Vietnam to expand renewable energy sources as part power development plan

By Slade Johnson, Kien Chau, Lindsay Aramayo

This article was published by the US Energy Information Administration on June 1, 2021.

In February 2021, the government of Vietnam released a draft of the country’s latest national power development plan, Power Development Plan 8 (PDP 8), for 2021 to 2030. The draft PDP 8 expands wind and solar capacity and increases their shares of the country’s generation mix. The draft PDP 8 also prioritizes enhancing grid infrastructure to ensure stable operation with a higher share of renewables.

Vietnam increasingly relies on coal imports because coal-fired power plants have been used to meet rapidly increasing electricity demand; more than half of Vietnam’s electricity generation came from coal in 2020. The country also relies significantly on hydroelectric generation and is home to a number of large rivers, including the Mekong. However, hydro’s reliability is affected by periodic droughts and water shortages. Non-hydro renewable sources such as wind and solar made up 5 per cent of Vietnam’s electricity generation in 2020.

Expanding non-hydro renewable capacity will likely help Vietnam rely less on coal, reduce carbon emissions, and increase electricity generating capacity to meet the country’s growing electricity needs. With its strong emphasis on renewables, the draft PDP 8 departs significantly from previous plans, which relied heavily on hydropower, coal, and natural gas sources.

As of 2020, solar and wind capacity in Vietnam was 16.6 gigawatts (GW) and 0.6 GW, respectively. Under the draft PDP 8, Vietnam plans to increase solar capacity to 18.6 GW and wind capacity to 18.0 GW by 2030.

Vietnam’s underdeveloped grid hampers these capacity additions. The country needs new transmission and distribution infrastructure to accommodate capacity additions and to transmit electricity to where it’s needed. The government recently adopted new legislation that improves and prioritizes grid development.

Grid development is also a priority in the draft PDP 8. Grid priorities include building more high-voltage transmission lines and expanding grid infrastructure, which would help ease grid congestion and integrate renewables.

Some of the country’s transmission lines are operating at full load or are overloaded, especially in the region where solar capacity is concentrated. Electricity producers have reduced generation from renewables because of grid limitations. Despite solar capacity in Vietnam increasing significantly in 2020, the country plans to reduce its renewable energy output by 1.3 billion kilowatthours in 2021 because it does not have the transmission capacity needed. Although grid congestion has some short-term solutions, such as battery storage, the long-term solution is to expand Vietnam’s transmission grid.

One major grid development underway is a 461-mile transmission line extension with three 500-kilovolt transmission lines. These transmission lines will connect nine cities and provinces across central and southern Vietnam.

You can find more information about Vietnam’s energy sector in our Vietnam Country Analysis Brief.