Solar Energy in Vietnam: High Hopes, Little Action

Blogs - Vietnam: Feb. 28, 2018

Vietnamese electricity is cheap and—largely—dependable, but is it green? At the moment, government-owned Vietnam Electricity (EVN) is the sole provider in the country, and this job is getting more and more demanding by the day.

In 2000, the energy usage per capita was listed at 294.04kWh. In 2014, when the data ended, usage had skyrocketed to 1,439.16kWh, propelled by expansive electricity coverage in rural regions and the proliferation of high-energy manufacturing plants.

At EVN, coal reigns. More than half of the energy in the country comes from coal burning, the rest from oil and gas; renewable energy sources are negligible.

The Vietnamese government aims to raise the renewables rate to 6.5 percent by 2020, and 10 percent by 2030.

In terms of megawatts, the current 850 MW generated by clean energy would be increased to 4,000 MW by 2020, and 12,000 MW by 2030. Experts doubt whether even the new numbers will be met.

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Full of Energy

This isn’t for lack of trying. As Ocean Nguyen from Red Sun Energy JSC told us, “Our government wants companies to use solar energy. They want to reduce the amount [of traditional electricity] they use.” So far, this has been a primarily top-down approach.

For one, government subsidies are available for companies committed to producing alternative forms of energy. Additionally, Nguyen said that a plan is in place to use solar power for government buildings, as well as large government-owned companies.

Vinamilk is one high-profile company with a commitment to solar, having introduced sun energy in its dairy farms; others are likely to follow suit.

Video source: Nguyen Long

With a stated commitment to improving renewable energy usage, the question becomes: why isn’t the adoption coming quicker? In September 2017 a highly publicised pilot auction program was circulated, announced in a conference held by The World Bank and the Ministry of Industry and Trade. The main takeaway from the document was the introduction of an official Feed-in-Tariff—the amount of money per kilowatt-hour paid to owners of solar energy sources who sell their energy to EVN.

At 9.35 US cents, the rate falls below the standard of other Southeast Asian countries, and by fixing the price in USD, potential investors worry that the rate could be affected by shifting foreign currency rates. Nguyen recognises that some potential customers are turned off by the fact that setting up solar power capabilities is still relatively expensive compared to using traditional electricity, though in five years he says enough energy has been generated to pay for itself. For the time being, it seems focussing on companies rather than individual consumers will make the most impact.

The Domestic Sun Rising

Despite potential problems, multinational companies like GE have been turning to Vietnam as a potential place of business, though at the moment local companies are most active.

In October, Sao Mai Group partnered with USAID to invest in a 210 MW solar power project worth US$193.35 million, to be located in An Giang Province. HCMC-based TTC Corporation is also getting some skin in the game, initiating several projects in central and southern Vietnam. The projects will be worth around VND3 trillion (US$133,500 million) and will start construction in Q1 of this year.

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However, until residents begin to embrace alternative energy sources as readily, the country will likely be looking at coal for some time in the future.

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