The shift from fossil fuels to renewable energy has become an inexorable trend not just in Vietnam but globally, as green growth and sustainable development increasingly take center stage. In particular, following Vietnam’s strong commitment at COP26 to achieve net-zero emissions by 2050, developing renewable energy has gone beyond environmental concerns; it is emerging as a key driver for transforming the country’s growth model, enhancing national competitiveness, and integrating more deeply into the global green economy.

Untapped potential

In order to realize its ambitious renewable energy development goals, the Vietnamese Government has laid out a series of strategic directions. Notably, the revised National Power Development Plan VIII (PDP8) stands out as a pivotal document, charting a long-term roadmap for clean energy development. Under the plan, offshore wind power capacity for domestic use is set to reach between 6,000 and 17,032 MW in the 2030-2035 period and grow to 113,503 to 139,097 MW by 2050.

At the same time, solar power is expected to see a major breakthrough. By 2030, total installed capacity, including both centralized solar farms and rooftop systems, is set to reach 46,459 to 73,416 MW, aiming for 293,088 to 295,646 MW by 2050. These figures reflect Vietnam’s strong determination to shift towards clean, sustainable energy sources.

With these ambitious targets, Vietnam is seen as having favorable conditions for renewable energy development. In addition to its vast potential for wind and solar energy, the country also has opportunities to expand into emerging sources such as biomass, wave energy, and biogas. Meanwhile, traditional energy sources like liquefied natural gas (LNG), hydropower, and coal will still play a supporting role during the transition period.

According to Associate Professor Dinh Duc Truong, Dean of the Faculty of Environment, Climate Change, and Urban Studies at the National Economics University (NEU), Vietnam has a major advantage in offshore wind energy, with potential comparable to Taiwan, and is second only to Indonesia in solar power. “This creates significant opportunities for Vietnam to implement large-scale renewable energy projects,” he emphasized.

Specifically, the country also boasts over 3,000 km of coastline with stable wind conditions, particularly in the south-central and Mekong Delta regions, offering ideal conditions for both onshore and offshore wind power development. Beyond wind, the central highlands, southern, and south-central regions also have high solar radiation levels, enabling further expansion of solar energy. These factors, in turn, provide Vietnam with critical points to accelerate a green and sustainable energy transition in the near future.

Building on these advantages, Vietnam is also actively promoting renewable energy projects nationwide. Mr. John Rockhold, Head of the Power and Energy Working Group at the Vietnam Business Forum (VBF) and Chairman of Pacific Rim Investment and Management (PRIM), praised Vietnam’s efforts to attract investment, build infrastructure, and develop supportive policies to scale up clean energy initiatives.

He especially highlighted Vietnam’s successful utilization of its solar energy potential, noting that the country has made impressive progress in harnessing this resource, especially through the rapid adoption of rooftop solar systems. “Vietnam already has around 200 local companies offering rooftop solar installations,” he noted. “The supply chain is solid, solar panels are high-quality, and prices are increasingly affordable for both businesses and households. As a result, rooftop solar has seen a major boom.”

Vital role

Accelerating renewable energy development not only brings Vietnam closer to its net-zero commitments but also plays a vital role in driving national economic growth. Associate Professor Truong emphasized that investment in renewable energy delivers tangible benefits to Vietnam’s economy. It creates thousands of new jobs in the construction, operation, and maintenance of energy plants while fostering technology transfer and strengthening domestic industrial capabilities.

Numerous studies have confirmed a positive link between renewable energy investment and economic growth. Such investments not only increase the supply of sustainable and stable energy but also diversify the economy, reduce dependence on imported fossil fuels, and enhance national energy security.

According to the Institute for Policy and Strategy Research (formerly the Central Institute for Economic Management, or CIEM), if Vietnam increases public and private investment in renewables to about 5 per cent of total social investment, GDP could grow an additional 0.7 to 1.1 per cent annually compared to a business-as-usual scenario.

Similarly, analysis by McKinsey & Company suggested that if Vietnam maintains an average annual investment of $15 billion (about 4 per cent of GDP) in renewable energy between 2025 and 2040, its GDP in 2040 could be 6 to 10 per cent higher than under a conventional development pathway.

These figures underscore that greater investment in renewable energy not only boosts GDP but also facilitates a shift towards a more sustainable growth model and positions Vietnam as a proactive player in the global fight against climate change. “Vietnam’s economy could transition from a trade-reliant model to one driven by public and private investment, thereby creating favorable conditions to attract increasing international capital into the clean energy sector,” Dr. Truong stressed.

Unlocking barriers

Despite significant potential and proactive policy efforts, Vietnam’s renewable energy sector still faces several critical challenges. According to Mr. Dinh Tuan Minh, Director of the Market-based Solutions Center for Social and Economic Issues, one major barrier is the current legal and policy framework, which lacks consistency, stability, and transparency. In addition, complicated administrative procedures, underdeveloped technical infrastructure, and limited domestic capital markets reduce Vietnam’s appeal among strategic investors.

Therefore, in order to realize its renewable energy ambitions, Mr. Minh suggested that Vietnam implement concrete solutions to improve the investment environment, especially to attract large-scale, long-term capital from international sources. This is particularly urgent as domestic enterprises continue to struggle with access to significant financing for renewable power projects.

Though Vietnam has transitioned from a Feed-in Tariff (FiT) regime to competitive auctions, Mr. Minh said it has yet to issue clear guidelines or a definitive legal framework. Such uncertainty undermines investor confidence. “A stable and transparent regulatory environment is therefore essential to unlock more FDI into the clean energy sector,” he said.

Not only that, Vietnam should focus on attracting high-quality FDI through practical incentives. The country needs to prioritize investors with strong financial capacity and advanced technology, offer initial financial support for offshore wind projects, and encourage technology transfer while strengthening public-private dialogue to build long-term trust.

Mr. Minh also suggested that developing supporting industries and enhancing domestic capabilities are key to driving renewable energy growth. “This includes investing in high-quality workforce training, improving the innovation ecosystem, and expanding local supply chains for the clean energy industry,” he added.

From another perspective, Mr. Rockhold pointed out that one of the key obstacles Vietnam continues to face in advancing its renewable energy sector lies in grid connectivity. Despite the rapid growth of rooftop solar installations, many of these systems are unable to transmit electricity back into the national grid due to outdated or insufficient grid infrastructure. This disconnect between generation capacity and grid readiness not only results in wasted energy but also discourages further investment in decentralized renewable systems.

Therefore, Vietnam should pay greater attention to developing grid connectivity as a critical enabler for scaling up renewable energy deployment across the country. “Once the grid is expanded and strengthened, I believe we will see even more rapid growth, not just in rooftop solar but also in large-scale solar farms, onshore and offshore wind,” Mr. Rockhold emphasized.

Chart:

Power capacity, by source

Source: YKVN