Opportunities in Renewable Energy in Vietnam

5:10 PM 04-Mar-21

Apart from being a major Tourist attraction, Vietnam has always been a major exporter of goods to the World. Including having the most fascinating country side views, panoramic scenery, rich and exotic Flora & Fauna, Vietnam also boasts of modern Roads, Seaports, Airports and Top Class Hotels.

So what investment opportunities does one see in a country which majorly exports? Look at the data and the reality will hit you like a cool draft on a hot summer afternoon.

• Vietnam's Energy production has increased 234% from the year 1990 to 61.07 MTOE (Million tons of oil equivalent).

• Total Energy supply has increased 367% from the same time to 83.46 MTOE.

• Total Electricity consumption stands at an impressive 227 TWh (Terra Watt per Hour), an increase of a massive 3406% from the year 1990.

* IEA (International Energy Agency)

Vietnam's CO2 emissions stood at 247.7 Mt (Million Tons) in the year 2019. Emissions are a major indicator to the industrialization of a country. More emission's point to more industries coming up which then points to more consumption of Energy. All that consumption would mean more output. And hence, it's no wonder that Vietnam's GDP stands at an impressive 7.1% when compared to its neighbor Thailand's 4.1%.

Reason's for increase in demand for Power

In the year 2013 Vietnam employed nearly 50% of its populace in the Agricultural Industry contributing about 22% to its GDP. Today, it employs 39.4% of workforce in the Agricultural Industry contributing 14.7% to its fast growing GDP.

As the numbers clearly state, the industry has primarily moved from less electricity consuming Agriculture to electricity gobbling Manufacturing Industries like Coal, Cement, Steel etc. For example, in 2006 the residential sector accounted for most of the electricity /energy consumption with a figure of 41%. Whereas in 2015, it was the Industrial Sector which had the largest share with 43%.

Today Vietnam has also invested hugely in high value industries like Computer Technologies, Electronic Goods and Cars. Oil Industry has also taken a grip in Vietnam in such way that even though it is considered a newcomer, the country has been tagged as the 3rd largest Southeast Asian producer of Oil.

Not to be left behind, the Services Industry now employs a total of 35.4% of Vietnam's population contributing whooping 41.6% value to its annual GDP.

According to a research, Power demand is set to grow at 8.6% for the period of 2021 to 2025 and at a pace of 7.2% from 2026 to 2030. It has been forecast that the Total Power Output is going to increase by nearly 80,000 MW by 2030. Accordingly the Power Sources for about 32.7% of this demand is going to be met by Coal, Gas and LNG powered Thermal Plants. While the rest of 62.7% is going to be delivered by Solar Power Plants and Wind powered Turbines.

This clearly means only one thing : energy demand and energy consumption have gone up in Vietnam and the govt. is taking due notice. In a resolution to address the development of Electricity, the Vietnam Politburo has drawn up a plan called the "National Energy Development Plan 8" which aims to optimally produce Power while being Environmentally friendly.

On February 11 2021, the Minister of Industry & Trade Tran Tuan Anh confirmed adopting Resolution 55NQ/TW on the orientation of the National Energy Development Strategy of Vietnam up to year 2030 with plans to extend it to 2045. This Resolution 55 shall ease the regulatory framework involved in development of Renewable Energy Sector sources like Solar Power Energy and Wind Energy. It also aims to set a target of 21% contribution of Renewable Energy to its overall mix of Power production by the year 2030, which is pretty ambitious.

In an interview to a reporter, the Minister of Industry & Trade said "In particular, with renewable energy, it is focused on continuing to review and build a breakthrough policy mechanism to facilitate the private participation. Specifically, we have to mention a very new and decisive viewpoint which is to continue considering and forming renewable energy centers based on the advantages of technology, geographical position and potential.

Resolution 55 has opened new doors and allowed us to fully believe in a strategy with new policy mechanisms, including the legal framework (not just the Electricity Law, the Law on Efficient Energy Use, but also new laws such as the Law on Renewable Energy), to orientate in development and ensure energy security, in the spirit of continuing solutions of mobilizing resources, especially the deep participation by private sector in national energy development."

Vietnam is determined to reduce Greenhouse Gas emissions produced from Energy Production & Transmission by 15% in 2030 and 20% in 2045. All this points to one direction : increase in Renewable Energy (RE)Sector.

In a recent assessment undertaken by the Ministry of Industry & Trade, it has been concluded that the potential for power generation via Renewable Energy sources like Solar Energy, Wind Energy and Biomass has very high potential to meet its Clean Energy targets by the year 2030. It also said that Solar Energy has the potential to produce about 300 GW.

As the demand for power grows exponentially in Vietnam, the Renewable Energy (RE) sector players across the world see a serious opportunity for themselves to participate in its Energy Development for a sustainable growth.

And in the scenario of the socio-economic condition of Vietnam continuing to improve year on year, the energy consumption will only increase. And with the Government keen on mitigating over dependence on Fossil Fuels for its Energy production, the future of Renewable Energy Sector is looking extremely bright.

Just a friendly reminder. The Fossil Fuels like Coal will be fully exploited within 70 years in Vietnam. Oil and Gas resources will be depleted in the next 60 years! But the Sun will always shine on Vietnam for a billion years. Are you ready RE players??