I just came back from Hanoi, where I was working on new opportunities in energy sector consulting. Vietnam’s power sector is on a brink of major change with opportunities opening for renewable energy, but the uncertainty lies in when exactly will the change take place.
Below are the conclusions I have drawn from the visit. I would be happy to discuss them, so do reach out on kuhasbani@revellegroup.eu
1. Vietnam is one of the fastest growing markets in South East Asia in terms of power demand growth. The current projections from the government’s National Power Development Plan N.VII indicate up to 11% of annual growth rate by 2020, slowing down to 7 to 8% during the period 2020-2025. Additional capacity will be required to satisfy this demand.
2. Currently, the state owned Electricity Corporation of Vietnam (EVN) dominates the generation landscape (it owns 61% of almost 25GW of installed power capacity) along with other state owned players (PVN 12%, Vinacomin 5%). Domestic and foreign investors own 15% and 7% respectively. However, power market restructuring is underway which should favor private owned generation. Wholesale market should open to competition by 2019 with retail market opening to follow.
3. The government officially supports shift in generation mix towards gas and renewable energy. In January 2016, the Prime Minister released a statement announcing the review of coal-based power generation development. For now, the announcement contradicts the official government plan, however it is indicative of the ongoing shift in policy making.
4. Several key decisions are pending which could affect renewable energy projects economics in the near future (which can be next month as well as in several years). This includes:
a) Increase in feed-in-tariff for wind to 11.2 USD cents/kWh. While there are almost 50 potential wind projects in the pipeline in Vietnam with total installed capacity of more than 4 GW, only few wind projects commissioned so far:
i) Tuy Phong/Binh Thuan wind farm - 30 MW
ii) Bac Lieu wind farm - 51.2 MW
iii) Phu Quy wind/diesel hybrid system - 6 MW
b) Feed-in-tariff announcement is expected for large-scale solar projects as well as rooftops. The expected tariff for rooftops is 15 USD cents/kWh which makes grid-parity for some industrial users.
5. In the meantime, limited number of installations have been happening which demonstrate feasibility of rooftop installations in specific circumstances;
a) Ministry of Industry and Trade building 12 kWp;
b) National Assembly in Hanoi 50kWp
c) UNDP building in Hanoi 119 kWp
d) Intel factory in Ho Chi Minh City 200 kW
6. At local level, Ho Chi Minh City launched an interesting initiative which supports solar installations on parking lots.
Useful sources of information on renewable energy and power sector that has come out of the international donors and development banks work in Vietnam:
- GIZ wind study for Vietnam (2015) –& more will be coming both on wind and solar
- UNDP Green Growth and Fossil Fuel Fiscal Policies in Vietnam (2014)
- World Bank Vietnam 2035 report “Toward Prosperity, Creativity, Equity and Democracy” (2016)
- ADB Assessment of Power Sector Reforms in Vietnam (2015)
Katarina Uherova Hasbani, Business Development Asia @ Revelle Group
