The Vietnamese government relies on the national power development plans to advance the sector, which forecast growth in demand and map out the overall development of the power industry to meet demand ten years out. The long-awaited Power Development Plan VIII (PDP8) was approved on May 15, 2023, for the period from 2021 to 2030, this works as the overall framework for stakeholders of the industry to move forward, with significant amount of renewable energy to be introduced to the market.
The country''s robust industrialization process has fueled a surging demand for energy in general and specifically for electricity. Vietnam is one of Asia’s fastest growing energy markets due to a large population and sharp economic growth coupled with fast declining reserves in its existing oil and gas fields.
According to Institute of Energy of Vietnam (IEV), Vietnam is set to face a surge in power demand and consumption over the coming decade, which will have an impact on its energy security. The Government of Vietnam expects power consumption to grow 10-12 % annually through 2030, one of the fastest power consumption growth rates in Asia.
The Central Committee of the Politburo of Vietnam, which is the highest body of the Communist Party of Vietnam, issued Resolution No. 55-NQ/TW dated 11 February 2020 on Strategic Energy Orientation until 2030 with vision 2045. This document outlined that installed capacity by 2030 is expected to be 125-130GW, doubling of its capacity in 10 years. PDP8 is required to comply with the policies stated in Resolution No. 55.
At the 26th United Nations Climate Change Conference of the Parties in 2021 (COP26) organized in Glasgow, UK, Vietnam''s Prime Minster announced Vietnam''s ambition to reach net zero emissions by 2050. After the event, Vietnam has taken positive steps towards making the commitment a reality by revising and approving PDP8 with significant consideration of renewable energy development, though without addressing significant regulatory barriers, Vietnam will struggle to meet its goals.
According to PDP8, the total power capacity installed by 2030 will be about 146,000 MW and rise to more than 416,000 MW by 2045. The proposed capacity that coal will account for about 30,000 MW of power generation in 2030. As coal’s role in power generation diminishes, natural gas, solar and wind will provide a larger percentage.
PDP8 prioritizes renewable energy, particularly offshore wind energy, in the long term. Vietnam aims to complete the coal phase-out by 2050. Only coal-fired power projects previously approved in the Revised Power Development Plan VII (PDP7R) may continue for development.
Notably, maximum priority will be given to the commercialization of domestic gas assets (Block B, Blue Whale, and Yellow Leopard), and the upstream appraisal work of Ken Bau for power generation. LNG imports will only be carried out to meet gas supply shortfalls. LNG import and regasification facilities continued development at the Thi Vai and Son My LNG regasification terminals.
PDP8 does not include any nuclear power production, and it only allows for nuclear research. The PDP7R called for nuclear power capacity of 4,600 MW to be installed by 2030, representation 5.7% of Vietnam''s energy mix. However, plans for the first plant, Ninh Thuan, have been canceled, and the country will focus instead on renewables, coal, and natural gas for power supply.
Following up with the PDP8 approval, the Ministry of Industry and Trade (MOIT) is required to prepare and submit the PDP8 Implementation Plan to the Prime Minister of Vietnam, this sets as the foundation to actual projects to be executed. In addition, MOIT is required to draft the amended Electricity Law and the Renewable Energy Law to submit to the Government of Vietnam for submission to the National Assembly in 2024. MOIT is responsible for submitting Direct Power Purchase Agreement (DPPA) regulations to the Government of Vietnam for approval.
PDP8 proposes about 21,000 MW of onshore and near-shore wind power, 7,000 MW of offshore wind power by 2030. There is no clear legal framework in Vietnam instructing how to carry out on offshore wind power currently.
Vietnam''s installed solar capacity of rooftop solar and solar farm has doubled in recent years, rising to an estimated 17,600 MW in 2021, owing mainly to a massive build of more than 11,000 MW in 2020. Even though the sector has experienced growth over recent years, solar power capacity will remain the same by 2030, with major factors contributing to issues of connecting the new solar capacity to the grid that will need to be resolved.
MOIT released Circular 15/2022/TT-BCT in October 2022 which set out a framework for EVN to enter bilateral tariff negotiations with the developers of these projects that failed to achieve commercial operations before the applicable feed-in tariff (FIT) deadline referred to in Circular 15 as transitional projects, by reference to a ceiling price i.e., the maximum tariff payable by EVN.
MOIT announced in January 2023 that the ceiling price for ground-mounted solar projects is reduced from USD0.0709/kWh to USD0.0502/kWh, a 29% decrease. The ceiling price for onshore wind decreased by 21%, from USD0.085/kWh to USD0.0672/kWh.
Vietnam currently has 73 power plants (hydro, thermal, gas, renewables source), 48 of those with capacity greater than 30MW. As EVN''s self-financing and other sources of debt financing only meet about 66 % of the total investment requirement, IPPs are expected to carry a large portion of the investment in the power generation sector, including those to be developed by foreign investors.
The power source structure by owner is quite diverse due to the division of former EVN power sources into power generation companies. EVN’s power generation in 2020 only accounted for about 13 % of the total capacity of the power source, while the proportion of power capacity privately owned has reached about 38 %, accounting for the highest proportion in the owner structure.
In the PDP8, MOIT proposes to continue building a 500kV power transmission system to transmit electricity from major power source centers in the Central Highlands, South Central Coast, and North Central region to major load centers of Vietnam (Ho Chi Minh City and Red River Delta) to strengthen the interconnected transmission grid and support the North-Central-South power transmission.
The national transmission infrastructure is struggling to keep pace with rapid capacity growth, which presents a risk of bottlenecks to growth. This is mainly because of a surge in renewables that occurred while a solar feed-in-tariff was in place, with projects typically taking a much shorter time to build as compared to a transmission line. The National Load Dispatch Center (NLDC) has been lowering output from hydropower plants to prioritize solar integration and prevent grid overload.
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