How does the US business community view investment opportunities in the Vietnamese energy market?

Gregory Testerman, chairman of the American Chamber of Commerce for Ho Chi Minh City and the central city of Danang

The US business community welcomes and supports the Vietnamese government’s vision and actions for a sustainable and low-carbon energy transition. We believe that Vietnam has great potential to become a regional leader in renewables, as well as a strategic partner for the US in advancing the global climate agenda.

The US business community is ready to offer its expertise, technology, and capital to help Vietnam achieve its energy goals. Over the past 20 years, Vietnam has reached a remarkable GDP growth rate of between 6-7 per cent per year, while electricity demand has increased over 10 per cent between 2016 and 2020.

It is forecast that demand will continue to grow at 8-9 per cent annually, requiring 6GW of installed capacity growth each year.

Vietnam’s Power Development Plan VIII (PDP8) strongly emphasises the use of renewable and liquefied natural gas (LNG) for power generation, while restraining further development of coal-fired capacity. The Vietnamese government also set a goal of putting into operation 22,400MW of LNG by 2030, from a base of zero today.

What specific steps are being taken by the US investors into the energy sector of Vietnam?

One of our member, AES, has been investing in the energy sector in Vietnam for over 12 years with a solid commitment to support the energy transition in Vietnam to meet the carbon-neutrality goal by 2050.

The investment of members in a combined cycle gas turbine power plant and new LNG terminal project is worth millions of US dollars. This will help to play a significant role in helping Vietnam during its transition to eliminate coal dependency and bridge the green transformation of the energy sector.

Together, the power plant and terminal are expected to play a major role in shaping Vietnam’s energy future by diversifying the energy mix with imported LNG and meeting the country’s increasing demand for sustainable and affordable electricity. It will also help improve the security of supply by providing firm capacity as more renewables come online.

AES continues to explore new investment opportunities which support Vietnam’s impressive commitment to reducing greenhouse gas emissions to net-zero by 2050, particularly in renewable energy and battery energy storage systems.

Vietnam is at its historic turning point for the next stage of its development journey, especially with the sustainable trend that multinational corporations are considering partly shifting their supply chain to Vietnam. This is especially so in the semiconductor industry, which the US business community has many competitive advantages over its competitors.

One of the key elements for semiconductor multinationals, such as Amkor Technology which inaugurated a $1.6 billion chip factory in the northern province of Bac Ninh in October, is access to green energy so that they can reach their net-zero ambitions in 2030-2040. Hence, it is the right time for US players to invest in the Vietnamese energy market, especially for renewable energy sector such as portfolios of rooftop solar projects.

What should the Vietnamese government do to open more flows from the US community to the energy sector?

The government has made significant progress in creating an enabling environment for the energy transition, such as the PDP8, the renewable energy development strategy, and the Just Energy Transition Partnership. However, there are still some barriers that need to be addressed.

Some key challenges for the energy sector persist, including policy barriers, slow development approval times, market design, and the burgeoning growth in solar and other renewable energy without more reliable baseload, leading to overloading of transmission infrastructure and grid instability.

Vietnam’s energy transition to cleaner and greener energy sources will be critical to combat the climate crisis in the region and ensure regional stability as, geopolitically, Vietnam continues to be an important platform for western economies in the region against Chinese dominance.

The future growth of the power sector assumes the continued investment in manufacturing and that the manufacturing investment requires access to reliable power. Therefore, in order to meet growth expectations, the Vietnamese government should move large power projects forward with urgency.

The government is also able to work with the US government on financing the investment of US players into the Vietnamese energy market, especially for renewable energy. The most recent example is that US International Development Finance Corporation has signed a letter of interest with VinFast to consider the company’s application for a $500 million loan for expansion.

The loan, which will be used to support VinFast’s establishment of lithium-ion battery manufacturing facilities in Vietnam, is subject to a comprehensive review and approval process.