Thomas Jakobsen has been working within the Vietnam marketplace for some 20 years, with most of his time in renewable vitality. This yr has been one to recollect for him.
In lockstep, the Vietnam authorities had authorised a company inexperienced energy buying scheme in summer season, and adopted up with clarifying rules. A revamp of an overarching electrical energy legislation final month signalled an extra opening up of the state-managed sector to personal buyers.
Jakobsen, managing director of Indochina Power Companions, a Singapore-based renewable energy producer and developer, stated he was “very glad” with the tempo of rules, which is “nearly as good as I’ve seen in 20 years in Vietnam”.
Lots of his friends may share the emotions, following whirlwind yesteryears. Renewables builders rushed in on excessive public procurement costs in 2018, making the nation Southeast Asia’s largest consumer of photo voltaic and wind vitality by a large margin. Then authorities offers abruptly halted in 2021 alongside a political crackdown, leaving inexperienced energy companies in a multi-year limbo. Whole wind and photo voltaic capability has crept up lately, although not considerably increased than the 20 gigawatts (GW) already put in by 2020.
“There may be nonetheless a variety of work to do, however I feel that the sentiment within the trade is rather more constructive than it was eight months in the past, or actually a yr in the past,” stated Mark Hutchinson, director of the Southeast Asia taskforce at trade group International Wind Power Council (GWEC).
Nonetheless, a renewable vitality renaissance for Vietnam could have to attend. Whereas massive companies like electronics agency Samsung and clothes retailer H&M made topline commitments to acquire extra inexperienced energy, few precise new clear energy tasks have been introduced this yr. Massive renewables companies have pulled again from the Vietnam market, and haven’t stated they might return.
Business gamers say 2025 will seemingly nonetheless be a yr of churning out fine-print laws, although particulars right down to the cents charged in operational charges may make or break inexperienced energy improvement within the nation. There are additionally various opinions on what precisely Vietnam ought to concentrate on, together with excellent considerations on the sufficiency of its electrical energy grid, and human rights document in its vitality transition.
Twin-track revamp
Vietnam’s renewable vitality plans basically run on two tracks. A phase is carved out for companies to purchase inexperienced energy immediately from producers, whereas the state additionally intends to renew renewables procurement for big tasks. Current laws suggests onshore wind and rooftop photo voltaic panels belong to the previous group, whereas offshore wind farms are for the latter.
On company procurement (generally known as direct energy buying agreements, or DPPA), the important thing nervousness of producers lies within the charges Vietnam intends to levy ought to offers require the usage of public energy traces. Current draft guidelines counsel a cost of US$0.018–0.025 per kilowatt-hour (KWh) of electrical energy despatched via, a determine that provides up as company offers contain large volumes of electrical energy provide over a few years. Too excessive a cost would erase the aggressive benefit renewables maintain in offering low cost energy, nevermind its inexperienced credentials.
“In the intervening time, the precise regulation doesn’t enable us to have a look at promoting on to remaining prospects. We’re, in fact, prepared to think about if the proposed wheeling cost doesn’t make the electrical energy produced primarily within the South and centre of the nation too costly for the purchasers positioned primarily within the North,” stated Olivier Duguet, chief government and co-founder of regional renewables agency The Blue Circle.
Hutchinson stated GWEC would contemplate one thing nearer to US$0.01/KWh possible, echoing the price concern for consumers.
Renewable vitality tasks additionally must be listed in Vietnam’s newest nationwide energy improvement plan to be eligible for DPPA offers. This provides one other hoop builders must clear, particularly since mission lists haven’t been finalised for some provinces.
However getting issues proper may additionally include large rewards. For one, energy demand in Vietnam is about to develop 10 per cent yearly for the remainder of this decade, so company offers may allow provide to be met by renewables, as a substitute of incumbent coal.
“You may transfer ahead with 10GW of wind energy via the DPPA, at little or no value to EVN (Vietnam Electrical energy, the nation’s sole state-owned utility). That can, to a big extent, resolve the foremost downside of holding energy manufacturing capability above peak demand in Vietnam,” Jakobsen stated. Jakobsen’s Indochina Power Companions is working to finish 400 to 500 megawatts of tasks via the DPPA scheme.
On the client’s aspect, world companies face regulatory pressures from the European Union to make use of greener vitality. Heavy trade importers into the bloc should pay carbon taxes quickly, with the expectation that extra sectors will probably be tithed sooner or later. Vietnam is the EU’s largest Southeast Asian commerce companion for items.
Offshore wind agenda
Vietnam can also be eager on restarting public procurement of renewable vitality tasks, although progress on this entrance has been slower. Ideas of how the nation intends to run auctions for brand new developments had been lately printed, although no particulars can be found.
In a November report, GWEC stated an absence of clear steerage and lengthy negotiation course of with state utility EVN are holding again improvement of offshore wind farms. It offered the federal government suggestions for a two-stage aggressive public sale course of, first to hunt approvals for marine surveys, adopted by bids for energy offtake – just like how issues work in Australia and the UK. Creating such a system would take Vietnam “at the very least a yr, if not two”, Hutchinson stated.
