In the past two decades, Vietnam has experienced one of the world’s ́ most rapid economic growth. The GDP per capita has increased nearly 20 times, from USD 94.88 in 1990 to USD 2,343 in 2017. Therefore, energy economy of Vietnam has changed rapidly in the past few decades with the transformation from an agricultural based on traditional fuels, to a modern mixed energy economy. With the increasing energy demand and recent fluctuations in energy import and export, in order to fulfill their domestic demand, Vietnam has become a net energy importer since 2015.

The energy sector plays a significant role in promoting the economy development. Economic growth requires secure and affordable supply of energy to all of the society participants and economic sectors. At the same time, in order to be sustainable, the energy sector must be able to attract the capital required to expand infrastructure, securing the needed supply of energy sources in the long term, and reducing negative environmental impacts as well as controlling green-house gas emissions.

According to National energy development strategy within 2020-2050, that is developed by Ministry of Industry and Trade (MOIT) in 2007, the specific objectives are striving to ensure adequate energy supply to meet the demand for socio-economic, developing generation sources and power grid, developing oil refinery plants, ensuring the national strategic reserve of oil at 45 days of average consumption, completing the rural and mountainous electrification program, developing long-term environmental objectives and standards   and strengthening international cooperation in the energy sector.

Vietnam’s energy demand is mainly covered by conventional fossil fuel (Figure 1). Nevertheless, the renewable energy contributes significant share of 23.73% with Biofuels & Waste as the main renewable source. Large population is residing in rural areas and majority of the workforce is working in the agricultural sector. Therefore, the utilization of biomass, especially by households, is very high. However, the use of biomass is merely limited to the generation of thermal energy for household purpose (e.g. cooking, heating, etc).

Vietnam's Primary Energy Supply in 2015 (%)

  • Oil & Petroleum (19,540 ktoe)
  • Natural Gas (9,551 ktoe)
  • Coal (24,608 ktoe)
  • Hydro (4,827 ktoe)
  • Non commercial biomass (11,925 ktoe)
  • Electricity Import (136 ktoe)

Source: Institute of Energy. Vietnam Energy Statistics

 

The electricity generation in Vietnam is shown in Figure 2. Total electricity generated in 2016 was amounted to 176,990 GWh. Hydropower and coal with 36% share were the dominant source in electricity generation, with natural gas being the third largest (25%). Renewable sources (i.e. Biofuels and Wind) only contribute to an almost negligible share (0.10%) although it was mentioned in 2016 that Vietnam has 135 MW of wind energy capacity.

Vietnam's Electricity Generation in 2016 (%)

  • Oil & Petroleum (19,540 GWh)
  • Natural Gas (44,248 GWh)
  • Hydro (63,716 GWh)
  • Coal (63,716 GWh)
  • Electricity Import (3,540 GWh)

Source: Vietnam Electricity Annual Report 2017

Vietnam applies a differentiated tariff system which denotes that the commercial sector pays the highest price for electricity. Across all sectors, the electricity tariffs in Vietnam are lower than the ASEAN average. However, the prices are expected to rise in the upcoming years. According to Vietnam Electricity in Annual Report 2017, the access to electricity in Vietnam is almost covered.  Vietnam has already achieved the electrification rate of 99%

 

Electricity Tariff in Vietnam per 2017

Source: EVN website [Accessed: September 2018]

Note: Conversion rate from USD (US-Dollar) to VND (Vietnam-Dollar) is 23,232 (as of December 2018).

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