Over the past decade, Vietnam's electricity demand has more than doubled. Due to the country's strong economic boom, population growth, and rapid industrialization and urbanization, this trend is expected to continue. While still dependent on coal to meet growing energy demand, Vietnam achieved significant progress in diversifying its energy mix, focusing heavily on investment in renewable energy (RE). As a result, Vietnam is well-positioned to rapidly transition to clean energy, ensure a sustainable future, and attract foreign investment in RE.

Vietnam is one of leading countries in renewable energy

In 2014, the share of renewable energy in Vietnam was only 0.32%. In 2015, only 4 megawatts (MW) of solar power was installed for power generation. However, within 5 years, investment in solar energy has rocketed. As of 2020, Vietnam had more than 7.4 gigawatts (GW) of rooftop solar connected to the national grid. These figures have handled all expectations, marking a 25 times increase in installed capacity compared to 2019 figures.

In 2021, data shows that Vietnam has reached a total solar power capacity of 16.5GW, while wind power - another important green energy source - reached 11.8GW. Notably, the government has set an ambitious target of developing an additional 12GW of onshore and offshore wind power by 2025. Concentrated efforts and updated policies are the reasons why Vietnam is gradually becoming Asia's next renewable energy powerful country.

With ambitious green energy targets and the Just Energy Transition Partnership (JETP), Vietnam has the opportunity to regain its leading position in the region and the world in deploying clean energy. Vietnam's abundant solar potential has attracted great attention from investors and is starting to bring significant results. In addition, investment in wind power projects also opens up great potential. Vietnam owns the best wind resources in Southeast Asia, with an estimated capacity of up to 311 GW.

Regarding solar power, Vietnam has the potential to reach 85GW by 2030 and 214GW by 2050. If the grid issues are resolved and the rapid growth of renewable energy is restored, Vietnam will continue to rise in the clean energy rankings. This means that Vietnam could surpass countries like South Korea in solar power capacity and return to the global top 10.

Renewable energy investment status across Vietnam

The history of the renewable energy market in Vietnam, along with its solid foundations, has made the country an attractive destination for global investors in the green energy sector. Vietnam is expected to become a focal point for attracting capital for clean energy projects in the coming years, especially investment opportunities in solar power.

In addition to the initial funding of US$15.5 billion from JETP, the Vietnamese government is also looking to attract more private investors to the domestic market. A typical example is the effort to promote direct power purchase agreements (DPPAs) to facilitate businesses to purchase electricity directly from renewable energy companies at competitive prices. Furthermore, the Government is also actively making the development of clean energy projects easier and more transparent. So far, Vietnam has implemented 4 out of 6 important policies that Climatescope considers necessary to attract foreign investment, including renewable energy targets, renewable energy auction mechanisms, feed-in tariffs (FiTs), net metering, import tax incentives, and VAT exemptions.

According to McKinsey, a renewable energy-based development roadmap can open up many opportunities for Vietnam. This includes saving 10% of overall electricity costs, cutting 1.1 gigatonnes of greenhouse gas emissions and 0.6 megatonnes of particulate matter emissions. Energy imports will also be reduced by 60% by 2030.

Future of Renewable Energy Development in Vietnam

Vietnam is the 11th best-emerging market for clean energy investment globally. According to VietinbankSC, the domestic renewable energy market will reach $714 billion and continue to grow for at least another 25 years. From 2020 to 2030, the solar market will grow by 12.8%; the wind market will grow by 34.2% per year.

Renewable energy is on its way to becoming the nation’s dominant energy source. As investments in solar and wind power begin to grow again, Vietnam has the potential to be among the top renewable energy countries in Asia and beyond.

The government's recognition of the country's huge technical potential for clean energy development in the National Power Development Plan VIII is a big first step. Next, Vietnam needs to improve its targets. For example, renewable energy currently accounts for about 30% of Vietnam's total potential, creating great development opportunities for clean energy technology. Moreover, the Government also has ambitions to become the leading green energy exporter in the region. Accordingly, Singapore has plans to import clean electricity from Vietnam. Specifically, The Straits Times reported on 14 November 2024 that from 2033, Singapore will import 1.2 gigawatts (GW) of low-carbon electricity, mainly generated from wind power, from Vietnam.

Translator: Hải Yến