In the decades ahead, Vietnam willl see deployment of non-hydro renewables expanding at the fastest rate – registering a compound annual growth rate (CAGR) of 22.4 per cent. Both government policies and the significant untapped renewable potential in the country will be major drivers of this dynamic, according to a new study by Global Data.

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The study reveals that the South East Asian nation has been struggling to develop its energy industry due to a lack of state funds. Vietnam’s coal reserves are depleting, and the government is looking to expand the energy mix. Due to government support and an abundance of untapped renewable potential, installed non-hydro renewable capacity is forecast to reach 19.9GW by 2030.

 

Hydropower “nearly exploited” ; wind & solar “untapped”

 

The South East Asian country’s hydropower potential has almost been fully exploited, oil & gas reserves are running low, and Vietnam last year went from a net exporter to net importer of coal. All factors point towards development of the country’s largely untapped non-hydro renewables resources as a sustainable route to energy security.

 

“In Vietnam, market development of renewable sources such as wind and solar is in nascent stage, ” observed Anchal Agarwal, Power Industry Analyst at GlobalData. “Hydropower potential is nearly exploited; in contrast, wind, and solar expansion potentials are high and to a great extent untapped. Against this backdrop, Vietnam has revised its 7th Power Development Plan (PDP7) and set the priorities for developing renewable energy sources such as wind, solar, and biomass. Projections are to increase the percentage of renewable energy power to seven per cent by 2020 and 10 per cent by 2030.

 

As of 2018, hydropower dominated Vietnam’s power mix, with a share of 40.2 per cent of the total installed capacity, followed by coal (38.9 per cent) and gas (15.9 per cent). Non-hydro renewable power technologies accounted for a share of just 2.1 per cent in 2018 – 1.3 per cent of which came from biopower, followed by wind (0.5 per cent) and solar (0.3 per cent).

 

Mobilising investment

 

As a percentage of the total installed capacity, the share of hydropower will decline from 40.2 per cent in 2018 to 23 per cent in 2030, which is expected to be replenished by an increase in non-hydro renewable energy sources. Wind and solar power are touted as frontrunners in terms of build-out of non-hydro renewable energy resources. 

 

However, there are several challenges currently facing the Vietnam power sector. Undoubtedly the biggest challenge is in how to mobilise the large investment requirements – estimated at around US$8bn annually – to meet the country’s rapidly expanding power demand. One of Asia’s fastest-growing economies, power-hungry Vietnam is an important production hub for global companies such as Samsung Electronics, and the country’s electricity demand is on course to grow by about eight per cent per annum for the next decade, according to the World Bank. 

 

“The financing requirements of the sector have been huge,” said World Bank’s country director for Vietnam,  Ousmane Dione, in a speech to Vietnamese government officials and energy partners in November last year. “Since 2010, the sector invested about US$80 billion in generation, transmission and distribution – and between now to 2030, another US$150 billion needs to be raised,” he said.

 

Vietnam has experienced difficulty raising funds for its energy sector, with public debt in the country close to a centrally-mandated ceiling of 65 per cent of GDP. Low electricity prices, the slow pace of major power projects and a lack of private sector interest, including that of foreign investors, are some of the other challenges facing by Vietnam’s power sector.

 

“In spite of certain roadblocks, investment is happening in the country’s renewable power sector,” Mr Agarwal concludes. “Vietnam is trying to reduce its dependence on fossil fuels for electricity generation and more emphasis is given to the development of solar, wind and other renewable resources."

 

Access GlobalData’s report here: ‘Vietnam Power Market Outlook to 2030, Update 2019 – Market Trends, Regulations, and Competitive Landscape’