Vietnam is located in an area that is still heavily dependent on coal-fired power and heavily damaged by climate change, this could be a motivation to energy transition. The goals are reducing greenhouse gas (GHG) emissions by large amounts, providing access to clean energy for all, and creating job opportunities. The European Union (EU) is aiming to be carbon neutral by 2050, while China is aiming for it by 2060. Vietnam has not yet set a carbon neutral target and it is unlikely to achieve this goal by 2060.
Since 2017, the energy policy has successfully introduced FiT (Feed-in tariff) rates for wind and solar power. However, the lack of clarity in policy compliance poses risks to companies participating and increases costs.
After 5 years of applying energy transition, many problems still persist:
• The risks in the electricity market, together with fossil fuel support.
• The occupation of land or seabed for solar and wind farms can be solved by multi-purpose use, providing co-benefits. However, there are currently no regulations to encourage this form.
• The cumulative capacity of rooftop solar PV systems has reached considerable scale, but these types of investments are facing regulatory and financial barriers.
• Weak and inadequate regulations, underdeveloped financial markets and low capacity of small enterprises.
• Creating more good and “green” jobs depends on the development of businesses.
Vietnam developed a Power Development Master Plan for the period 2021-2030 with a vision to 2045, based on the demand forecast. Forecast results indicate that electricity demand will increase to more than 2 times in 2030 and 4 times higher in 2045 than in 2020. However, most of the solar and wind power projects are concentrated in the Central region, causing challenges in balancing the national power system and requiring investment in the transmission grid.
The draft outlines that the total installed capacity will be higher compared to the 2016 plan as a higher share of solar and wind power is expected, they have lower power factor and need to be "balanced" with other power sources when there are not enough non-hydro renewable sources of energy available.
The electricity market is a key element in the integration of variable renewable energy (VRE). Vietnam has established a wholesale market and a competitive retail market is being developed and planned to be applied in 2024.
There are still some regulatory challenges and market risks when investing in VRE, such as issues of indirect subsidies for fossil fuels, instability of future electricity prices. The VRE auction mechanism and the regulation of VRE participating in the wholesale market are still unclear. When there is more renewable energy connected to the grid, the market have to be flexible to balance between demands and supplies.
The recent energy transition in Vietnam brought both benefits and difficulties to the country. However, reaching 100% renewable energy is not possible with the current technology. The biggest problem is most types of renewable enrgy are not controllable.
There is a big mismatch between the demands and the supplies. For example, with solar energy the peak generation is around 12 pm but at that time the demands decrease, such as in the typical load profile in Vietnam. Without any energy storage, the system have to give up on the surplus amount.