{"id":36880,"date":"2023-04-09T23:23:29","date_gmt":"2023-04-09T23:23:29","guid":{"rendered":"https:\/\/energytracker.asia\/?p=36880"},"modified":"2023-04-11T04:49:23","modified_gmt":"2023-04-11T04:49:23","slug":"wind-energy-in-vietnam-opportunities-and-potential","status":"publish","type":"post","link":"https:\/\/energytracker.asia\/wind-energy-in-vietnam-opportunities-and-potential\/","title":{"rendered":"Wind Energy in Vietnam – Opportunities and Potential"},"content":{"rendered":"
<\/div>\n

Vietnam Wind Power 2023<\/strong><\/h2>\n\n\n\n

After its widely renowned success in solar power development, Vietnam needs to make wind energy<\/strong> the next growth market. While developers and investors are willing to participate in the country\u2019s decarbonisation journey, current regulatory uncertainty and limitations remain a roadblock. Addressing their concerns would ensure that Vietnam has the needed capital to exploit its vast clean energy potential and get closer to its 2050 net-zero goal. <\/p>\n\n\n\n

The State of Solar and Wind Energy in Vietnam in 2023<\/strong><\/h2>\n\n\n\n

In 2022, clean energy generation in Vietnam grew by 16% year-over-year<\/a>. Renewables accounted for 34.7 GWh of generated energy or 12.9% of total power generation.<\/p>\n\n\n\n

As of the end of 2022, clean energy makes up 26.4% (20.17 GW)<\/a> of the installed power capacity. Renewables are the third-largest energy source in Vietnam after coal (32.5%) and hydropower (29%). <\/p>\n\n\n\n

While ahead of many other Southeast Asian countries, Vietnam can do even better. The country has the best wind energy resources<\/a> in the region, with an estimated potential of up to 600 GW<\/a>.<\/p>\n\n\n\n

\"Vietnam's
Vietnam’s Clean Energy Potential, Source: McKinsey<\/a><\/em><\/figcaption><\/figure><\/div>\n\n\n\n

In the past, it has demonstrated a remarkable track record<\/a> for taking advantage of its vast clean energy resources.<\/p>\n\n\n\n

Vietnam came into the spotlight when in 2020, it became a top 10 solar power market<\/a> in just a few months. This allowed the country to achieve its 2025 target<\/a> five years early. <\/p>\n\n\n\n

In 2021, it recorded 337% in solar output growth<\/a> compared to the previous year. The country moved way ahead of the other top 10 markets.<\/p>\n\n\n\n

\"10
10 Countries With The Highest Solar Power Generation in 2021, Source: Vietnam News Agency<\/a><\/em><\/figcaption><\/figure><\/div>\n\n\n\n

Vietnam’s<\/strong> Regulatory Landscape: Uncertainty that Risks Impeding Potential Growth<\/strong> of Renewable Energy<\/strong><\/h2>\n\n\n\n

According to analysts, the country’s recent steps on the regulatory front risk jeopardising its clean energy progress.<\/p>\n\n\n\n

The Power Development Plan 8 (PDP8) has been revised several times<\/a> over the past two years. The plan has been pivoting between increased clean energy adoption and turning back to coal and gas. Furthermore, the plan now remains in limbo<\/a> due to clean energy pricing issues.<\/p>\n\n\n\n

Furthermore, while the spirit of the plan indicates a potential focus on increasing renewable energy capacity, including wind power capacity, the country\u2019s partnership with Japan signals that questionable decarbonisation technologies<\/a>, including hydrogen and ammonia co-firing schemes, might also be considered.<\/p>\n\n\n\n

Under the planned Just Energy Transition Partnership (JETP), Vietnam targets a 47% share<\/a> of renewable power in the total energy mix by 2030. While the JETP aims to deliver a massive USD 15.5 billion<\/a> in clean energy investments, concrete details are lacking. Analysts warn that the JETP remains more of a \u201cblack box<\/a>\u201d rather than a transparent investment framework.  <\/p>\n\n\n\n

