With an investment of $7.4 billion in solar and wind power in 2020, Vietnam is ranked 8th on the list of renewable energy investment worldwide, indicating a strong growth for further investment in this sector. Although this journey of Vietnam towards a sustainable energy security is with multiple existing challenges, there still hold great opportunities in the future.
According to the Global Energy Review 2021, the Renewable electricity generation in Vietnam is expected to grow by more than 8% to reach 8,300 TWh, which is the fastest annual growth since the 1970. In the latest Power Development Plan 8 (PDP 8) for 2021 to 2030, the government proposes to greatly expand wind and solar capacity, reaching over 18-19 GW and 19-20 GW in 2030 respectively. Additionally, according to EVN, in the first 6 months of 2021, the amount of renewable energy accounted for 11.4% (14.69 billion kWh) of the total amount.
In addition, Vietnam is exploring its potential in developing biomass energy using agricultural wastes from the Mekong Delta region and Red River Delta, including rice husk from paddy milling stations, bagasse from sugar manufacturers, coffee husk from coffee processing producers (central highlands) and wood chip from wood processing factories. A great amount of the total biogas potential of about 10 billion m3 annually will come from the large livestock population of more than 30 million cattle, pigs and buffalos.
Another great potential for the Renewable Energy sector in Vietnam is the fast rise in foreign investment. One reason is since energy investors can get more confident as the capital costs have dropped 75% for solar energy installation and 30% for wind projects in the last 5 years.
Without doubts, with more investment and supporting policies to maintain and even accelerate the renewable energy expansion rate from the last 2 years, Vietnam has a great potential to surpass countries including Australia and Italy in innovative energy solutions and renewable energy growth.
One of the main challenges that is threatening the ambitious Renewable energy target of Vietnam is the lower demand during the pandemic in 2020. According to Nguyễn Đức Ninh, director of the National Power Regulation Centre, due to oversupply, in 2021, Vietnam will cut 1.3 billion KWh of renewable energy. More seriously, the lack of strict controls, impactful investment in transmission infrastructure and a clear solar development vision contributes to this incomplete capacity of solar electricity, says Professor Bùi Thiên Dụ, a former lecturer of the Electrical Faculty of Hanoi University of Technology.
Additionally, current and potential investors are facing numerous challenges in limited qualified human resources, underdeveloped supporting industries, uncertain future energy prices and low feed-in-tariffs. There is also a legal risk for foreign investors due to the unbankable Power Purchase Agreement (PPA), raising serious concerns for investors and creditors.
Without doubt, there are clear potentials for the renewable energy sector in Vietnam, especially when the sector is receiving great attention from foreign investors, policy makers and innovative businesses. Developing the renewable energy sector is the sustainable solution to tackle energy crisis issue in developing countries like Vietnam.
You can check out the Renewable Energy Sector Briefing by BritCham in Vietnam here.
Reposted from my article on Vietnam Insider.