Renewable energy development needs a clear and long-term roadmap

Ms. Ngo Thi To Nhien – Executive Director of Vietnam Initiative for Energy Transition (VIETSE) had a conversation with Vietnam Business Forum Magazine to share the potentials and development trends of Renewable Energy (RE) in Vietnam as well as recommendations on policies for maintaining a long-term development of the RE market in order to meet electricity demand as well as a sustainable economic development goal for Vietnam.

– From the commitments of the PM in the COP26, how do you assess the renewable energy development potential and trend, especially in Vietnam nowadays?

It is necessary to fully understand the commitment of the Prime Minister of Vietnam at COP26, aiming for CO2 neutrality by 2050. According to the Nationally Determined Contribution (NDC) report of Vietnam that was submitted to the Secretariat of the United Nations Framework Convention on Climate Change (UNFCCC), the total emissions from the energy sector accounted for 73%.

Therefore, in order for Vietnam to be able to fulfill its commitments, national development plans need to be assessed from the perspective of energy transition’s impact, integrating emission reduction targets of each sector for each stage into the national action strategy. The government should develop a long-term energy transition scenario (until 2050). This is information for negotiations with partners to attract financial and technological funding for the implementation of international commitments.

– What are the points that need to be adjusted in the policy to encourage investment and development of RE in Vietnam?

The Government’s policy to encourage investment in renewable energy development in Vietnam, especially the Government’s decisions on the purchase price of solar and wind power in 2017 and 2018 has opened up a new trend in investment and development of power sources in Vietnam.  However, this policy does not have a continuous roadmap, which reduces the commitment of investors in implementing projects according to the plan. The government needs to have policies to maintain long-term development for the market to meet electricity demand as well as sustainable economic development goals for Vietnam.

–  The inadequacies of the grid infrastructure show that the power plan is based on the investment plan. So in your opinion, how should the planning be adjusted to be close to reality and consistent with commitments?

Investment in power grid infrastructure has been implemented continuously from the state budget and ODA loans for many years. The transmission system is invested and managed by EVN. Renewable energy power projects often take about 6 – 36 months to construct, meanwhile, the transmission grid takes at least 36 months of investment and construction. Therefore, the transmission network investment project is often slower than the power plant investment project. According to the draft Power Development Plan 8, the demand for investment capital of the power grid in 2021-2030 is 32.9 billion USD, and from 2031to 2045 is 52.1 billion USD. The amount of capital is enormous and it is necessary to mobilize more from private investment capital, so it is necessary to amend the Electricity Law.

– Facing above requirements, what policies do Vietnam need in order to attract and ensure the interests of investors in RE?

A consistent policy with a clear roadmap and a mechanism for implementing competitive and transparent auctions will be an important premise to promote the investment market. Vietnam needs a suitable National Power Development Plan map to the actual situation, the harmony between different power sources, the harmony between the source and the grid as well as the harmony between regions and the whole country. The unbalance of power sources between regions led to the continuously capacity curtailment at excess electricity areas, causing a great waste of social resources and discouraging investors.

As a think tank, we have modeled electricity development scenarios to maximize national energy security and reduce emissions for the electricity industry. According to our assessment, the draft PDP8 (version November 2021), has a very high dependency rate on imported fossil fuels for power generation, the rate is respectively 42% in 2030 and 47% in 2045. This means that future electricity prices will depend on the international market, and it will be difficult to cut CO2 emissions as committed by the Prime Minister at COP26. In addition, this Plan should carefully consider the long-term national energy security factor.

Source: Business Forum Magazine.