Furthermore, Vietnam\u2019s transitional pricing for solar and wind power projects is between 16% and 29%<\/a> lower than the original incentive FIT (feed-in tariff) rates. Analysts<\/a> warn that the country’s Power Purchase Agreement<\/a> is putting an excessive burden on clean energy developers. The reason is that it doesn\u2019t allow<\/a> direct engagement in energy provision to businesses. However, the government is now working to change<\/a> this. It also lacks government provisions or \u201ctake or pay<\/a>\u201d obligations.<\/p>\n\n\n\n

According to estimates<\/a>, introducing a competitive bidding mechanism in Vietnam would slow the development of solar and wind power plants. Furthermore, it is expected to decrease the internal rates of return for developers of onshore wind projects from 18-22% under the previous FIT to 8.2-11% under the bidding mechanism.<\/p>\n\n\n\n

Dynamics of the Clean Energy Investment Landscape<\/strong><\/h2>\n\n\n\n

In the past, Vietnam has been successful<\/a> in attracting clean energy investments. The country even demonstrated the potential to become one of the most attractive markets for green capital. However, recent developments have negatively affected investment growth.<\/p>\n\n\n\n

Clean energy investments declined<\/a> from a peak of USD 8.7 billion in 2020 to USD 6 billion in 2021.<\/p>\n\n\n\n

\"Energy
Energy Transition Investments in Vietnam, Source: Global Climatescope<\/a><\/em><\/figcaption><\/figure><\/div>\n\n\n\n

As of 2022, Vietnam ranks 14th out of the emerging markets and 40th in the global ranking of the most attractive markets for energy transition project investment, according to Global Climatescope<\/a>. Furthermore, the agency warns about the uncertainty in future revenue and offtake schemes for solar and wind projects.<\/p>\n\n\n\n

Bloomberg\u2019s analysts note that, due to regulatory uncertainty, the country saw a massive drop<\/a> in new wind energy plants in 2022. The administrative burdens and the lack of investment certainty deterred project developers from moving ahead with their wind development plans. Due to this, many offshore wind projects face delays<\/a> or are built but sitting idle.<\/p>\n\n\n\n

\"Vietnam
Vietnam Didn’t Commission New Wind Plants in 2022, Source: Bloomberg NEF<\/a><\/em><\/figcaption><\/figure>\n\n\n\n

Currently, funding for renewable energy projects comes mainly from domestic sources, with 58% of the projects developed<\/a> by Vietnamese companies. Only 12% are executed without a Vietnamese partner.<\/p>\n\n\n\n

Vietnam\u2019s Net-zero Mission Can Succeed But Requires Effort <\/strong><\/h2>\n\n\n\n

Experts warn<\/a> that without foreign investment, Vietnam might fail to reach net-zero by 2050. McKinsey estimates the country\u2019 needs USD 30 billion<\/a> (10% of its current GDP) annually in energy transition investment. <\/p>\n\n\n\n

However, Vietnam must concentrate on improving its investment climate<\/a> to attract the needed capital. Among the leading areas for improvement is the PPA structure, which currently limits<\/a> clean energy developers. There are already calls<\/a> for the country to allow offshore wind developers to take advantage of a FIT system. According to experts, this would ease and speed up the initial mass deployment of projects. After the market becomes more mature, the government can push ahead with its bidding mechanism plans. <\/p>\n\n\n\n

Other measures that the country can focus on to attract more investments include introducing ambitious clean energy subsidies, ensuring a sufficient supply<\/a> to support the expansion ambitions of foreign manufacturers, allowing companies to sign direct PPAs and more.<\/p>\n\n\n\n

Indirect measures include removing incentives for fossil fuels and a strict fossil fuel phase-out policy.<\/p>\n\n\n\n

Last but not least, Vietnam should focus on proven decarbonisation solutions that are ready to be deployed from the get-go and those that have massive potential, like solar and wind, instead of unproven technologies.   <\/p>\n\n\n\n

Investing in Offshore and Onshore Wind Power Projects in Vietnam<\/strong><\/strong><\/h2>\n\n\n\n

