Capturing the wind: Renewable-energy opportunities in Vietnam
Vietnam’s commitment to increasing its energy capacity using renewable sources and favorable macroeconomic conditions may create valuable opportunities for wind investors and developers.
In pursuit of Vietnam’s economic growth agenda and sustainability goals, the country’s authorities have been actively working to expand energy capacity, with a commitment to renewable sources where possible. This is no small feat in a country where coal provides most of the energy generation, hydropower sources are essentially tapped out, and energy needs are growing by almost 10 percent a year. According to our 2019 research on Vietnam’s energy future, renewables have the potential to become the lowest-cost option for meeting the country’s energy needs.
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Already, Vietnam has made significant progress on expanding its capacity to generate renewable energy. The vast majority of that expansion to date has come from photovoltaic (PV) solar installations, in large part driven by private investment. Still, coal retains a dominant share of the energy mix today, accounting for more than 50 percent of the capacity added since 2018, which has contributed to persistent poor air quality. According to a 2019 report from the Ministry of Natural Resources and Environment, for example, pollution metrics in Hanoi reached historical highs before the pandemic despite a variety of efforts.1
Earlier this year, Vietnam’s Ministry of Industry and Trade released a draft of its eighth national power development plan (PDP8) for 2021–30, which also includes a vision for 2045.2 The plan includes higher targets for renewable-energy capacity—with upper limits of 18.6 gigawatts of solar and 18.0 gigawatts of wind by 2030—as well as for the share of total energy capacity derived from renewables. It also accounts only for coal plants already under construction; no new coal plants are planned.3 This top-down plan informs the plans of provincial governments working in concert with the centralized government in achieving targets.
PDP8 calls for a substantial increase in wind capacity, which has untapped potential in Vietnam. Vietnam’s natural advantages in wind are significant, and some pioneering players have already launched large-scale projects in favorable locations. In this article, we show how the success of solar projects to date creates significant opportunity for wind power and then outline the steps investors and developers can take to capitalize on that potential.
Solar has been powering Vietnam’s energy expansion
Since 2018, the growth in Vietnam’s power-generation capacity has largely come from private investors. At least 45 percent of this growth has resulted from purely private investments (both foreign and domestic), while 35 percent of capacity growth involved foreign direct investment (FDI), either alone or in partnership with local companies and governments.
Due largely to this investment, Vietnam has experienced a boom in renewables capacity that is dramatically shifting the overall energy mix (Exhibit 1). Since 2018, the country has added almost ten gigawatts of capacity from renewable-power plants (excluding distributed-generation solar), constituting nearly half the total energy capacity added. The vast majority of this renewables capacity is solar, with hydro-, wind, and biomass power only adding up to one gigawatt of capacity.Read More…
source : mckinsey
