Strong prospects for renewable energy in Vietnam amid clean transition

Vietnam's renewable energy industry faces great opportunities for future development as the industry ministry is proposing to reduce the proportion of coal-fired power in favor of renewable energy to drive clean development and greenhouse gas emission reduction.

Under the latest draft national power development plan for the 2021-2030 period with vision until 2050 (PDP VIII) the Ministry of Industry and Trade (MoIT) submitted to the Prime Minister on November 11, renewable energy sources (excluding hydropower, including solar, wind and biomass power) will have a combined capacity of 21,871-39,486 megawatts, accounting for 18-27% of the total capacity of Vietnam’s power plants, by 2030.

By 2050, the ratio of renewable energy sources will increase to 54.9-58.9%, demonstrating a strong energy transition in Vietnam. Specifically, the respective capacity of concentrated solar power and onshore wind power will be 8,736 MW (7.2%) and 11,905 MW (9.8%) in 2030, and 100,651 MW (27.3%) and 49,170 MW (13.3%) in 2050.

Meanwhile, biomass power, waste-fired power and other renewable energy sources will have a total capacity of 1,230 MW (1%) in 2030 and 6,015 MW (1.6%) in 2050.

Vietnam has made notable renewable energy development thanks to its feed-in-tariff (FIT) mechanisms. The 20-year preferential FiT was 9.35 U.S. cents per kWh (Decision 11/2017) and 7.09-8.38 U.S. cents per kWh (Decision 13/2020) for solar power projects that became operational by December 31, 2020; and 8.35-9.8 U.S. cents per kWh for wind power projects that became operational by November 1, 2021.

Before 2017, almost no solar power projects were developed amid the lack of a preferential price mechanism. After the incentives were launched, solar power capacity skyrocketed from only 86 MW in 2017 to 16,500 MW in 2020 (up 191 times), while that of wind power surged from only 90 MW in 2017 to over 4,100 MW by November 2021 (over 45 times).

Tens of billions of U.S. dollars have been raised to invest in developing solar and wind power projects, mainly from private sources.

In a report on solar power projects, the MoIT said that 6,565 MW of solar power capacity have not been put into use yet, including 452.62 MW from five project segments already completed without a pricing mechanism; 426.6 MW from 11 projects that have signed contracts for equipment procurement.

In addition, six projects are in the stage of investment preparation, with a capacity of 1,481.2 MW and three project segments that have not been implemented by investors, with 60 MW.

The total cost for implementing the projects is estimated at VND12.7 trillion ($511.7 million).

Therefore, in its latest draft, the ministry proposed allowing investors of these projects to continue implementing and putting them into commercial operation before 2030.

Meanwhile, in order to realise clean development goals and reduce greenhouse gas emissions toward carbon neutrality in the long term until 2050, PDP VIII drafts have repeatedly reduced the proportion of coal-fired thermal power capacity.

In the latest draft, the capacity of coal-fired thermal power plants will fall to 36,327 MW (28.9%) in 2030 and 9,835 MW (3.3%) in 2045 toward zero in 2050.

According to the MoIT, by the end of September 2022, the country had 39 operating coal-fired power plants with a total capacity of 24,674 MW. Of which, five projects that have already received in-principle agreement from Vietnamese authorities are facing difficulties in implementation and capital arrangement.

These projects with a total capacity of 6,800 MW remain at the stage of investment preparation. They include Song Hau 2 in the Mekong Delta province of Hau Giang, Vinh Tan 3 in the central province of Binh Thuan, Nam Dinh 1 in the northern province of Nam Dinh, Quang Tri in the central province of Quang Tri, and Cong Thanh in the central province of Thanh Hoa.

Seeing that it is very difficult to continue implementing these projects in the current context, the MoIT did not include 6,800 MW of these projects in the latest PDP VIII draft, which will be compensated for by other sources, mainly wind and biomass power.

Meanwhile, the capacity of gas-fueled power is set to decrease from 14,930 MW (12.3%) in 2030 to 7,030 MW (1.9%) in 2050.