National electricity demand is expected to increase by 8.5% a year until 2025 and 7% until 2030, making Vietnam an attractive market for foreign energy investors.

A project of rooftop solar power in Ho Chi Minh City

The economy is expected to grow at 6.5%-7.5% annually until 2030, and would require 90,000MW of power by 2025 and 130,000MW by 2030.

At the 2020 Vietnam Energy Summit in July in Hanoi a number of deals for investment in energy projects were signed, including the memorandum of understanding by the Copenhagen Infrastructure Partners, Asiapetro and Novasia Energy with the Binh Thuan Provincial People’s Committee to develop the 3.5GW La Gan offshore wind power project at a cost of US$10 billion.

Many investors said Resolution No 55-NQ/TW for strategic orientations for national energy development through 2030 has created a favourable environment to invest in the country’s power sector.

The resolution prioritises renewable and clean energy, offering foreign investors a great opportunity, experts said.

Hoang Tien Dung, Director of the Electricity and Renewable Energy Authority, said: “Existing regulations allow the [sale] of projects to eligible foreign investors. Transferring projects and changing shareholders need approval from the Ministry of Planning and Investment or the Department of Planning and Investment depending on scale."

As of May 11 Vietnam had 92 solar and 10 wind power plants with a total capacity of nearly 6,000 MW in operation, according to the Department of Electricity and Renewable Energy.

A number of them have been sold partially or wholly to foreign investors from Thailand, the Philippines, China, Singapore, and Saudi Arabia.

Coal and gas power projects are invested under the build-operate-transfer model with Government guarantees, but solar and wind power projects do not have such guarantees.

Foreign investors, with their great experience and capability in investing in and managing plants bring investment efficiency and thus greater benefit to society.

The development of renewable energy is helping reduce dependence on costly oil-fired power plants and greenhouse gas emissions.

Feed-in tariffs (FIT) for solar power were considered too high, and though they fell quickly as technology improved from 9.35 US cents per kilowatt-hour in 2017 to 7.09 cents last year for plants on land, they remain quite high compared with other countries.

According to Nguyen Tam Tien, General Director of Trung Nam Group, one of the leading wind power producers with 12 projects underway in Vietnam, wind power cannot be cheap in the country yet.

“Since 100 percent of wind power equipment has to be imported and power producers suffer from a lack of skilled labour, it is difficult to meet the low prices the FIT mechanism suggests.”

According to the latest study by the World Bank, more than 39% of the country’s land area has annual average wind speeds of over 6m/s at a height of 65m, equivalent to a total capacity of 512GW. The offshore potential is 475GW.