How to effectively utilize Vietnam’s solar capacity to support economic growth?

Lu Nam Anh

College of Arts and Sciences, VinUniversity

ENGL 1011: Fundamentals of Academic Writing – Section 4

Prof. Daniel Ruelle

January 13 , 2023

Word count: 1471

I have read and understood the VinUniversity Student Academic Integrity Policy and
Procedures and declare that the content of this assignment is entirely my own work. I have
cited and referenced any ideas, information, language, or data which I have used to
augment my original ideas, in accordance with academic convention. I have not submitted
this work in whole or in part for the assessment of another course or program at
VinUniversity or any other higher education institution. Signed by: Lu Nam Anh on January
13, 20
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The Vietnamese economy has seen tremendous expansion in recent decades, with a gross
domestic product (GDP) growth rate of around 7% per year on average over the most recent
ten years (World Economic Outlook, 2022). However, as a result of the continuously growing
yearly need for power to sustain the country's industrial sector (Minh & Sharma, 2011),
Vietnam was forced to depend on imported fossil energy from its neighbors, most notably
coal from China (Vu et al., 2019). As a consequence of this dependence on external
electricity, Vietnam's ability to maintain its energy security would be placed in jeopardy
(Luong N. D., 2015). Renewable energy sources are what Vietnam has to look to in order to
tackle this developing issue while also living up to its international obligations to reduce its
emissions of greenhouse gases and its overall carbon footprint. The recent increase in
demand for energy sources has resulted in an increasing shortage of energy sources. In light
of this development, the inclusion of sustainable energy sources seems to offer Vietnam
with a reliable and secure energy supply. According to Zissler (2019), Vietnam has a
significant potential for the production of renewable energy, particularly from hydropower,
solar, wind, and biomass sources. Other forms of renewable energy, such as solar power,
are not getting nearly enough attention from legislators, in contrast to hydropower and
biomass, both of which are being employed to significant capacity. Vietnam possesses a high
potential to utilize solar power to its fullest capacity thanks to its favorable geographical
location. This would allow the country to provide energy at an affordable price, in addition
to ensuring and supporting the country's energy security and rapid development in the not
too distant future (Kimura and Phoumin, 2019).

Beginning in the year 2000, a number of studies have been carried out in attempt to
establish the viability of using this energy source in Vietnam. Since that time, a great
number of solar power plants operating on varying sizes have been built. In point of fact,
Vietnam's solar power capacity surged from a meager 86 megawatts in 2018 to an
astounding 4,750 megawatts in 2019, making it the greatest solar powerhouse in South East
Asia (Do et al., 2020). In spite of this, evaluations of Vietnam's solar potential are not yet
considered to be comprehensive as of this day. In addition, despite the fact that in recent
years the authorities have given greater attention to legislation for the establishment of
solar power projects, the rules and policies that are now in place are not entirely suited to
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promote new investment in solar energy. In the meanwhile, the electrical infrastructure is
not nearly as developed as it should be, and the national energy grid is unable to keep up
with the expansion of newly constructed solar power plants. Solar energy, despite its
undeniable many benefits, is expanding at an unsustainable rate in Vietnam owing to a
number of obstacles on the institutional, technical, and socio-economic fronts. This is
despite the fact that solar energy's benefits are abundantly clear. These are the primary
identifying challenges that Vietnam has to overcome in order to fully capitalize on the
promise of its solar energy resources.

In the first place, Vietnam does not have a comprehensive strategy for expanding the use of
solar energy over the whole country. At this time, legislative support for the development of
new solar plants can only be found in states, provinces, and municipalities that have a
strong potential for solar energy. On the other hand, these provincial restrictions have only
been applied to large-scale facilities that are directly connected to state-run energy grids.
Solar panels installed on residential rooftops have not been subjected to these regulations.
The absence of policies will not only have a bad effect in the short term on the already
worsening issue of a shortage of energy, but it will also have a negative impact in the long
run on the chance of sustained and coordinated expansion of renewable energy across the
nation. Investors and locals are less likely to acquire and install solar power systems on
either an industrial or a residential scale if the government does not provide much in the
way of incentives and there is also a lack of legislation that is desperately required. This not
only made the installation of power transmission lines and the clearing of land more
difficult, but it also had a detrimental impact on the output of solar power plants, the
functioning of the national power system, and investor interests. In addition, feed-in-tariff
(FIT) laws are not in place in Vietnam. FIT regulations are the method that governments
employ to encourage sustainable energy firms via attractive purchase prices. Vietnam does
not have these regulations. Despite the fact that the government formerly offered investors
appealing FIT programs, such programs were discontinued in 2019 since it was determined
that they lacked the necessary technical standards and were negative for EVN (Vietnam
Electricity, the state-owned electricity monopoly in Vietnam). Since then, the FIT pricing
have been published and then canceled many times; these ephemeral policies have
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generated mistrust among prospective investors and resulted in a loss of interest on their
part. While this is going on, on the international stage, a number of nations have effectively
introduced FIT rates quite early on and have shown continued support for the installation of
more photovoltaic cells (solar cells). According to Tongsopit et al. (2016), for instance,
Thailand has been publishing FIT prices for solar power since 2007. Furthermore, by 2013,
the Thai government had announced specific buying rates for various renewable energy
models depending on the location in which they were installed, such as households, farms,
and community-shared land (Yoomak et al., 2019). These prices take into consideration a
variety of expenses that investors may incur, such as those associated with land use, labor,
or installation. In addition, these prices take into account the capacity, efficacy, or operating
time of solar enterprises. In addition, in order to guarantee profits for investors and keep
the solar energy market competitive and available to new entrants, the Thai government
routinely evaluates and modifies the rates of FITs in line with the supply and demand of the
market as it exists at any given time. As a result of the success that Thailand has had with
their program, the government of Vietnam should seriously consider implementing a
scheme that is either very similar to or directly inspired by Thailand's program. The
Vietnamese government needs to move quickly to implement suitable laws and policies, as
well as create detailed and just FIT regulations, in order to create a more appealing
environment for new investors to join the solar energy market. This will help rebuild trust
and encourage the private sector to invest in solar energy. In addition, this will encourage
the private sector to invest in solar energy.

In addition to the challenges posed by legislation, Vietnam also faces many technical-related
barriers that prevent the formation of new solar plants. These barriers include a lack of
adequate infrastructure, unclear standards and regulations relating to technical matters,
and a dependence on technology imported from other countries. To begin, the national
power system is not equipped to handle the high levels of energy production that are
possible from large-scale solar power projects. Since its inception, the primary purpose of
the national power grid has been to facilitate the distribution of electricity produced from
fossil fuels, such as coal and oil, in addition to that which is derived from wind turbines or
hydroelectric dams. As a consequence of this, states that have a large capacity of energy
produced through conventional techniques have a greater chance of having an advanced
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power infrastructure, and vice versa. Furthermore, there are presently no technical
restrictions on solar cells, which makes it exceedingly difficult for local governments to
oversee the quality of the product. In the meanwhile, almost all solar panels are imported,
mostly from China. This results in very high costs associated with maintenance and
shipment, which in turn presents investing solar enterprises with a number of logistical
issues.
In conclusion, in order to develop solar energy in a manner that is both sustainable and
successful in supporting the nation's economic growth, Vietnam must enhance the law that
supports solar energy, improve its infrastructure, and update its technical standards.
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Reference list

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Kimura, S., & Phoumin, H. (2019). Energy Outlook and Energy Saving Potential in East Asia 2019.

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Tongsopit, S., Moungchareon, S., Aksornkij, A., & Potisat, T. (2016). Business models and financing

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