In the meantime, state-owned Vietnam Oil and Gasoline Group has began on an offshore wind pilot, to be accomplished earlier than 2030. The federal government had earlier stated non-public firms wouldn’t be concerned on this effort, although Vietnam Oil and Gasoline Group has current work with Singapore utility Sembcorp on exporting wind energy to the city-state.
GWEC’s Hutchinson stated tie-ups with overseas companies for the pilots will help with know-how and multilateral financing. However a number of main European vitality companies – Enel, Orsted and Equinor – have lately retreated from Vietnam as a result of stall in its renewables sector.
“We wish to deliver them again. We’ve had numerous discussions with firms which have exited to verify what they want to see earlier than returning,” Hutchinson stated.
An Orsted spokesperson stated the agency appreciates the current coverage adjustments in Vietnam, and can keep its presence within the nation and work with native firms. An Enel spokesperson declined remark, whereas Equinor didn’t reply to queries.
Priorities
Vietnam’s newest electrical energy legislation updates concern not simply the photo voltaic and wind sectors, but additionally embrace guidelines geared toward facilitating the usage of fuels reminiscent of pure gasoline and hydrogen. Nuclear energy improvement as soon as once more options within the wording, after being unnoticed of the sooner iteration printed 2004.
The updates have been billed as essential for vitality safety, however in addition they appeal to questions over whether or not Vietnam can attend to all of the completely different sectors directly. Jakobsen of Indochina Power Companions believes the fast precedence ought to be on onshore renewables – usually the most cost effective types of technology regardless that the size of tasks are often smaller.
“For different vitality sources reminiscent of liquefied pure gasoline, offshore wind and nuclear energy, some work will be achieved within the background, however it could be very useful if the trade, regulators, and advocates can concentrate on what is possible and doable, as a substitute of vitality tasks that haven’t occurred within the final 5 to 6 years as introduced,” he stated.
There may be additionally lingering concern over the aptitude of the ability grid in Vietnam to assist extra electrical energy coming in. Each photo voltaic and wind potential are highest in South Vietnam, however a few of its enterprise hubs are positioned up North close to capital Hanoi, some 1,000 kilometres away. A 520km high-voltage transmission line was accomplished in August, however the expectation is that a number of extra of such installations could be wanted.
Vietnam’s social and environmental monitor document in its vitality transition have additionally attracted criticism. The newest electrical energy legislation stipulated streamlined approvals for emergency energy tasks, permitting a main minister’s determination to exchange written approvals for points reminiscent of land allocation and conversion.
Such provisions threat overriding considerations of affected native communities, stated Guneet Kaur, member of the Vietnam Local weather Defenders Coalition, which is made up of over 30 worldwide and regional environmental justice and human rights organisation. Fossil gasoline and nuclear developments in Vietnam ought to be paused to correctly assess for financial and environmental impacts, she stated.
A number of environmental and clear vitality advocates have additionally been jailed lately, on fees critics imagine are trumped as much as instill worry – although Vietnam’s authorities has denied the accusations.
Broad social dialogue ought to type the spine of any type of environmental, social and governance (ESG) or local people safeguards and is a needed a part of a simply vitality transition, Kaur stated.
“Nonetheless, in Vietnam, unbiased civil society is persecuted which prevents social dialogue.”
This exclusion of civil society and the shortage of transparency makes for “a foul enterprise case and an insecure investor setting”, Kaur added.
Vietnam’s Ministry of Business and Commerce didn’t reply to an emailed request for touch upon its social safeguards and priorities for advancing renewable vitality capability.
Observers stated Vietnam is taking a extra deliberate method with managing its vitality sector, after the volatility of the earlier years.
“We’re seeing warning within the authorities method, which is comprehensible. And they don’t seem to be going to let that occur once more, which is the correct factor to do,” stated Hutchinson.
“Subsequent yr goes to be about finalising the DPPA rules and fees, working to construct all of the decrees and circulars beneath the Electrical energy Legislation, and transferring the EVN and PVN tasks ahead. So it’s going to be much less about high-level coverage and extra about implementation,” he added. PVN is brief for Petrovietnam, the nation’s state-owned oil and gasoline group.
Vietnam’s method may also must take care of a altering regional panorama for renewables. Thailand has additionally launched company inexperienced energy buying this yr, whereas the Philippines has been working yearly renewables auctions for 4 years.
The Philippine mannequin gives for visibility and confidence to take a position, stated Duguet from The Blue Circle, which has practically 2GW of tasks beneath improvement there. “For the second, in Vietnam, we’re removed from having the identical visibility and clear political agenda with a concentrate on renewables,” Duguet stated.
“However, this might be shortly tackled by the central and native authorities if there’s actual political willingness,” he added.
