The roadmap for Vietnam’s electricity growth provides a clear indication of the country’s commitment to renewable energy in the decades ahead, as the country marks a swift shift from the coal plant-dominated electrical mix. This article discusses the aspects of the Renewable Energy Industry in Vietnam, as well as investment potential in the sector.
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Booming Renewable Energy Industry
According to a report by IRENA, renewable energy’s installed capacity in Vietnam made up 56% of the total power grid in 2021. Sustainable energy capacity also saw the biggest-ever expansion in capacity in 2020, jumping 12 gigawatts (GW) to approximately 39 GW.
Hydro and marine energy had the largest share among renewables, accounting for 51% of total capacity, followed by solar power at 39%. Wind energy, in particular, is quickly taking off: its capacity grew nearly 6.5 times between 2020 and 2021. The IRENA report also demonstrated tremendous potential for solar and wind power generation in Vietnam, making the renewable energy industry an ideal target for investors to explore the sector’s unexploited opportunities.
What Is Fueling the Boom in Vietnam’s Renewable Energy Industry?
Vietnam’s rapid development is the primary force behind the rise in the renewable energy sector.
The Vietnamese economy has grown at an average rate of 6.3% per year during the 2010s according to the Asian Development Bank. Unlike most countries, Vietnam managed to sustain some growth despite the effects of the Covid-19 pandemic and is expected to make a full recovery by the end of the year. The amount of energy consumed is soaring as a result of this outstanding perseverance. The Diplomat reported that Vietnam Electricity (EVN), a state-owned electric business, sold 209.4 terawatt-hours (TWh) of electricity in 2019, a big jump over the 128.6 TWh in 2014.
Electricity consumption has been expanding at a pace of more than 11% per year, significantly faster than GDP. On top of that, with people spending significantly more time indoors due to the pandemic in the last two years, household energy consumption is following suit. All these trends are feeding a ravenous need for increased electricity generation and investment.
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Vietnam’s government recognizes that the country’s rapid economic growth will require large capital inflows to keep up. According to EVN’s 2017 Annual Report, keeping up with demand in the electricity sector required $22 billion in investment by the end of 2020 and early 2021. Conclusively, it is because of this that the energy sector has experienced such a dramatic shift in such a short period of time.
Investment Prospects in Vietnam’s Renewable Energy Industry
Power demand in Vietnam has grown at a compound annual growth rate of 13% since 2000 and is predicted to grow at an annual rate of 8% through 2030 as a result of the country’s economic growth. To address increased energy demand and predicted energy shortages, the country will require $8-10 billion in investment in the energy sector over the next decade.
High prices, energy security, environmental and health consequences, and a lack of energy services have encouraged countries such as Vietnam to pursue a more diverse energy mix.
Furthermore, Vietnam’s Politburo passed Resolution 55 in February, urging that the Electricity Law be amended to allow private sector investment in power infrastructure. As a result, Vietnam has attracted a lot of investment, for instance, Ireland-based Mainstream Renewable Power Ltd declared to acquire an 80% stake in a company that is producing a 405-MW portfolio of solar projects in Vietnam. It is also expected to receive much more investment in the future from both domestic and international investors. It is due to the potential of Vietnam’s enormous renewable energy resource and the effectiveness of the solar feed-in tariff.
How Can Cekindo Help?
If you’re a foreign investor looking to invest in Vietnam’s renewable energy industry, having Cekindo by your side can make the whole process hassle-free. Cekindo, with its integrated business registration services, can advise on the most suitable legal entity type. We provide instructions on gathering relevant documents and submission of applications.
Moreover, Cekindo acts as a local representative to submit your application on your behalf without you being in the country. We also provide legal assistance during the business registration and setup and help you in applying for work permits.