- The long-anticipated Power Development Plan 8 sets out a roadmap for Vietnam’s energy transition over 2021-30
- The goal is to gradually reduce the country’s dependency on coal while diversifying energy sources to wind and LNG
- Vietnam is working with ASEAN and G-7 partners to address hurdles on infrastructure and funding
Hungry for energy. As Vietnam’s economy continues to expand and develop, the demand for energy has increased sharply in recent years. The country was once an energy exporter, but became a net importer in 2015 as domestic production dwindled and demand continued to rise. The latest El Niño-related power crunch is a reminder of the importance of diversifying into other energy sources – particularly renewables – in response to rising power needs.
The PDP8 roadmap. Released in May, the long-anticipated Power Development Plan 8 (PDP8) sets out an energy roadmap for 2021-30, reflecting Vietnam’s green transition ambitions. In less than a decade, Vietnam wants to diversify away from coal (from a 30% to a 20% dependency ratio) while increasing the share of wind and LNG in its total power production by 2030. Some regions in Vietnam have untapped potential to expand the country’s wind footprint, while LNG is seen as a transition fuel to accommodate rising energy demand.
Challenges ahead. The path to energy transition is not easy. Vietnam faces two main hurdles: (1) inadequate infrastructure and lack of transmission capacity may constrain its renewable energy ambitions; and (2) funding is a key concern. The authorities have been addressing these challenges. For example, Vietnam has become the third developing country to receive sizeable funding from the G-7 to assist in its transition through the Just Energy Transition Partnership (JEPT) programme.
ASEAN co-operation. Co-ordinated regional cooperation is also key to creating a more reliable and resilient power supply. Some ASEAN initiatives are already under way. For example, Singapore is looking to import offshore wind power from Vietnam from a joint wind power plant that will be connected through an undersea high-voltage cable. In our view, co-operation is crucial for helping regional economies realise their energy targets.