Vietnam’s Energy Transition: A Shift Toward Solar Power and Sustainability

1. A New Era in Energy Policy: Shifting Focus to Solar and Onshore Wind

Vietnam is undergoing a significant transformation in its energy strategy, prioritizing solar power and onshore wind over coal and natural gas. This shift reflects the nation’s growing awareness of the importance of sustainability and its commitment to reducing reliance on fossil fuels. The revised energy plan, expected to be finalized soon, aims to generate 16% of Vietnam’s electricity from solar energy by 2030—a dramatic increase from the earlier target of just 5%. This ambitious goal underscores Vietnam’s recognition of the urgent need to decarbonize its energy sector and align with global efforts to combat climate change.

The decision to scale back on offshore wind turbines and new gas projects is driven by the high costs and complexities associated with these initiatives. Instead, the focus is on expanding onshore wind capacity, rooftop solar, and energy storage solutions. Large solar farms, in particular, are seen as a cost-effective and feasible alternative, offering a quicker path to achieving Vietnam’s renewable energy targets. This strategic pivot is a response to the challenges of integrating expensive and technically demanding projects like offshore wind into the national energy mix.

2. The Rise of Solar Power in Vietnam: A Story of Rapid Growth and Hurdles

Vietnam’s journey in solar energy has been nothing short of remarkable. Between 2018 and 2020, the country experienced a solar boom, driven by favorable government policies that encouraged investment in renewable energy. During this period, Vietnam surpassed several neighboring countries and even some wealthier nations, like the United Kingdom, in terms of solar power adoption. However, this rapid growth hit a roadblock in 2020, as the limitations of Vietnam’s outdated electricity grid became apparent. The grid, which was designed to handle consistent energy sources like coal, struggled to accommodate the intermittent nature of solar power, which is only available when the sun shines.

This bottleneck led to a significant slowdown in the development of new solar projects, as the grid became increasingly overloaded. “It was like the market almost stopped,” remarked Dimitri Pescia of the Berlin-based think tank Agora Energiewende, highlighting the challenges Vietnam faced in scaling up its solar capacity. Despite these setbacks, Vietnam has made progress in addressing grid limitations and improving its ability to manage variable renewable energy sources.

3. Grid Challenges and the Need for Modernization

Vietnam’s energy transition is not just about generating more renewable energy; it’s also about creating a grid system that can efficiently handle the integration of solar and wind power. The country’s electricity grid, which has struggled to keep up with the rapid growth of clean energy generation, remains a major bottleneck. While some improvements have been made, much work remains to be done to create a reliable and modern energy infrastructure.

One innovative solution Vietnam has explored is allowing large-energy consumers, such as factories owned by companies like Samsung Electronics, to purchase electricity directly from energy producers. This approach aims to reduce strain on the grid and enable manufacturers to meet their climate goals. However, the lack of available land for building clean energy projects near factories has limited the effectiveness of this strategy. Solar energy, with its relatively smaller spatial requirements, is seen as a promising solution to this challenge.

4. The Paradox of Coal: Why Vietnam Continues to Rely on Fossil Fuels

Despite its ambitious solar targets, Vietnam is still heavily reliant on coal to meet its growing energy demands. The use of coal has surged in recent years, with Vietnam poised to become one of the world’s top five coal importers, according to the International Energy Agency. This reliance on coal is driven by several factors, including the need to compensate for lost hydropower capacity due to droughts and the surge in demand from businesses shifting operations from China to Vietnam.

Vietnam is also the second-largest coal producer in Southeast Asia, after Indonesia, and its domestic coal industry plays a significant role in the national economy. However, the country’s coal-fired power plants are relatively young, and operators are still recouping their investments. As a result, phasing out coal in Vietnam will likely take more time than in countries with older coal fleets. “Phasing out coal in a country like Vietnam will take more time,” noted Pescia, emphasizing the complexities of transitioning away from fossil fuels in a rapidly growing economy.

5. The Road Ahead: Balancing Renewables and Fossil Fuels

Vietnam’s energy future is a delicate balancing act between its commitment to renewable energy and the ongoing reliance on fossil fuels. The country’s revised energy plan reflects both the increased potential for renewable energy and the practical challenges of achieving a rapid transition. By 2030, Vietnam is expected to require more than 211 gigawatts of energy—40% higher than its previous estimate and surpassing Germany’s current total capacity. Meeting this demand while reducing greenhouse gas emissions will require careful planning and significant investment in both renewable energy infrastructure and grid modernization.

“It reflects both an overall increase in potential power demand by 2030 and the fact that LNG projects are not on track to be completed by 2030,” said Giles Cooper, a partner at the international law firm Allens, highlighting the dual drivers of Vietnam’s energy strategy. While the country continues to expand its solar and wind capacity, it must also address the ongoing challenges of energy storage, grid stability, and the economic realities of transitioning away from coal.

6. Conclusion: Vietnam’s Path to a Sustainable Energy Future

Vietnam’s energy transition is a complex and multifaceted journey, marked by both progress and challenges. The nation’s decision to prioritize solar power and onshore wind reflects its commitment to sustainability and its recognition of the need to reduce reliance on fossil fuels. However, the continued use of coal and the limitations of its energy grid highlight the practical difficulties of achieving a rapid transition to renewable energy.

As Vietnam works to meet its soaring energy demands while addressing climate change, it will need to balance short-term realities with long-term sustainability goals. By investing in modern infrastructure, promoting innovation, and fostering international collaboration, Vietnam can pave the way for a cleaner and more resilient energy future. The road ahead will undoubtedly be challenging, but Vietnam’s determination to embrace solar power and reduce its carbon footprint offers a promising glimpse of what’s possible.