In 2000, Renewable Energy including biomass and hydro together contributed around 53% of the total primary energy supply (TPES). However, this share dropped to 24% in 2015. In the same period, the coal share grew from 15% to 35% of total supply. This trend is expected to continue far into the future as the domestic supply of hydro and biomass do not seem to be able to meet the increasing demand.

Vietnam has relatively ambitious targets for the development of renewable energy. These targets are described in the National Master plan for Power Development 2011-2020 or Power Master Plan VII, which includes the vision until 2030. The share of renewable energy in electricity generation is expected to grow from 3.5% in 2010 to 4.5% by 2020 and 6.0% by 2030 (see Table 1).

 

 Vietnam RE Targets for 2020 and Vision for 2030

Source: National Master Plan for Power Development for 2011 – 2020 with the vision to 2050

 

Note: The target for 2020 consists of two parts: normal hydropower (17,400 MW) and energy storage hydropower (1,800 MW). In 2030, the target for hydropower storage is 5,700 MW and there is no specific target for normal hydropower. It is assumed that normal hydropower capacity remains the same as of 2020. 

In Vietnam, large hydropower with installed capacity more than 30 MW is not considered a renewable energy source.

At present, the total renewable energy installed capacity is around 2,418 MW in 2016. Hydropower is the dominant source which contributes to 94.42% of total installed capacity of renewable sources (see Figure 4). Wind power make up the remaining share. Only small hydropower plants with capacity of less than 30 MW are considered to be renewable energy source in Vietnam.

Vietnam's RE Installed Capacity in 2016 (%)

  • Small Hydro (2,283 MW)
  • WInd (135 MW)

Source: Vietnam Electricity Annual Report 2017

The total renewable energy generation is nearly 66 TWh in 2016. Hydropower is the only dependable renewable source in Vietnam. The potential of hydropower is estimated at 64 TWh per annum. In case this resource was almost fully utilised, the total electricity consumption in the country could be covered. Vietnam is also rich in biomass resources such as rice husks, paddy straw, etc., which could also be used for electricity generation.

At the moment, the electricity generated by renewable energy sources comes almost exclusively from hydropower. Wind power and biomass also generate some electricity, but the numbers are almost negligible compared to hydropower (see Figure 5).

Vietnam's RE Electricity Generation

  • Hydro (63.7 TWh)
  • Biomass (2 TWh)

Source: Institute of Energy. Vietnam Energy Statistics

Note: Hydropower indicated in Figure 6 represents the small hydropower (less than 30MW) as well as large hydropower (with capacity equal to or more than 30MW). Although the Ministry of Industry and Trade Vietnam does not consider large hydropower (specifically for installed capacity above 30 MW) as a renewable energy source, the available energy generation data does not distinguish between small and large hydropower.

According to the Vietnam energy outlook 2017 published by Ministry of Industry and Trade, the summary of existing supporting mechanisms for renewable energies or renewable energy feed in tariff is shown as in Table 2 below:

Vietnam RE Feed in Tariff in 2017

Source: Vietnam Energy Outlook 2017

 

The wind energy sector is expected to develop progressively in the coming years. There is an on-going 6 MW wind farm project on Phu Quy Island in Binh Thuan province. In 2012, the installation of 10 wind turbines with a total capacity of 16 MW was completed in Bac Lieu province. The process of grid connection is under way. In total, 62 wind turbines are going to be installed in the first phase of this project with total installed capacity of 99.2 MW. Another 52 turbines are planned for the second phase.

The government has launched a roadmap for electricity market liberalization. This will offer opportunities for individuals or businesses to establish energy retailing enterprises. However, this roadmap is a long-term process and a fully competitive retail market cannot be expected in the near future.

The subsidy for renewable energy development is necessary to attract investments. However, since the subsidy price for electricity (excluding small hydro) is higher than the average price offered by the EVN on the electricity market, it is necessary to consider the option for setting up a fund to support renewable energy development.

The National Energy Development Strategies for Vietnam up to 2020 with an outlook until 2050 states that the Government of Vietnam considers to establish an Energy Development Fund to support the development of renewable energy project. Under this fund, the developers of renewable energy-based power project have access to investment credits from the state which provides loans at favourable interest rate.

The Vietnam Renewable Energy Development Strategy up to 2030 with an outlook to 2050 states that the Sustainable Energy Promotion Fund shall be established to support renewable energy development.  The fund will be provided by the state budget, revenue from the environmental fees levied on fossil fuels, various source of funds, and contributions from domestic and foreign organisations. This fund will provide the financial support to compensate the costs incurred by the power utilities on the investment and construction cost for power system using renewable energy power sources. This fund also supports the studies as well as the R&D of renewable energy project and construction of renewable energy projects in rural areas.

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