all parties involved by considering lifecycle economics and not just initial investment, and adapting to new technologies that may be more cumbersome today but allow for the only real progress towards decarbonization.
He added that the necessary reforms to succeed include various aspects such as strengthening local banks, opening up to international investment in infrastructures, improving Vietnam’s credit stance – which includes maintaining the very solid government budget limits – and strengthening state-utility Vietnam Electricity by bringing energy prices to cover the full cost and investment necessary to completely revamp the grid, with the support of private companies.
It also involves letting go of production and direct power purchase agreement (DPPA) connections that add to the grid’s burdens, said Andreatta.