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Vietnam

With a power score of 2.19, Vietnam ranks number 14 among emerging markets and number 32 in the global ranking.

  • Emerging markets
  • Asia-Pacific

2.19 / 5

Power score


 

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Low-carbon strategy

Net-zero goal and strategy

At the COP26 climate meeting in November 2021, Vietnam announced a net-zero emissions by 2050 goal. A month after the COP26 announcement, Vietnam’s prime minister launched a national steering committee to implement the net-zero target. The committee is engaging with all relevant ministries to develop the implementation plan.

In April 2022, the government also released its Draft National Strategy on Climate Change by 2050 setting greenhouse-gas emission reduction goals for key sectors by 2030 and 2050.

In January 2022, Vietnam also legalized the establishment of a carbon market under its revised Law on Environmental Protection. Vietnam is planning the pilot launch of the Carbon Credit Exchange by 2025 with full operation by 2028

Nationally Determined Contributions (NDC)

Under its Nationally Determined Contribution, or its official plan to cut emissions under the Paris Agreement, Vietnam commits to reducing its greenhouse-gas emissions by 9% under a business-as-usual scenario by 2030, and up to 27% reduction by the same year with international support.

Fossil fuel phase-out policy

There is no fossil fuel phase-out policy in Vietnam

Power

Power policy

To spur development in wind and solar, Vietnam introduced FiT schemes for wind and solar projects. The first wind FiT implemented in 2011 at $78/MWh failed to incentivize development. It was subsequently revised in September 2018 – the onshore wind FiT was increased to $85/MWh and an offshore wind FiT of $98/MWh was introduced. The FiT scheme expired in November 2021.

Power policies

Renewable energy auction
Feed-in Tariff
Import tax incentives
Net Metering
Renewable energy target
VAT incentives

Power prices and costs

The solar FiTs successfully attracted investments into the sector, allowing Vietnam to emerge as the regional clean energy leader in Southeast Asia. The two solar FiT schemes drove almost 19 gigawatts of solar build in just two years and propelled Vietnam to become the third-largest solar market in 2020. This led to a significant change in the makeup of Vietnam’s power mix. In 2020, the share of fossil fuel fell significantly to just 42% of installed capacity, from 83% in 2019. However, as most of the solar boom in 2020 occurred in December, coal and gas still generated 66% of electricity that year, falling to 57% in 2021. The rapid development of solar and wind have, however, has given rise to grid and curtailment concerns.

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Power market

Vietnam’s power market is dominated by state-utility Vietnam Electricity Group (EVN). The generation sector is open to the participation of independent power producers. Two consecutive solar booms in Vietnam over 2019-20 and a 2021 wind build rush greatly diversified generation capacity mix and ownership. These feed-in tariff (FiT) schemes helped make Vietnam the largest market for solar and wind in Southeast Asia with some 20.6 gigawatts of capacity installed by the end of 2021.

EVN retains a monopoly in the transmission, distribution and electricity retail segment. The government targets liberalizing its electricity retail market by 2025 starting with a planned 1 gigawatt direct power purchase agreement pilot

Vietnam has witnessed strong power demand growth over the last decade. Between 2015 and 2021, Vietnam’s electricity demand increased at a compounded annual growth rate of 7.9%, primarily driven by increased foreign investment in Vietnam’s manufacturing sector. Delays in planned fossil fuel plants and exhaustion of the country’s large hydro potential led to power supply shortage concerns. This led to a pivot in the government’s attention away from coal and toward renewables and gas as suggested by the draft power development plan VIII. The latest draft of the PDP VIII sees coal capacity additions ending in 2030; it also envisions rapid growth of gas power capacity and renewable energy

Installed Capacity (in MW)

20122014201620182020020K40K60K80K MW

Electricity Generation (in GWh)

20122014201620182020050K100K150K200K250K GWh
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Utility privatisation

Which segments of the power sector are open to private participation?


Generation
Transmission
Retail

Wholesale power market

Does the country have a wholesale power market?


Available
Not available

Doing business and barriers

The investment climate in Vietnam is stable. There are no known defaults by the single off-taker, EVN. There are no barriers to entry in the form of foreign ownership restrictions or local content requirements. There is however uncertainty in the future revenue and offtake schemes for solar and wind projects. After the expiry of the last solar FiT in December 2020 and wind FiT in November 2021, the government has yet to release any new pricing mechanism for solar and wind projects.

Currency of PPAs

Are PPAs (eg. corporate PPAs and all other types) signed in or indexed to U.S. Dollars or Euro?


Available
Not available

Bilateral power contracts

Can a C&I (Commercial and Industrial) customer sign a long-term contract (PPA) for clean energy?


Available
Not available

Fossil fuel price distortions - Subsidies

Does the government influence the wholesale price of fossil fuel (used by thermal power plants) down through subsidies?


Available
Not available

Fossil fuel price distortions - Taxes

Does the government influence the wholesale price of fossil fuel (used by thermal power plants) up through taxes or carbon prices?


Available
Not available

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This marks the 11th anniversary of Climatescope, BNEF’s annual assessment of energy transition opportunities. The project has been expanded to include activity not just in clean power but in the decarbonization of the transportation and buildings sectors. The Power Transition Factbook is the first of three reports that composes BNEF's Energy Transition Factbook. The transport and buildings sectors reports are coming soon.

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