Vietnam’s electricity mix was controlled by hydropower (46 percent), coal (29 percent)and gas (22 percent). By the end of 2019, wind as well as solar represented 5,700 MW of installed capacity, regarding 10 percent of the overall supply. That means Vietnam has seen wind as well as solar go from essentially absolutely no to 10 percent of its supply in just 5 years. What is driving this renewable resource boom?The main moving company is Vietnam’s explosive rate of growth. According to the Asian Growth Financial institution, Vietnam’s economic situation has actually expanded at 6 percent or more annually given that 2014, getting to 7 percent in 2018 as well as 2019. This fast development is driving up power consumption at a phenomenal rate. The state-owned electrical energy, Vietnam Electrical power(EVN), has actually seen the amount of energy marketed rise from 128.6 terawatt hours( TWh )in 2014 to 209.4 TWh in 2019. Usage of electrical power has been raising at more than 11 percent each year, growing at a price considerably faster than GDP. This is sustaining a virtually insatiable demand for more electricity generation and also investment.Vietnam’s historical reliance on hydroelectricity positions it at a drawback below, as the sustainability of generating energy by damming rivers is restricted, and also the geopolitics of common hydropower sources in the region are currently stuffed. Definitely Vietnam can not power this level of financial development forever via hydroelectricity. So what about coal as well as natural gas, its various other major resources of electricity manufacturing? Since 2015 Vietnam came to be a net importer of coal, importing 43.7 million lots in 2019. Imports of gas and also petroleum have also been rising dramatically given that 2014. The bottom line is that residential production of nonrenewable fuel sources can not equal usage, forcing Vietnam
to turn to worldwide markets to secure enough raw materials to power its grid. As in the case of Thailand, when a nation begins to rely on imports to power its electric grid it is generally when the political class gets serious regarding transitioning to renewable resource. Vietnam has thus far followed this pattern rather closely.Get the E-newsletter In 2017, Vietnamese regulatory authorities authorized EVN to pay an appealing rate of 9.35 cents/kilowatt hr to acquire solar power from independent producers.
These kinds of feed-in-tariffs have actually revealed to be efficient incentives for jump-starting growth in renewable resource, under specific conditions. A high tariff alone will not generally get the job done. It should be accompanied with institutional as well as political assistance, specifically from the applying agency which in this instance is the state-owned utility EVN. Via its subsidiaries, EVN has a syndicate on the transmission and also distribution of electrical power in Vietnam and has historically controlled around 60 percent of the producing market. Why then did EVN obtain onboard with these renewable resource passions, which require it to deliver market share to solar as well as wind power companies?Enjoying this article? Click on this link to subscribe for complete access. Just $5 a month.Aside from the reality that importing coal as well as natural gas is driving up the cost of production (which can not be conveniently recovered with greater retail prices, as the customer rate of electrical power in Vietnam is very carefully regulated by the federal government), it belongs to a much larger initiative to push through market reforms in order to make Vietnam more financial investment pleasant. This includes minimizing the state’s duty in essential fields, and showing that Vietnam is a place where personal funding can produce healthy and balanced returns.The federal government of Vietnam knows that the country will certainly call for large resources inflows to proceed underwriting its breakneck rate of financial growth. In the electrical power field alone, EVN’s 2017 Yearly Report estimated they would require$22 billion in investment by 2020 to equal need. Eventually, this is what has forced such a dramatic shift in the power field in such a brief time duration. On the one hand energy imports are increasing production costs for EVN, and also threatening power safety and security by positioning the energy at the mercy of international product prices.At the same time, the country’s political class aspires to expand the duty of personal resources as a motorist of growth, and it understands that in order to do so it must press through reforms in vital industries historically controlled by state-owned business. The speed with which EVN has utilized feed-in-tariffs to onboard renewable energy from exclusive manufacturers must send a positive signal to markets. It also emphasizes the truth that when it comes to sustainable energy transitions, it is crucial to look past plain technological or plan options as well as take into consideration all the political and also financial pressures that eventually form the destiny of the industry.