Vietnam approves long awaited power development plan


Vietnam’s national electricity development plan for the period 2021- 2030, with a vision to the year 2050 (“PDP8")

Vietnam’s long awaited eighth national power development plan (“PDP8”) has finally been approved by Vietnam’s Deputy Prime Minister, Tran Hong Ha under Decision 500/QD-TTg. The PDP8 sets out the country’s plan through to 2030, with a vision to 2050, and is ambitious in its plans to ensure national energy security in order to support socio-economic growth targets while responding to global environmental standards. The plan, which will require an estimated US$134.7 billion in funding, aims to boost production of wind and gas energy while reducing reliance on coal in order to assist Vietnam’s transition to becoming carbon neutral by 2050.

Originally scheduled for release in 2020, the highly anticipated PDP8 is ambitious in its plans and commitment towards ensuring energy security in order to support the country’s target GDP growth, and its net zero ambitions.

It specifically sets out the objective of providing sufficient electricity to support the country’s target GDP growth of 7percent per annum in the period up until 2030, and about 6.5 - 7.5percent per annum in the period between 2031 and 2050. In order to do so, it sets out to increase Vietnam’s total generation capacity to 150,489 MW by 2030; of which 30.9 to 39.2 percent are expected to come from renewable energy; and a further increase to 490,529 to 573,129 MW by 2050, of which 67.5 to 71.5 percent shall be from renewable resources, on the assumption that the commitments made under the Just Energy Transition Partnership (“JETP”) signed with between Vietnam and the G7 nations in December 2022 are fully implemented. (In December 2022, G7 nations agreed to provide US415.5 billion in public and private funding to assist Vietnam transition away from coal).

The plan also seeks to control greenhouse gas emissions to a peak of 204-254 million tons by 2030 and to about 27-31 million tons in 2050. If the commitments under JETP are fully realised, the plan aims to reach peak emissions of no more than 170 million tonnes by 2030.

The plan to increase Vietnam’s total generation capacity is expected to come from the following energy sources:

  • Coal - By 2050, the PDP8 mandates the end to the use of coal, with a complete transition to either biomass and/or ammonia as an alternate fuel. The Government shall cease developing power plants using coal, except for those that have already started construction under the previous power development plan. All existing coal power plants will switch to alternate fuels when the conditions are favourable, unless the plants are older than 40 years and are not able to be converted, at which point, they shall be decommissioned. In the short term however, coal remains to be an important player as it is projected to contribute 30,127 MW of electricity, attributing to 20 percent of the total generation capacity by 2030.
  • GasThe plan aims to maximise the use of its domestic gas as well as imported liquified natural gas (“LNG”) to compensate for weaning off coal as a source of fuel. By 2030, the PDP8 sets out to produce 14,930 MW of electricity, contributing to 9.9 percent of the total generation capacity via its domestic gas thermal power, and 22,400 MW of electricity from the use of LNG, contributing to 14.9 percent of the total generation capacity. Although, the PDP8 did place caution on developing over-reliance on imported LNG and intends to use hydrogen for the developed LNG powerplants after 2035.
  • Wind powerthe plan encourages the development of wind power. By 2030, it targets the production of onshore wind power to be developed to 21,880 MW and offshore wind power to be developed to 6,000 MW, totalling up to 27,880 MW, thus contributing to 18.5 percent of the total generation capacity. By 2050, it aspires to generate 130,050 to 168,550 MW with wind power, contributing to 26.5 percent to 29.4 percent of the country’s total generation capacity. The PDP8 notes that both onshore and offshore wind power production capacity has technical potential to reach up to 221,000 MW and 600,000 MW, respectively.
  • Solar power- the PDP8 has reprioritised solar energy for the country. By 2030, solar energy is projected to only produce 8.5 percent of total generation capacity, down from 13.5 percent in earlier drafts. Instead, the Government intends to encourage autonomous installation and use of solar panels, as they did not place any regulations for the use and installation of these solar panels, except for restricting the sale of energy produced. The PDP8 still provides that solar energy will continue to be an important energy sector in the country, in view of an expected 33 to 34.4 percent contribution to the total generation capacity of the country by 2050.
  • Biomass power - Biomass and waste-to-energy power plants show great potential in the coming years as the PDP8 estimates that by 2030, the combined capacity of biomass and waste-to-energy power plants will reach 2,2750MW and 6,015 MW by 2050. This is projected to contribute 1.5 percent and 1 to 1.2 percent of total generating capacity by 2030 and 2050, respectively.
  • Hydropower – The PDP8 took a more conservative approach with hydropower, despite viewing all types of hydropower within the country as being synonymous. The projected energy produced by this sector is only expected to amount to 29,500 MW, contributing to 19.5 percent of the total generating capacity by 2030; and a slight increase to 36,000 MW of energy, contributing to only 6.3 to 7.3 percent of total generating capacity by 2050.
  • Energy storage - The Government recognises the importance of managing electricity loads as it ramps up development of its energy production sector. The PDP8 plans to develop hydropower plants for energy storage to support the integration of renewable energy sources at scale, where it is projected to be able to store 2,400MW by 2030. The PDP8 also provides for the development of storage batteries should they become more affordable, which would provide for a further 300MW of energy storage by 2030 if implemented. By 2050, the country hopes to achieve 30,650 to 45,550 MW of total energy storage, between both hydropower plants and battery storage power plants.

Looking Forward

The PDP8 is Vietnam’s bold and clear commitment to reduce its greenhouse gas emissions and begin its energy transition to becoming carbon neutral by 2050, while ensuring energy security in order to achieve sustained economic growth. The plan is estimated to require around US$134.7 billion in funding, which is expected to come from a mixture of public and private funding. As the world’s top 20 coal users, Vietnam’s PDP8 would be welcomed by clean energy advocates as well as investors looking for opportunities in the energy transition sector.

Reference: Decision 500/QD-TTg.