Vietnam has achieved a renewable energy revolution over recent years, with its electricity generation from solar and wind reaching
10.5 per cent and 1 per cent respectively as of 2021. This, combined with the country’s existing hydroelectricity capabilities, places Vietnam second in terms of renewable energy capacity per capita among major developing Asian economies, trailing only China. In addition, as seen in the table below, Vietnam stands out among Association of Southeast Asian Nations (ASEAN) member states as the leading player in the share of renewable energy in total electricity generation.
Source: The International Renewable Energy Agency (IRENA)
As countries worldwide race to increase their use of renewable energy, Vietnam’s recent progress will likely have a ripple effect across the ASEAN member states. As one of Asia’s largest markets for renewable energy generation, manufacturing and services, and cross-border energy transmission, Vietnam has the potential to contribute to the prosperity, sustainability, and resilience of the entire region.
Vietnam's renewable energy surge
Since initiating its "Doi Moi" (Renovation) reforms in 1986, Vietnam strategically prioritised power sector development to meet growing demand and achieve universal coverage. As a result, the nation's electricity consumption surged from just a fraction of peer countries like the Philippines, Indonesia, and India in the late 1980s to 2–3 times higher per capita in the 2020s.
Vietnam now outpaces all ASEAN countries, except Indonesia, in electricity production output, with approximately 244 billion kWh as of 2021.
Renewable energy has been pivotal in fuelling this rapid capacity expansion. Hydropower has been a significant part of the country’s energy mix for decades, but what is most notable is the monumental leap in solar energy production. To put this in perspective, in its Power Development Plan revised in 2014, Vietnam planned to reach 850 MW of solar power generation by end-2020 but ended up reaching 16,500 MW, exceeding its target by almost 20 times. This dramatic rise has since slowed, with the total solar capacity reaching 17,077 MW in 2023.
Vietnam has also experienced a remarkable surge in wind energy capacity, rising from
237 MW in 2018 to 5,888 MW in 2023. While this is low in absolute terms, and in comparison to global leaders, it represents the country’s potential for wind energy and Vietnam’s commitment to energy diversification.
Government incentives and predictions
The spike in wind and solar capacity can be attributed to a variety of reasons, such as the Government’s implementation of generous feed-in-tariffs (FITs). This guaranteed a fixed, elevated, rate for electricity generated and sold to the grid over 20 years, as long as the infrastructure began operation by a set deadline.
Another explanation is the Government’s commitment to international climate change treaties, such as achieving net zero by 2050. It is also notable that Vietnamese people are among the region’s most supportive of the green energy transition, most aware of the risks of climate change, and most active in climate advocacy according to the
Southeast Asia Climate Outlook: 2023 Survey Report.
Together, these factors have shaped the policy landscape, as demonstrated by Vietnam’s Eight Power Development Plan (PDP8). PDP8 predicts Vietnam’s commercial electricity consumption will reach 335 billion kWh by 2025, 505.2 billion kWh by 2030, and 1,224–1,378 billion kWh by 2050. To put this in perspective, Vietnam’s 2050 estimate is comparable to the projections for G7 economies such as Germany and Japan.
As a result, PDP8 estimates the need for investment in the energy sector to be US$135 billion (SGD$135 billion) between 2021–2030 and US$399–523 billion (SGD$540-707 billion) between 2031–2050. This includes a transition away from coal power generation, the use of natural gas as a transition energy, and a significant expansion in wind and solar.
The Just Energy Transition Partnership (JETP)
While the transition to renewable energy is a global imperative, it is essential that the transition is “just”. This is the guiding principle of the JETP, a financing cooperation mechanism to help emerging economies make a just energy transition away from coal.
The JETP initiative stands as a commendable effort, providing Vietnam with a substantial funding injection of US$15.5 billion (SGD$21 billion) along with invaluable technical support to accelerate its energy transition.
Of this substantial financial package, US$7.75 billion (SGD$10.5 billion) will be contributed by countries renowned for their expertise in renewable energy development, including the US, UK, Germany, Canada, France, Italy, Japan, Denmark, and Norway. The remaining US$8 billion (SGD$11 billion) is anticipated to be sourced from the private sector. This allocation signifies Vietnam's potential to leverage this financial aid and technical assistance to craft a highly effective strategy, enticing robust participation from global industry leaders in facilitating its swift energy transition.
Implications for regional power grids in ASEAN
Thanks to Vietnam’s recent surge in renewable energy, its commitment to net zero by 2050, and the funding injection through the JETP, Vietnam is well-positioned to support the decarbonisation efforts of its regional neighbours as well as its own.
For example, one of the policy actions outlined in the JETP for Vietnam includes the development of policies to strengthen the interconnection of the grid with neighbouring countries. This could facilitate the establishment of interconnected power markets among ASEAN member states, something which has long been envisioned as the ASEAN power grid (APG).
One of the criticisms of renewable energy is its intermittent nature, however, through cross-border transmission and energy wheeling, this intermittency can be mitigated.
For example, Vietnam is already pursuing stronger ties with ASEAN nations, particularly Singapore, where green energy has emerged as a focal point. Currently, Petro Vietnam and Sembcorp are collaborating on a project to establish an offshore wind farm in Southern Vietnam, aimed at supplying Singapore with 1GW of power and ensuring a stable load of 75 per cent. Moreover, the construction of a submarine energy and optic cable spanning over 1,000km between Vietnam and Singapore represents a groundbreaking initiative for ASEAN countries to cooperate in establishing pan-ASEAN grid networks.
While many challenges to the APG persist such as resource nationalism, a lack of continuity in energy trade policies, and standardised wheeling charge methodologies, the advantages of an APG powered by renewable energy are undeniable. Solving these political issues holds the key to attracting further investment and fostering long-term commitment towards renewable energy development across Vietnam and the region.
Propelled by a dynamic economy and boasting a population of 100 million, Vietnam stands primed to capitalise on its strategic location, extensive presence of multinational corporations, and a proficient workforce, particularly in digital technology, engineering, and increasingly, renewable energy.
Neighbouring ASEAN countries can learn from Vietnam’s renewable energy revolution not only as an example of how to increase their domestic capacity, but as an opportunity to strengthen regional cooperation and achieve net-zero together.
Vu Minh Khuong is an Associate Professor at the Lee Kuan Yew School of Public Policy (National University of Singapore). His research and teaching concentrate on economic development and policy analysis.