The Vietnamese government has announced a new energy strategy, the latest version of its National Power Development Plan VIII for the 2021-30 period. Among other things this plan brings back Net Metering for solar, ditched in mid-2019, and ends the policy limbo which had limited solar and wind build out since January 2021.
As we always mention in an article about Vietnam, the country had a highly generous Feed-in Tariff introduced in 2019, which was cut twice and then abruptly abolished at the end of 2020, after it had briefly made Vietnam the 2nd biggest global solar market in Q4 2020, absurdly, and left the grid with a congestion headache.
For most of the 28 months of policy limbo since the abolition of the Feed-in Tariff, government planners gave the impression that they’d been burned by the solar boom, whole scale and suddenness couldn’t have been predicted. No new policy until now had been brought in to replace old payment frameworks, leaving renewable development in near-limbo for 28 months, especially for projects which had failed to meet the end-of-2020 commissioning deadline.
The new Plan makes it clear that solar is still not favored, but its cost-competitiveness isn’t completely ignored either. The Plan features the following capacities to be achieved by 2030:
- 88 GW onshore wind total
- 6 GW offshore wind total
- 5 GW of new utility-scale solar
- 6 GW new rooftop solar
- 27 GW biomass and waste-to-energy
- 4 GW pumped hydro storage
- 300 MW battery storage
- Coal to reach peak of 30 GW, with no new capacity approved from this point on.
- Gas to become the primary energy source with 6.9 GW coming from the Block B Ca Voi Xanh project alone to a total of 37.63 GW.
- No mention of nuclear power
This plan is so oddly conservative that it appears to still have a 12.8 GW capacity target for solar by 2030 – which was already exceeded halfway through December 2020. Only in the 2030 to 2050 period does the Plan say “yes” to solar, with total capacity to reach between 169 GW to 189 GW.
In actuality, this is explained by the new rooftop solar capacity – intended to reach 50% of residential and office roof space by 2030! – not being intended to participate on the grid at all, in which case the 300 MW battery figure is also not representative, as there will be a significant battery buildout to accompany the distributed solar. If this pans out then Vietnam will again be a multi-GW per annum rooftop solar market.
The Plan also expects around two-thirds of the gas to be converted to hydrogen in that period. These power assets will cost an expected $119.8 billion with ’only’ $14.9 billion for the grid.
Beyond the Plans’ official targets, which can be considered a guideline only, it will be interesting to watch what will be the impact of the new Net Metering scheme, and the reaction by foreign investors and developers.
In an article in March which mostly described the sorry state of affairs, we mentioned that the winds might be changing back in favor of solar according to several minor indications – Ho Chi Minh City asking for 5 GW of rooftop, bilateral PPAs and other liberalizing power market moves.
Vietnam is not a rich country, and nor is its state-owned utility EVN, so it is quite surprising to see not just solar, but Net Metering-funded solar back in the picture. At least it isn’t a Feed-in Tariff. While Vietnam is not rich yet, its economy and industry are growing rapidly, with 8% power demand in 2022. Power demand will reach 335 TWh in 2025 and 505 TWh in 2030 per the Plan. That makes it especially remarkable that the Plan would make Vietnam a net energy exporter (it currently imports modest amounts of hydropower), exporting between 5 GW and 10 GW – roughly the intensity at which California imports power from its neighboring states.
Utility EVN still retains its monopoly over transmission, distribution and sale of electricity, notwithstanding the bilateral PPA exception, but given the constant nature of Power Development Plan revisions, it will not be surprising to see this eroded a little bit more in future.