2023年5月18日

Vietnam's PDP8 Released

作者:

In an eagerly awaited and very exciting development for the Vietnamese power market, Vietnam’s eighth national power development plan (“PDP8”) has finally been approved by the Deputy Prime Minister Tran Hong Ha under Decision No. 500/QD-TTg.

PDP8 sets out the country’s electricity roadmap for the period through to 2030, with a vision towards 2045 and, most significantly, represents Vietnam’s clearest commitment towards decarbonisation since it announced its net zero ambitions at the COP26 Summit in October 2021. In a country with such abundant renewable resource, this is promising news for an investor market hungry for opportunities across the energy transition sector.

Like others we are still digesting the full contents with our Vietnam based colleagues, but immediate takeaways of note include:

Vietnam’s total generation capacity will significantly increase to 150GW by 2030 from 69GW in 2020.
Renewable energy is, as expected, a major focus, and will account for almost 50% of the energy mix by 2030, with 19.5% from hydropower (down from 30% in 2020), 18.5% from wind (the majority of this will be from onshore wind generation) and 8.5% from solar.
The renewable energy mix could further increase to 66.5% (with hydropower included) if the Vietnam Just Energy Transition Partnership (JTEP) pledges are fully implemented - towards the end of last year, as part of the newly formed Vietnam JTEP, IPG members, including the European Union, the United Kingdom, France, Germany, the United States, Italy, Canada, Japan, Norway and Denmark, committed to provide Vietnam with an initial $15.5 billion of public and private financing over the next three to five years to support Vietnam's decarbonisation targets.
Offshore wind capacity by 2030 has been slightly reduced to 6GW (compared to 7GW in previous drafts of PDP8), but will increase to 70GW by 2050, so the targets remain ambitious – positive news for the numerous players already established in Vietnam and readying themselves for the sector to launch.
Gas (both domestic and imported LNG) will account for 24.8% of the energy mix (37.33GW) by 2030, a fourfold increase from the 9GW of capacity in 2020 and in line with the focus we have seen globally on LNG as a complimentary transition fuel on the road towards Net Zero. This increase in capacity will come from 13 LNG to power projects which are expected to come online by 2030, being the 3,200MW Bac Lieu project, the 1,500MW Long An 1 project, the 2,250MW Son My 1project, the 1,200MW Hiep Phuoc project (Phase 1), the 1,500MW Quang Ninh project,the 1,500MW Thai Binh project, the 1,500MW Nghi Son project, the 1,500MW Quang Trach 2 project, 1,500MWQuynh Lap project, the 2,250MW Son My 2 project, the 1,500MW Ca Na project, the 1,624MW Nhon Trach 3 & 4 project and the 1,500MW Hai Lang project (Phase 1). A further 3,000MW of capacity is planned to come online by 2035 with the completion of the 1,500 Long Son project and the 1,500 Long An 2 project.
There is a plan to put in place a fuel-to-hydrogen conversion roadmap when the technology is commercialised and costs are more affordable, with a 2050 fuel-switch target of 7,030 MW for gas plants and between 16,400-20,900 MW for LNG plants. It remains to be seen whether these ambitious targets are achievable, particularly given the complex regulatory framework and supply chains that will need to be put in place before a hydrogen industry in the country can materialize. The industry is certainly gaining some traction, with The Green Solutions Group having announced earlier this year that it has started construction on the country’s first and largest green hydrogen factory, with a total investment of VND8 trillion (USD341 million).
Coal will continue to play a key role in the country’s energy mix but on a reducing basis, accounting for 20% by 2030 (compared to 31% in 2020) - Vietnam remains committed to completely phasing out coal dependency by 2050. The catch? It’ll be expensive -to fully achieve net-zero and completely phase-out coal by 2050, the government predicts that USD658 billion of funding is required, one-fifth of which is needed within this decade.
Electricity imports from ASEAN and the Greater Mekong Subregion with hydropower potential are also a focus, as is power grid connectivity to the region and associated energy exports. Under an agreement between the Vietnam and Laos governments, there is a current commitment to import 5,000 MW of capacity from Laos by 2030, potentially increasing to 8,000 MW by 2050. Early successes in this space include the 600MW Monsoon Wind power project, which announced last month that it has signed the finance documents for limited-recourse project financing from a combination of export credit agencies, multilateral agencies and commercial banks. This is the first Vietnam-Laos cross-border wind project, with all electricity generated to be sold to Vietnam Electricity (EVN) under a 25 year power purchase agreement.
The government recognizes the importance of upgrading the country’s aging grid network in order to link regional power systems and unlock the potential of large scale renewable energy resources. It has committed to building reliable 500 kV and 220 kV transmission grids, in addition to accelerating the development of a smart grid construction roadmap.
There are a few mentions of the need to combine solar power development with battery storage technology, with a target of having 300MW of storage capacity by 2030. However, as with hydrogen and other new technologies, the regulatory environment remains unclear, and much work is needed by the government before we expect to see substantive development in these areas.
Overall the Government estimates US$134.7 billion of new funding will be required for the construction of new power plants and grid infrastructure provided for in PDP8, part of which is expected to come from foreign investors.

The plan is ambitious, no doubt, and there will be cynics, but it comes not a moment too soon as the potential is undeniable. The call to action on energy transition is now louder than ever – and to achieve it countries are clamouring (and competing) for foreign direct investment and resources, which are not limitless, and will not materialise without stable and supportive regulatory regimes. As others have said, much remains to be done, but with this statement of intent in PDP 8 and, we hope, further detailed incentivising policies to follow, Vietnam has just taken a major step forward.