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Vietnam has yet to develop offshore wind power, and experts see pricing mechanisms as the key enabler. (Photo: iStock)
Vietnam has updated its Power Development Plan VIII (PDP8) to significantly scale up renewable power generation, particularly from wind and waste-to-energy sources.
However, uncertainty around capital and regulatory frameworks continues to deter private sector investment. Experts suggest that reforming the electricity pricing system could increase transparency and profitability, restoring market confidence.
Vietnam aims to scale up renewable energy capacity
Under the revised PDP8, Vietnam’s installed power capacity is expected to reach between 156,000 and 208,000 MW by 2030—roughly triple its current level. The majority of this increase is expected to come from renewable sources, including solar, wind, biomass, waste-to-energy, and energy storage.
The scale of investment required to transform Vietnam’s energy mix is enormous, with annual funding needs estimated at US$27.6 billion. The government cannot rely solely on state-owned enterprises.
Nguyen Anh Tuan, former Director of the Renewable Energy Center at the Ministry of Industry and Trade, noted that major state utilities—Vietnam Electricity (EVN), PetroVietnam (PVN), and Vinacomin (TKV)—have limited investment capacity, primarily focusing on nuclear and core grid infrastructure. He emphasized that private investors must play a leading role.
Nguyen pointed out that renewable energy development has stalled since the feed-in tariff (FiT) scheme ended in 2021: “Wind capacity only increased by 1,200 MW, and there have been virtually no new utility-scale solar projects.”
Complicating matters, the former FiT policy led to disputes that impacted even foreign investors. Most power purchase agreements (PPAs) are denominated in Vietnamese dong, which depreciates by about 4%–6% annually, adding significant foreign exchange risk for investors dealing in U.S. dollars. This underscores the need for a clear and transparent pricing mechanism.
Vietnam aims to significantly boost renewable energy, but unclear electricity pricing has raised concerns among foreign investors. Pictured is a solar power plant in Cam Ranh, Vietnam. (Image: iStock)
First offshore wind hinges on government pricing strategy
Nguyen Huy Hoach, an expert at the Vietnam Energy Association, said achieving renewable goals will require a solid legal framework and effective solutions—particularly an attractive electricity pricing model. Offshore wind projects, in particular, demand high upfront costs, long payback periods, and foreign capital—making alignment with both local and international standards essential.
For its first offshore wind project, EVN has proposed temporary regional tariffs:
- In the north (e.g., Quang Ninh, Haiphong): VND 3,975 per kWh (approx. US$0.15)
- In the south: same as the north
- In the south-central region (e.g., Binh Thuan): VND 3,078 per kWh (approx. US$0.12)
Experts widely believe these rates are not competitive enough to draw investment. In addition, EVN's exchange rate assumptions are more conservative than developers' expectations, further elevating financial risks.
Nguyen Huy Hoach also pointed out the risks associated with waste-to-energy investments, including unstable feedstock supply and limited transportation volumes. As waste-to-energy projects are classified as public services, local governments may prioritize cost-cutting, which could erode profit margins and further deter private sector involvement.
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