Vietnam\u2019s clean energy success story hasn\u2019t gone unnoticed. Some of the world\u2019s leading wind energy developers, including \u00d8rsted<\/a>, already have offices or project plans in the country. <\/p>\n\n\n\n

Foreign investments have been critical<\/a> for empowering Vietnam\u2019s clean energy success. However, to continue into the future, foreign investors need incentives.<\/p>\n\n\n\n

Granting these incentives and introducing regulatory reforms that ease and stimulate foreign investor participation is in Vietnam\u2019s best interests.<\/p>\n\n\n\n

The country is among the top five<\/a> most exposed to the climate crisis. Climate risks aside, speeding up clean energy development and easing foreign energy transition investments would open a USD 1.5 billion<\/a> revenue opportunity for local banks. On a national scale, the support for climate-friendly technologies can create new value pools worth between USD 9 trillion and USD 12 trillion by 2030.<\/p>\n\n\n\n

The opportunities are there for the taking, but so are the risks of missing out.<\/p>\n","protected":false},"excerpt":{"rendered":"

Vietnam has already established itself as one of the world’s most notable clean energy success stories. However, to retain that crown, the country needs to incentivise foreign financiers. <\/p>\n","protected":false},"author":14,"featured_media":36892,"comment_status":"closed","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[354,15,87,365],"tags":[173,153,302,175],"hashtags":[],"class_list":["post-36880","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-clean-energy-financing","category-features","category-renewable-energy","category-vietnam","tag-renewable-energy","tag-vietnam","tag-wind-energy","tag-wind-power"],"acf":{"custom_author_name":"","article_pdf_file":{"ID":36899,"id":36899,"title":"Vietnam Needs Reforms to Attract Investors and Tap Solar and Wind Energy Potential","filename":"Vietnam-Needs-Reforms-to-Attract-Investors-and-Tap-Solar-and-Wind-Energy-Potential.pdf","filesize":575379,"url":"https:\/\/energytracker.asia\/wp-content\/uploads\/2023\/03\/Vietnam-Needs-Reforms-to-Attract-Investors-and-Tap-Solar-and-Wind-Energy-Potential.pdf","link":"https:\/\/energytracker.asia\/wind-energy-in-vietnam-opportunities-and-potential\/vietnam-needs-reforms-to-attract-investors-and-tap-solar-and-wind-energy-potential\/","alt":"","author":"14","description":"","caption":"Vietnam Needs Reforms to Attract Investors and Tap Solar and Wind Energy Potential","name":"vietnam-needs-reforms-to-attract-investors-and-tap-solar-and-wind-energy-potential","status":"inherit","uploaded_to":36880,"date":"2023-03-27 10:19:11","modified":"2023-03-27 10:19:20","menu_order":0,"mime_type":"application\/pdf","type":"application","subtype":"pdf","icon":"https:\/\/energytracker.asia\/wp-includes\/images\/media\/document.png"},"poll_vote":0,"show_in_lastest_from_the_region":"0","order":"","short_desc":"Vietnam has already established itself as one of the world's most notable clean energy success stories. However, to retain that crown, the country needs to incentivise foreign financiers. "},"_links":{"self":[{"href":"https:\/\/energytracker.asia\/wp-json\/wp\/v2\/posts\/36880","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/energytracker.asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/energytracker.asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/energytracker.asia\/wp-json\/wp\/v2\/users\/14"}],"replies":[{"embeddable":true,"href":"https:\/\/energytracker.asia\/wp-json\/wp\/v2\/comments?post=36880"}],"version-history":[{"count":0,"href":"https:\/\/energytracker.asia\/wp-json\/wp\/v2\/posts\/36880\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/energytracker.asia\/wp-json\/wp\/v2\/media\/36892"}],"wp:attachment":[{"href":"https:\/\/energytracker.asia\/wp-json\/wp\/v2\/media?parent=36880"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/energytracker.asia\/wp-json\/wp\/v2\/categories?post=36880"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/energytracker.asia\/wp-json\/wp\/v2\/tags?post=36880"},{"taxonomy":"hashtags","embeddable":true,"href":"https:\/\/energytracker.asia\/wp-json\/wp\/v2\/hashtags?post=36880"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}