Viet Nam Renewable Energy Profile

Table of Contents

Last updated Jul. 26, 2024.

I. Introduction

Viet Nam leads its fellow Southeast Asian countries in electricity generation from solar and wind sources accounting for 69% of the region’s power generation. However, despite its leadership within the region, hydropower remains Viet Nam’s primary source of renewable energy domestically. In 2022, hydropower comprised 42% of the country’s renewable electricity generation.

Fossil fuels still dominate Viet Nam’s overall power mix. Coal, much of it imported, contributes a significant 38.76% share. The LNG, on the other hand, has declined over the past decade.

Faced with a doubling of electricity demand in the past two decades,1Ember. Viet Nam decided to meet this demand by doubling down on its coal production. However, the country’s immense renewable energy potential offers a more sustainable path forward. By harnessing this potential, Viet Nam can not only meet its growing energy needs but also invest in strengthening its national grid to accommodate the increased use of renewable energy sources and avoid overloading the system.2Eco-Business.

II. Current Status of Renewable Energy

Installed capacity of major renewable sources (2022):

  • Hydropower – 22.53 GW 
  • Solar – 16.70 GW
  • Wind – 5.07 GW

Electricity generation of major renewable sources (2022):

  • Hydropower – 95.96 TWh
  • Solar – 26.37 TWh
  • Wind – 8.04 TWh

In 2022, major renewable energy sources generated a total of 130 TWh of electricity. This represents nearly half (49.9%) of the country’s total demand of 260.87 TWh. To fully detach itself from fossil fuels in its power generation mix, Viet Nam needs to further accelerate the development of renewable energy sources (RES).3Ember, supra.

III. Renewable Energy Potential

In 2023, Viet Nam has a solar capacity of 17 GW, and a hydropower capacity of 22.64 GW. However, despite Viet Nam’s large capacity for electricity generated from renewables, the country generates only a fraction of electricity from these sources. This can be attributed to the country’s current grid infrastructures.

The surge in renewables had strained the country’s grid, preventing these grid infrastructures from absorbing electricity from renewable energy sources, resulting in unused electricity from RES.4Fulcrum. To accommodate the increasing RES and utilize the vast electricity produced from clean energy, the government must prioritize grid management which includes upgrading the conventional grids to accommodate electricity sourced from RES. 

IV. Summary of Renewables Policies and Incentives

TYPE OF POLICYVIET NAM
REGULATORY POLICIESRenewable energy in INDC or NDC✔
Renewable energy targets✔
Feed-in tariff/auctions/premium payment✔
Net-metering/billing/direct consumption-supply✔
Biofuel blend obligation/mandate/target✔
Electric utility quota obligation/RPS✔
Tradable REC✔
Renewable heat obligation/mandate
FISCAL INCENTIVES AND PUBLIC FINANCINGTax incentives✔
Public investment/loans/grants/subsidies/rebates✔
Reductions in sales, CO2, VAT or taxes✔
Tendering
Investment or production tax credits✔
Energy production payment
Source: REN21 and ASEAN Centre for Energy (ACE) via JSTOR.

View comprehensive list of Viet Nam’s renewables policies here.

V. Summary of Identified Challenges

Policy analysts have identified the following legal and policy-related challenges to Viet Nam’s renewable energy development:5Weatherby, Courtney, et al.

  • Bankability issues with Power Purchase Agreements (PPAs) for utility-scale power plants (see Weatherby et al. for details)
  • Uncertainty surrounding feed-in tariffs due to frequent revisions and gap periods
  • Cumbersome permitting procedures involving numerous departments
  • Slow development of direct PPAs between private sellers and buyers
  • Delays implementation of FiT rates causing non-utilization of RE electricity which forces more electricity imports.6Vir.
  • The surge in renewable energy stressed the existing power grid.

View comprehensive list of identified challenges here.

VI. Future Outlook

  • Viet Nam plans to have 33% renewable energy share by 2030. In 2050, the country aims to build up on the progress by increasing the share of RE to 55%.7Decision No. 896/QD-TTg.
  • The country plans to achieve Net Zero by 2050.8Climate Action Tracker.
  • Moreover, the government plans to increase 18.5% wind and 8.5% solar (excluding rooftop solar) by 2030, 26.8% wind and 34.7% solar by 2050.9PDP8.

VII. Conclusion

  • While leading Southeast Asia in solar and wind generation, hydropower (42%) is Viet Nam’s major renewable source in 2022. Fossil fuels, particularly coal (38.76%), remain the main electricity source.
  • Electricity demand has doubled in 20 years, met mainly by increased coal production. Renewable energy offers a solution for sustainable growth.
  • Viet Nam has a high installed capacity for solar (16.7 GW) and wind (5.07 GW) in 2022, but generation remains low due to grid limitations.
  • The surge in renewables has strained the grid, hindering full utilization of clean energy sources. Upgrading the grid is crucial for future expansion.
  • Viet Nam has established policies like Resolution 55 and PDP8 to promote renewables, with ambitious targets for solar and wind power.
  • Bankability issues with power purchase agreements, uncertain feed-in tariffs, and permitting delays hinder development.
  • Viet Nam targets a 33% renewable energy share by 2030 and 55% by 2050, aiming for net zero emissions by 2050.

References