Insights

Vietnam’s changing energy trends

For many years the moan of many foreign investors, particularly in the manufacturing sector, was energy and the brownouts and blackouts and the projected future shortages. We do not hear too many complaints these days and I will highlight some of the reasons why. Since the year 2000 Vietnam has increased the supply of energy to the economy 8 times[1]. The growth in electricity supply in 2018 was marked at 10% double the figure in 2011. The long term projection under the latest Power Development Plan 2020 to 2030 forecasts an annual increase in production of 8%.

 

The new and welcome trend is towards renewable energy sources and away from hydro, gas fired, and the once planned nuclear sources.  The current plan foresees renewables contributing 10% of energy by 2030 but for many observers and industry experts the move to renewables is too slow and lagging behind other developing economies. Whilst the potential for renewables, particularly wind and solar are extremely high the costs in Vietnam are reportedly double those of India and China, mainly due to the higher land costs and high costs of finance.

 

The time is certainly right to invite the greater participation of the private sector but as we know there are still significant issues in developing PPP projects because of the much needed review of the regulations around PPP and the fact that very few lenders are comfortable with the current PPA agreements. Other challenges include the grid system and battery storage capability.

 

One of the opportunities to increase solar energy use and production is through rooftop solar which is becoming more commercially feasible with the reduction in costs of solar panels. Whilst the bigger benefit of rooftop solar is self-sufficiency many home and factory owners are also looking to benefit from onward sale of su7rplus electricity but this will also place pressure on the transmission line and grid system both of which are in need of upgrading.

 

Kenneth M Atkinson

 

[1] John Rockhold Head of the Power and Energy working group under the Vietnam Business Forum.

Founder & Senior Board Adviser
Kenneth Atkinson Contact
Insights Latest Insights View more