ENERGY MARKET RESEARCH PAPER – NAM NGUYEN VAN

VIETNAM AND THE GLOBAL ENERGY MARKET TRENDS IN WIND AND SOLAR
POWER
INTRODUCTION
In response to the challenges posed by climate change, governments worldwide have been working
together to explore and implement renewable energy sources in order to reach net zero emission
plans. The production of solar panels, the competitiveness of renewable technology—with a focus on
wind and solar power—and the policy trends promoting the utilization of renewable energy were all
examined in the IEA's Renewables 2023 report. The Vietnamese government is one of the most
proactive players in transitioning to renewable energy sources, particularly wind and solar power, due
to its geographically advantageous location and abundance of natural resources. This paper will
carefully examine Vietnam's rapid adoption of solar and wind energy as well as provide an insight on
the country's renewable energy future.
THE GLOBAL TRENDS IN WIND AND SOLAR POWER
Due to significant technology advancements and cost reductions which are mostly driven by China,
solar energy continues to be one of the renewable energy sources that is growing the fastest globally.
Solar photovoltaic (PV) capacity reached a record-breaking 117 GW in 2022, demonstrating the
technology's immense appeal and promise. The main drivers behind this increase were utility-scale
installations, distributed solar systems and supportive policies such as tax cut and subsidies grant for
private sector. Thanks to its progressive price reductions, solar PV has become more cost-effective; in
2023, the average price of PV modules was 40% less than in 2022. As a result, solar energy is
increasingly becoming a viable and lucrative source of power, particularly in sun-abundant regions.
Still, there are several issues including land use, intermittency, and grid integration that might impede
the deployment of solar energy. However, innovations like bifacial solar panels, hybrid solar projects,
and advanced tracking systems are addressing these problems.
Another important pillar in the transition to renewable energy is wind power, which offers established
technologies with significant development potential. Wind power capacity expanded dramatically in
2022, hitting 724 GW globally. This rise, in fact, was particularly notable because of bursting growth
of offshore wind power system, of which new capacity of a record 15 GW was installed. Due to
decreasing costs and technological advancements, offshore wind has become more competitive as
new offshore wind markets have emerged strongly in places such as the US and Asia-Pacific region.
Corporate power purchase agreements (PPAs) and auction-based procedures appear to be gaining
traction in the wind power procurement sector, according to market trends. Encouraging the adoption
of wind power still requires objectives and incentives found in policy support. But much as with solar
energy, there are still certain issues that need to be resolved. These include public acceptability,
permitting processes, and grid integration, all of which call for innovative approaches. As a solution
to intermittency issues, hybrid projects that combine wind with solar or storage are becoming steadily
more common.
In summary, the fast rise of both renewable energy sources is being pushed by falling costs,
technology breakthroughs, and supporting regulations. However, in order to accelerate the transition
to a low-carbon and sustainable energy future, attention must be given to the significance of
continuing investments, international collaboration, and innovation.
 Graph 1: Share of utility-scale wind and PV with lower levelized cost of energy than new coal
and natural gas power plants (left) and existing plants(right), 2022-2028
HOW VIETNAM IS PROACTIVELY ADOPTING WIND AND SOLAR POWER
Vietnam, along with its dynamically developing economy has a diverse energy fuel resource of
various types such as coal, natural gas, petroleum, hydropower and renewables such as solar and wind
energy. The country has recently been successful in renewable energy deployment, especially solar
and wind power development, with its long-awaited Power Development Plan VIII (PDP8) approved
on May 15, 2023, for the period from 2021 to 2030. This works as the overall framework for
stakeholders of the industry to move forward, with significant amount of renewable energy to be
introduced to the market. The Government of Vietnam expects power consumption to grow 10-12%
annually through 2030, one of the fastest power consumption growth rates in Asia. The forecast of
power shortage became a reality in Vietnam, as the North of Vietnam faced great challenges in 2023
for power shortage. Power was supplied on alternative schedules for manufacturing, operations and
residential areas.

Graph 2: Sources of Vietnam annual electricity generation (1985 – 2020)

As Graph 2 has shown, though around 30% of the total electricity generation of 2020 was green
energy including hydro and other renewables, the rest of the electricity generation came from coal and
natural gas, which emits enormous amount of greenhouse gases. It is true that the potential for
Vietnam’s hydro power remains great thanks to its geographic advantages, yet due to the high initial
investment cost of hydro power plant, it is much more efficient to put efforts into other renewables,
especially wind and solar power. One reason behind this is that considering the capital usage
efficiency, and that the only energy distributor in Vietnam is a state-owned corporation Vietnam
Electricity or EVN, there is not much incentives for the private sectors to invest into hydro power
plant, yet this is a total different story for wind and solar power plant.
Power Development Plan 8 (PDP8) aims to secure Vietnam’s energy future up until 2030, with
further a aim of achieving carbon neutrality by 2050. By 2030, Vietnam aims to draw a minimum of
30.9% of its energy from renewable sources, increasing to 67.5% by 2050. Offshore wind, from
which Vietnam generated no power in 2020, should give the country 15GW by 2035, accounting for
around 18.5% of the total power mix. According to PDP8, the total power capacity installed by 2030
will be about 146,000 MW and rise to more than 416,000 MW by 2045. Offshore wind has been
stated to be strongly preferred for a number of reasons. First, Vietnam has a long coastline of 3260 km
and a huge area of sea terrority with an abundant amount of gusts of wind. Secondly, by focusing on
wind power, Vietnam can attract Foreign Direct Investment and international grants to fasten the
energy transition. Lastly, it is more convenient for both the investors and the Vietnamese government
to export energy generated from offshore wind power system, which helps in pushing the transition in
other ASEAN countries at the same time.
In terms of solar energy, Vietnam’s installed solar capacity of rooftop solar and solar farm has
doubled in recent years, rising to an estimated 17,600 MW in 2021, owing mainly to a massive build
of more than 11,000 MW in 2020. Even though the sector has experienced growth over recent years,
solar power capacity will remain the same by 2030, with major factors contributing to issues of
connecting the new solar capacity to the grid that will need to be resolved. Yet, with the progressive
reduction cost and the fast technical improvement of solar PV which can be directly imported from
China with cheap transportation cost, investors of solar power farm are most of the time guaranteed to
make profits, as long as their solar power system are connected to the national grid. By the end of
2020, grid-connected solar power sources that had been put into operation were up to about 9,000
MW (of which Ninh Thuan and Binh Thuan provinces are nearly 3.5 GW). The capacity scale of the
additional planned solar power projects is over 13 GW, with the total registered construction scale
(not yet added) at about 50 GW.

https://www.vietnam-briefing.com/news/vietnams-national-energy-master-plan-key-takeaways.html/
#:~:text=At%20the%2026th%20Conference%20of,to%2085%20percent%20by%202050.
https://www.mckinsey.com/industries/electric-power-and-natural-gas/our-insights/putting-renewable-
energy-within-reach-vietnams-high-stakes-pivot
https://www.power-technology.com/news/vietnam-approves-energy-plan-for-the-next-decade-
promoting-renewables/
https://www.trade.gov/country-commercial-guides/vietnam-power-generation-transmission-and-
distribution