What’s new in this issue? At the moment, RE is still at an early stage. The total output from RE amounts to about 5% of the total country’s supply. The policy framework has only been constructed since 2011 and has recently included solar power. However, Vietnam has high ambitions with RE, as shown in the Revised National Power Master Plan VII, released in March 2016. The Plan stipulated that 21% of the total energy supply comes from RE sources. As plans for a nuclear power plant was already rejected by the National Assembly, the country is pushing for more alternatives to its energy hunger. Foreign investors are especially welcome, where there is no Foreign Ownership Limit and many attractive tax incentives.
RE, by nature, is dependent on the available resources and potential. As a agricultural, near-the-equator, long-coastline country, Vietnam does not lack biomass feedstocks, solar radiation nor wind power density. The question turns to whether the country is able to take advantage of what nature has given, and turn the theoretical and technical potential to commercial potential.
The development of RE in Vietnam, although highly encouraged by the government, faces financing obstacles as well as counter-party risks given the existing policy framework. Some of these will be highlighted in the upcoming pages, as well as examples of mitigation measures and specific case studies, learned via our in-depth interviews with developers and policy makers.
Renewable energy in Vietnam is in its early stage, with plenty of potential for development especially in the wind and solar segments
Vietnam has traditionally relied on hydropower and then coal fired power and gas fired power as the major suppliers of electricity. Yet to go on becoming an industrialized country, it increasingly demands more energy and electricity to support its key, energy-intensive sectors
The majority of renewable energy projects in Vietnam are stuck at the pre-investment stage, and it takes long months and multiple agreements to go through each stage
The PPA is virtually un-bankable as it poses serious legal and commercial risks to both lenders and developers, who have to seek other ways to back up loans
The selection process of a local counterparty should include careful examinations of relationship, management team, financial health and RE know-how/expertise