The Prime Minister issued Decision No 2068/QD-TTg dated 25 Nov 2015 on Viet Nam’s Renewable Energy Development Strategy until 2030 and vision to 2050. The Strategy is aimed at mobilizing all available resources to promote the development and usage of renewable energy, reduce dependence on fossil fuels, contribute to energy security, mitigate climate change, protect the environment, ensure sustainable socio-economic development, and to utilize renewable energies to reach sustainable environmental targets, and to develop the green economy.
The renewable energy potential in Viet Nam
Based on the authority’s approved plan for cascade hydropower plants in the big rivers and medium-and-small scale hydropower plants, Vietnam has the potential to develop 1,279 hydropower projects with a total capacity of 26,500 MW, among which: 72 projects are of medium scale (with capacity ranging from 30MW to 100MW), 43 projects of big scale (with capacity more than 100MW) with total rated capacity of 14,583MW; 1,164 projects of small scale (with capacity less than or equal to 30MW) with total rated capacity of 7,745MW. In addition, there are potential to develop other 200 projects, mostly small-scale projects, with total capacity of 400MW. When fully utilized, all the hydropower projects in Vietnam can generate around 95 to 100 billion kWh annually; of which, approximately 35 to 40 billion kWh come from medium and small-scale hydropower projects.
Wind power potential
Coastal provinces and cities, and highland provinces have potential to develop wind power energy; with the estimated onshore wind capacity of around 40 to 50 thousand MW. Taking into account the offshore potential, Vietnam can develop up to 100 thousand MW of wind power.
The Ministry of Industry and Trade has approved a number of provincial Wind Power Development Plans. Accordingly, the wind power potential of provinces to 2030 are as follows: Ca Mau – 3,607MW; Binh Thuan – 2,500MW; Ninh Thuan – 1,409 MW; Tra Vinh – 1,608 MW; Soc Trang – 1,470 MW.
Solar power potential
Vietnam is located in the tropical area and use solar power all year round; on average, the Red River Delta is exposed to the sun for 1,500 hours a year while this for the Southern Central region is 2,700 hours. The energy density varies from 3,000 to 5,000 kCal/m2/day. The national average solar radiation is approximately 4.6kWh/m2.day; the highest being 5.7kWh/m2.day in the Southern Central coast.
Biomass include all the energy resources originated from organic matters such as wood, agricultural products, organic waste, urban solid waste, weed and other plants. Viet Nam’s total biomass power potential is around 60 million TOE (Total Oil Equivalent).
The benefits of and the demands for renewable energies.
To ensure energy security: since 2015, Vietnam has turned from energy exporter to energy importer. Developing renewable energy sources will help reduce the import of energy, and improve national energy security.
To ensure sustainable economic development: By harvesting the local resources, creating a new industry, and generating more jobs, renewable energy development will also create more business opportunities, especially for small and medium enterprises, mostly in creating new enterprises. Big enterprises can also benefit from renewable energy by investing in new technologies as part of their long-term business plan; all of this contribute to Viet Nam’s sustainable economic development.
To improve provincial socio-economic performance: contributing in lifting the rural living standard, upgrading rural infrastructure; to attain multi-targeted economic goals, to increase the provincial revenue.
To ensure the sustainability of the environment: Renewable energies are sustainable, and do not emit harmful wastes to the environment and can be harvested without damaging the existing fauna and flora.
To provide energy for rural and mountainous areas, islands, remote areas, and under-developed areas.
- Economic-financial feasibilities of renewable energy projects: in many cases, the renewable energy power generation can compete directly with generation by fossil fuel sources.
Renewable energy targets
To ensure that most rural households have access to electricity at reasonable price by 2020.
To reduce the Greenhouse Gas Emission by 5% in 2020, and by 22% by 2030, and by 45% by 2050.
To increase the ratio of renewable energy to 32.3% in 2030, and to approximately 44% by 2050.
To increase electricity generation from renewable energy to 32% in 2030, and to about 42% in 2050.
Electricity generation from wind power accounts for 2.7% by 2030, and 5% in 2050. Electricity generation from solar power accounts for 6% by 2030, and 20% in 2050. Electricity generation from biomass power accounts for 6.3% in 2030, and 8.2% in 2050.
Biofuel can meet 13% of the demand for transportation in 2030, and about 25% in 2050.
Incentives for the development of renewable energies
a. Develop a market for renewable energy: to encourage organizations, individuals of different ownership to engage in the development and use of renewable energy, the State protects the rights and lawful benefits of such organizations, individuals who develop and use the renewable energy.
b. Price support mechanism (Feed in tariff – FiT) and investment guarantee.
- Electricity companies must buy all the power generated from renewable energy plants connected to the national grid.
- Renewables energy projects are prioritized when it comes to connection to the national grid.
- Ministry of Industry and Trade develops and submits to the Prime Minister for approval of the FiT for renewables energy projects connected to the grid:
Wind power projects: (i) for onshore projects, the FiT is 1,928 VND/kWh (equivalent to 8.5 US cents/kWh); (ii) for offshore projects, the FiT is 2,223 VND/kWh (equivalent to 9.8 US cents/kWh).
Solar power projects: for solar power projects connected to the grid, the FiT is set at 2,086 VND/kWh (equivalent to 9.35 US cents/kWh).
Biomass: (i) for Biomass projects using Combined Heat Product, the FiT is 1,220 VND/kWh (equivalent to 5.8 US cents/kWh); (ii) For other biomass projects, the selling price at the metering terminals follow the avoided cost tariffs issued by the Ministry of Industry and Trade annually.
For projects using solid wastes: (i) For projects using direct solid-waste combustion technology, the FiT is 2,114 VND/kWh (equivalent to 10.05 US cents/kWh); (ii) For projects using collective gas from waste burial sites, the FiT is 1,532 VND/kWh (equivalent to 7.28 US cents/kWh).
c. Power generators and Power Distributors must meet the standards for renewable energy ratio (Renewable Portfolio Standard – RPS).
d. Clearing mechanism (Net metering): the electricity end-users who develop renewable energy generation are eligible for clearing mechanism.
e. Other incentives and benefits: Renewable energy development projects and projects using renewable energy can receive investment incentives, import tax incentives, corporate tax incentives, land usage incentives, etc.
f. Environmental protection policy: Organizations, individuals using fossil fuel generated energy must pay environmental tax related to the amount of fossil fuel used.
- Vietnam has great potential for renewable energies; till now, the focus has been on hydropower; wind power and solar power projects are of small scale and does not match their expected potentials.
- Some mechanisms and policies to promote the development of renewable energies have been issued; however, there is a big gap between the reality and the strategical targets. The Ministry of Industry and Trade, and other government organizations need to study and propose new support mechanisms or adjust current ones to promote the development of renewable energies.
- Renewable energy projects are located around the country with short construction time frame (if all the support mechanisms are applied, the total time for investment preparation, and investment time are approximately 1-2 years). Many thermal power plants (Long Phu 1, Song Hau 1, Quang Trach 1, Nam Dinh, Na Duong 2, Cam Pha 3, etc.) are delayed in comparison with the plan specified in the Revised National Electricity Master Plan VII; so renewable energy projects will act as an important solution to maintain the electricity supply required for the social-economic development from 2019 to 2020 and beyond.
Nguyen Van Vy - Vietnam Energy Association