Renewable energies in Vietnam: Current opportunities and future prospects
thamnguyen99 19-11-2020, 11:12

There are also other incentives such as low-interest loan loans, land use tax exemptions and land lease exemptions.

In order to ensure investors consistent returns, the government has also approved electricity prices (tariffs for avoided costs, feed-in tariff) for grid-connected renewable energy, including standardized electricity purchase agreements (20 years) for each type of renewable energy. EVN, the only electricity consumer in Vietnam, was also commissioned to give priority to renewable energies in connection with the grid connection, dispatch and purchase of electricity at approved tariffs.

The future of renewable energies is positive, but more needs to be done

Vietnam has immense potential for wind and solar projects and is sufficient to meet the growing energy demand. However, low feed-in tariffs have deterred foreign investors due to the high investment costs. The government must gradually increase the FiTs or at least adopt a pricing plan so that investors are informed of the price increases to be expected in the future. If Vietnam can introduce a bankable PPA, it could also increase international funding, which would help the country achieve its renewable energy goals.

Apart from the FiTs, negotiating standard PPAs with EVN, the only pantograph, is time consuming, resulting in an increase in the overall project costs. The PPA negotiations need to be made more efficient in order to reduce the overall cost to investors due to delays. Competent government agencies should also shorten the timeframe for formulating policies and regulatory approvals, which in some cases has taken years. A lack of clarity and delays in approvals often lead to delays in execution or the complete abandonment of projects.

In addition, the quality and acquisition of data for the renewable energy subsectors need to be improved in order to provide investors with clarity about available locations, infrastructure capacities and the goals of the government.

As the renewable energy sector gains momentum in the next decade, the government must also focus on developing human resources. In recent years, EVN has carried out various training programs for technical experts, mainly for power plants, and similar training courses should also be introduced for the renewable energy subsectors in order to meet the new requirements.

Last but not least, the supporting industry plays a crucial role in the development and faster introduction of technologies for renewable energies. The government should encourage domestic SMEs through capital subsidies and incentives such as tax breaks and preferential loans. A competitive supporting industry will help reduce capital costs for renewable projects.

Note: This article was first published in March 2019 and has been updated to reflect the latest developments.