Vietnam’s ambition in shifting towards renewable energy
The market has welcomed the long-awaited PDP VIII, approved in late May of this year, which provides an ambitious plan through 2030 with a vision towards 2050. After a number of delays brought on by the pandemic, shifting policy priorities and commitments, and dialogue with industry stakeholders, the PDP VIII lays out a vision for investment in Vietnam’s power sector through 2050.
As it stands, PDP VIII presents an ambitious shift for Vietnam’s generation mix away from coal, and heavily weighted towards in renewables and new technologies such as battery storage, hydrogen, and ammonia, underpinning the government’s international commitments to reach NetZero by 2050. The plan addresses some outstanding uncertainties within the industry, although it introduces additional challenges regarding actual implementation and a pathway forward for investors and all industry stakeholders.
Strategic investment in power generation and infrastructure is paramount
Vietnam’s economic growth has been driven by strong infrastructure investment, as well as an affordable generation mix leading to attractive residential, commercial, and industrial power rates. This has led generally to the broad-based growth of export-oriented manufacturing, an overall attractive investment environment, and support for a growing domestic consumer market.
The projection and aspiration of potentially joining the G20 by 2050 will require ongoing significant, strategic investments in power generation and infrastructure to support the estimated 5-7% economic growth over the next three decades. The recent PDP targets average power generation exceeding GDP growth. This amounts to a roughly 2x projected growth to 150 GW in installed capacity by 2030, and 500 GW by 2050.
Nearly 700 billion USD in investment would be required over the next three decades in new and retrofitted generation, as well as in grid infrastructure to achieve these ambitious targets. Government authorities, international development organizations, as well as public and private investors must work together in order to make this growth and transition a success.
Looking forward
PDP VIII is a great milestone in Vietnam’s economic development of this decade, looking towards 2050.
Potential investors could find numerous opportunities throughout the industry for successful investment and strong returns, provided that prudent pre-investment analysis is performed for commercial, tax, legal, and technical considerations.
Although questions remain, the release of PDP VIII has provided all industry stakeholders with a clearer view of Vietnam’s priorities moving forward in the sector.
Get in touch
Pham Anh Duy
Senior Manager, Capital Projects and Infrastructure, PwC Vietnam
Tel: +84 918 484 843