Renewable Energy Investments in Vietnam – Asia’s Next Clean Energy Powerhouse
04 May 2021 – by Viktor Tachev
For the last five years, Vietnam’s electricity demand has been growing by 10% on average per year. Due to the country’s robust economic boom, population growth, and heavier industrialization and urbanization, the trend is poised to continue. However, thanks to Vietnam’s recent efforts to diversify its power mix with a heavier focus on renewable energy projects, the country is now in a great position to build a sustainable future and attract foreign investments to its energy sector.
Remarkable Renewable Energy Progress in Less Than a Decade
In 2015, Vietnam had a total of 4 MW installed solar capacity for power generation. In 2014, the share of renewables was just 0.32%.
Statistics point out that, as of the last day of 2020, the country has over 7.4 GW of rooftop solar capacity connected to the national power system. The results surpassed even the wildest expectations, marking a 25-fold increase in installed capacity compared to just a year earlier.
The latest estimations reveal that in January 2021, Vietnam had 16.5 GW solar power and 11.8 GW wind power. A further 6.6GW is expected to be delivered by the end of 2021. The government is also planning to install 12 GW onshore and offshore wind by 2025.
Today, the country’s concentrated efforts and dedicated policies are why Vietnam is Asia’s next renewable energy powerhouse. TTo learn more about the country’s remarkable journey from fossil fuels to the renewable energy sector, read our dedicated in-depth analysis.
How Does Vietnam Fare to Global Renewable Energy Leaders
Since signing the Paris Agreement on December 12, 2015, many countries have started actively working on their renewable energy programs. A little over five years later, we can already see the clear leaders in the green energy race.
Vietnam’s potential in the renewable energy sector
According to statistics by the International Renewable Energy Agency (IRENA), as of the end of 2020, Vietnam is within the top 10 countries with the highest capacity of solar energy installed.
Considering the country’s high solar PV potential and the ambitious green energy goals towards 2050, Vietnam has all the means to become a regional and global leader in renewables.
If Vietnam retains its lightning pace of renewable energy expansion from the last two years, it will further climb the ranking, potentially surpassing countries like Australia and Italy in renewable energy development & innovative energy solutions.
While Vietnam is way behind global renewable energy leaders like Germany, estimations point out that the opportunities in the Southeast Asian country are there for the taking.
The Growth of Renewable Energy in Vietnam Starts to Attract Investments
Going forward, Vietnam will be a focal point for renewable energy financiers and investors due to the wide variety of green power opportunities.
While its current energy plan is ambitious, McKinsey says that it can become even better. The consultancy concludes that a renewables-led pathway can unlock a plethora of opportunities for the country, including saving 10% in overall power costs, cutting down 1.1 GTs fewer greenhouse gas emissions and 0.6 MTs fewer particulate emissions, and up to 60% fewer energy imports through 2030.
Investments in Renewable Energy in Vietnam Are on the Rise
Foreign investors, mainly in the field of solar and wind power projects already recognize the country’s relatively flexible terms and policies for easing projects’ financing.
The data shows that foreign investments in Vietnam’s renewable energy potential are not only picking up but dramatically increasing in the last couple of years.
According to a report by VietinbankSC, the rate will further speed up, while the value of the local renewables market will hit USD $714b and keep developing for the next 25 years at least. The bank concludes that between 2020 and 2030, the solar power market’s value will grow 12.8%, while the wind power market will increase by 34.2% each year.
The question now is not if Vietnam will be the next renewable energy powerhouse and investments destination in Asia, but when.
And the country’s initial draft of the PDP 8 plan had the answer. Vietnam announced plans to shift from FiTs to auctions to ensure steady and stable growth and further drive renewables price down. Furthermore, the local government intends to move away from coal by postponing or cancelling pending projects worth over 17 GW of capacity.
However, as of the end of 2020, things are a bit different. Due to the lower power demand during the pandemic, several Vietnamese ministries and agencies have submitted comments to reduce the development of renewable energy projects in the PDP 8.
Now, we should wait and see how things will unfold in the next couple of months. What we know for sure is that Vietnam holds its faith in its own hands and has everything it takes to enjoy a swift journey towards renewable energy domination.