On 15 May 2023, the Prime Minister of Vietnam issued Decision No. 500/QD-TTg approving the National Power Development Master Plan outlining strategies and goals for the country’s energy sector for the period from 2021 to 2030, with a vision for 2050 (“PDP8”).
- Targets
PDP8 anticipates that Vietnam will achieve an average GDP growth of approximately 7% annually from 2023 to 2050, resulting in its commercial electricity consumption growing to 335 billion kWh by 2025, 505.2 billion kWh by 2030, and up to1.254,6 billion kWh by 2050. To meet demands, PDP8 is targeting the following goals:
(i) Produced and imported electricity: 567,0 billion kWh by 2030 and 1.224,3 billion kWh to 1.378,7 billion kWh by 2050.
(ii) Maximum installed electricity capacity: approximately 59,318 MW by 2025; 90,512 MW by 2030; 185,187 – 208,555 MW by 2050.
- Energy transition plan
In comparison to PDP7, the projections for the use of coal-fired power and renewable energy for the year 2023, have undergone significant changes. As energy transition is the key focus, PDP8 aims to achieve 30.9 – 39.2% renewable energy sources by 2030 and 67.5 – 71 .5% by 2050. The transition strategies include reducing the use of coal and gas, expansion of renewable energy, and exploiting non-traditional sources such as biomass and waste-to-energy. Below is an overview of the projections extracted from PDP8:
| Energy Sources | 2030 | 2050 |
| Coal-fired | 20.0% | 0% |
| Gas – fired (Hydrogen and LNG conversion) | 9.9% | 2.6 – 3% |
| LNG (Hydrogen fired and Hydrogen) | 14.9% | 4.1 – 5.4% |
| Hydropower | 19.5% | 6.3 – 7.3% |
| Wind onshore | 14.5% | 12.2 – 13.4% |
| Wind offshore | 4% | 14.3 – 16% |
| Solar (excluding existing solar rooftop projects) | 8.5% | 33 – 34.4% |
Expansion of solar and wind power: For solar, PDP8 promotes the use of on-site rooftop solar power and emphasizes on self-consumption. For wind, significant projections can be seen for offshore wind, particularly plans on developing HVDC lines for offshore wind by 2030.
Expansion of storage capacity: To meet the projected demands, PDP8 also aims to develop storage with a capacity of 2,400 MW and battery storage of 300MW by 2030 to manage the electricity loads.
Promoting non-traditional sources: To support the energy transition, PDP8 urges to consider energy sources such as biomass, waste to energy, and ammonia. This strategy is likely to reflect the country’s growing prospect of rice and wood pellet production.
3. Grid developments
Upgrading the country’s grid infrastructure into interconnecting regional power systems is a key focus. Developments for smart grid system and transmission grid (including cross-border/regional interconnection) are recommended to provide a safe, stable, and economical electrical system.
4. Policies developments
As a general policy document, PDP8 envisages further legislation developments, including amendments to the law on electricity, which would be required to address issues such as bidding policies for investor selection, tariffs, PPAs, incentives to motivate participation, etc. to achieve the projected targets. Investors can expect a more transparent legal environment when selecting a suitable investment in Vietnam.
5. Investment estimation
PDP8 estimates that between 2021 and 2030, the power plan and grid developments require funding of US$134.7 billion to implement. The funding is estimated to rise to US$523.1 billion by 2050.
At Asia Counsel, we provide a comprehensive range of legal services to support renewable energy projects in Vietnam. Our experienced team is involved in a variety of renewable energy projects, including solar and wind, and provides legal advice on matters such as regulatory frameworks, investment guidelines, and template contracts for foreign investors.
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We are dedicated to providing comprehensive legal advice and support to our clients, helping them navigate the complex legal and regulatory landscape in Vietnam’s renewable energy sector. Contact us today to learn more about how we can support your renewable energy projects in Vietnam.
Author: Minh Duong – Managing Partner, Ross Macleod – Partner