To fully exploit Vietnam’s renewable energy potential, it is imperative to strengthen the role of the private sector in the energy sector, experts told the Made in Vietnam Energy Forum 2023 of the Power and Energy Working Group (PEWG) held on November 21 in Hanoi.

Experts provided opinions on how to create the necessary conditions for the private sector to participate in the process of amending the Law on Electricity, building an effective policy framework for renewable energy development and participating more deeply in the activities of the Just Energy Transition Partnership (JETP) Working Groups, bilateral projects, and other official direct support.

Mr. Nitin Kapoor, Co-Chair of Vietnam Business Forum Consortium, said that 2023 witnessed the energy and power sector taking center stage in the public eye. Vietnam’s proactive stance towards sustainable energy is evident through its implementation of various energy transition policies. These policies prioritize renewable energy sources in power generation and promote research into cutting-edge technologies within the power and energy sector. The nation’s clear vision recognizes the imperative of transitioning to clean energy sources for sustainable development.

In this context and in anticipation of COP28 in Dubai, the Made in Vietnam Energy Forum serves as a platform for dialogue between domestic and international private sector stakeholders and the public sector on crucial energy sector issues as the National Steering Committee for key energy projects is on the verge of being established. Discussions held during the event will offer valuable insights to support the government in achieving its net-zero commitments.

Mr. Kojima Masao, Managing Director, Regional Head of Vietnam, MUFG Bank, Ltd. touched on the main issues of power purchase agreements (PPAs) between producers and customers and risk mitigation measures.

He explained that the current situation is that Electricity of Vietnam (EVN) has no contractual obligation to purchase all electricity output from wind and solar power projects. It only pays for the amount of electricity it receives, and there is no required minimum purchase. Power cuts experienced are due to limitations in grid stability, transmission and distribution system overload, local demand, and overall generation costs.

Mr. John Rockhold, Head of the PEWG Steering Committee, said that although there has been a gradual decline in year-on-year growth in power demand, the likelihood of power shortages looms in the near future. However, amid this concern, solar and wind energy emerge as the most promising options for ensuring long-term energy security.

According to Mr. Rockhold, the most significant barriers for the development of renewable energy in Vietnam are divided into four groups: policies and legal framework; technology and standards; bankability; and human resources.

He pointed out that the needs for international investors and developers when investing in renewable energy in Vietnam include a roadmap to move from development to operations to market; and established legal framework for self-consumption, industrial consumption, and EVN purchases; stable commercial mechanisms and revenue certainty; key milestones controlled and risk reduced; certainty over revenue, investment and return; and minimization of risks to reduce cost.

The Made in Vietnam Energy Forum is part of the Vietnam Business Forum (VBF) and returning a second time this year to discuss Vietnam’s strategies and policies for its ongoing energy transition, offer insights on how to attract the necessary financing for this process, and present the findings.

There were presentations from relevant departments on Vietnam’s strategies and policies on energy transition, its international commitments, such as the JETP and other initiatives, and how these commitments shape its policy landscape. Industry experts - financiers, donors, and power companies - also discussed how the public and private sectors can work together to promote the development of renewable energy and leverage Vietnam’s decarbonization efforts as a means of advancing its development goals, thereby fostering net-zero emissions and amplifying GDP growth.

The Forum welcomed around 100 attendees joining in-person and 300 joining online from government authorities, bilateral and multilateral donors, businesses, research institutes, and academia in the power and energy sector.

It also saw the launch of the Made in Vietnam Energy Plan 3.0. This report presents recommendations from the private sector to the government on how to encourage private sector involvement in energy development, in alignment with the spirit of Resolution No. 55 from the Politburo. This would transform the energy industry into a key economic sector, ensuring national energy security and serving as a catalyst for overall economic development.

The MVEP 3.0 is structured into four parts. Part 1 offers an overview of Vietnam’s power sector, covering consumption, generation, transmission, and distribution, and explains the concept of “energy transition” in Vietnam, exploring the country’s strategies and policies driving this transition.

Part 2 delves into an analysis of Vietnam’s successful initiatives in kick-starting its renewable energy development and discusses the existing challenges that it encounters and will face in the future in achieving its transition objectives.

Part 3 accumulates global experiences from economies in the region and worldwide to address pivotal questions that Vietnam is looking to address around creating a robust legal framework to drive the desired energy transition, the bankability of PPAs for renewable energy projects, defining a pathway for electricity prices, and ensuring the nation’s energy security.

The final part of the report draws implications from earlier discussions, presenting considerations for the short, medium, and long-term prospects. To fully unlock the country’s potential, it is imperative to bolster the role of the private sector in the energy landscape and to embrace that process now. This can be accomplished through facilitating the active participation of the private sector in the revision of the Law on Electricity, the development of a robust regulatory framework for renewable energy, and further engagements in the Working Groups of the JETP and other official direct assistance and bilateral projects.