Revolutionizing the Energy Landscape: Vietnam’s Ambitious Path to Transformation | Tractus

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Amid Vietnam’s rapid expansion in the industrial manufacturing sector, combined with an anticipated annual population growth rate ranging from 6.5% to 7.5%, demand for energy within the country has surged. While sustainability has become top of mind for many government agencies and investors alike, The nation still relies heavily on coal as its primary energy source, posing a significant challenge due to its notorious greenhouse gas emissions and contribution to environmental degradation.

In response to this pressing dilemma, the Vietnamese government unveiled its visionary strategy, the Power Development Plan 8 (PDP8), on May 15, 2023. This comprehensive and forward-looking initiative aims to harmonize the country’s energy demands and fulfill the commitments made by the Prime Minister at the 2021 United Nations Climate Change Conference (COP26) to achieve net-zero carbon emissions by 2050. PDP8 aspires to elevate the share of renewable energy in the power mix to approximately 30.9% – 39.2% by 2030, with a further goal of 67.5% – 71.5% by 2050. This strategic shift is steering Vietnam away from its current coal-dominated energy landscape towards a future illuminated by cleaner, greener, and more sustainable energy sources.

Coal port and stocking operation along Long Tau River, Phuoc Khanh Vietnam
Credit: Getty Image

The current PDP8 target is to increase the total generation capacity in Vietnam to 150 GW by 2030, from around 78 GW at the end of 2022. This will require a significant adjustments to the makeup of Vietnam’s energy mix. The plan aims to achieve the following by 2030:

  1. Coal-fired: reduce its share to 20%.
  2. Natural Gas and LNG: increase to 25% of the total energy output.
  3. Hydropower: reduce capacity to 29.4 GW by 2030, equivalent to 19.5% total share of energy source of 2030.
  4. Renewable Energy: increase to 30.9 – 39.2% of the total in 2030:
    • Wind: increase to 18.5% of the total by 2030 (14.5% onshore and 4% offshore), for a total equivalent to 27.9 GW;
    • Solar: modest additions to capacity with a share of 8.5% by 2030;
    • Biomass: 2.3 GW of biomass electricity and electricity produced from waste (1.5%).
  5. Imported Electricity: currently accounts for 3.3% at 5 GW; potential increase up to 8 GW.
  6. Other sources of electricity may contribute up to 3.9% of the total energy mix, with the following breakdown:
    • 2.4 GW of pumped-storage hydroelectricity (1.6%);
    • 0.3 GW of storage batteries (0.2%);
    • 2.7 GW of cogeneration electricity, electricity using waste heat, blast furnace gas, by-products of technology lines in industrial facilities (1.8%);
    • 0.3 GW of flexible electricity sources (0.2%).
Source: Vietnam Power Development Plan VIII & EVN Vietnam

The energy landscape is witnessing a notable shift in the composition of its two primary sources. Presently, coal-fired and hydropower sources dominate the energy share. Nevertheless, as per the PDP8 plan, renewable sources and natural gas & LNG are set to take over. Looking ahead to the next decade, wind power is expected to comprise the largest share in Vietnam’s renewable energy landscape.

Projecting further towards the year 2050, under this plan, coal-fired electricity will no longer be present, and solar power is planned to surge ahead, claiming the top spot with an impressive 34.4%. Wind power will follow closely at 29.4%. A new power source will also find its place in the renewable energy equation – hydro gas, contributing 3.2% to the overall mix. This innovative energy source will primarily emerge from repurposing gas-fired and LNG power plants, tapping into hydro-based fuel for cleaner and more sustainable energy generation.

Source: Vietnam Power Development Plan VIII

Vietnam’s PDP8 plan is not without its risks. Achieving the plan will require substantial investment of USD134.7 billion, including USD119.8 billion for power generation and USD14.9 billion for grid infrastructure. Thus, securing long-term and sustainable funding, both domestically and through potential international partnerships, is a critical aspect of the plan’s success. Additionally, Vietnam’s increasing reliance on natural gas up to 2030 may pose a risk, given the depleting local resources as well as both the cost and infrastructural challenges of importing gas, that will likely worsen as the world moves away from this energy source; however, plans to reduce this consumption by 2050 will follow global trends.  Ensuring top-tier infrastructure quality and adept timeline management is imperative.


How Tractus Can Help

Tractus has been assisting companies to make informed decisions about where to invest and how to expand their businesses in Asia and beyond for more than 25 years. In a changing energy landscape that is certain to impact the investment environment, staying ahead of local and global trends is more important than ever. Contact Tractus today to learn more about how you can ensure your investment in Vietnam is set up for success.


Authored by

Duyen (Olivia) Nguyen is a Consultant based in Vietnam.


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