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Renewable energy sector in Vietnam has abundant room for growth

Renewable energy sector in Vietnam has abundant room for growth

Wednesday 15, 12 2021
Vietnam’s renewable energy sector has been attracting foreign investment in the last few years with its remarkable growth rate. Renewable energy in Vietnam still shows much potential to develop in the coming years.

Vietnam’s renewable energy is attracting foreign investment

The renewable energy industry in Vietnam has been receiving attention from many foreign investors. Recently, EDF Renewables, a part of Électricité de France S.A., invested in SkyX Energy of VinaCapital, owner of the rooftop solar power developer SkyX Solar. With the cooperation of EDF Renewables, SkyX Solar expects to invest at least 100 billion USD in producing 200MWp of rooftop solar energy in Vietnam within two to three years to come.

SkyX Solar

Mr. Yalim Ozilhan, Southeast Asia Regional Director of EDF Renewables, said that renewable energy is one of the fields with great potential for development in Vietnam. With the strength of rooftop solar energy solutions globally, EDF is very interested and wants to expand its activities in this market.

According to Bloomberg data, Vietnam has become the leading market in Southeast Asia for solar power in the last few years, with a total cumulative capacity of 9.3 GW by the end of 2020.

Aside from EDF, Vietnam's renewable energy market has attracted foreign capital in recent years as the demand for low-carbon power sources tends to increase. Besides solar power, wind power is also being paid attention to by many foreign investors.

In October 2021, HSBC Vietnam also confirmed the agreement to provide short-term green credit in the field of general contractor for construction and installation of renewable energy projects to Power Construction Joint Stock Company No 1, one of Vietnam's leading companies in power construction general contractors.

Power Construction Joint Stock Company No 1

Sustainable financing is also one of the three focus areas of Standard Chartered Bank's sustainability framework. At the end of May 2021, Standard Chartered Vietnam and Standard Chartered China completed a trade finance transaction totaling 462 million USD for renewable wind energy projects.

Standard Chartered will financially support customers' strategic wind power projects for the sustainable development of Vietnam.

According to international organizations, Vietnam is recording the highest investment level in renewable energy in the ASEAN region. Vietnam has demonstrated a strong commitment to renewable energy to attract more FDI and provide foreign companies with more sustainable energy.

HSBC Global Research believes that Vietnam has the best potential to contribute to renewable energy across the ASEAN region, with foreign investments driving the sector's growth.

Abundant room for growth

According to Mr. Nguyen Quang Quyen, Deputy General Director of the Refrigeration Electrical Engineering Corporation, after the COVID-19 pandemic, electricity consumption demand will increase sharply again, the oversupply of electricity in the past two years will no longer exist in the next 1-2 years. In the next 3-4 years, if new investment is not made, the situation of electricity shortage will be repeated as in the pre-pandemic period, especially in the Northern provinces.

Refrigeration Electrical Engineering Corporation

Renewable energy sources such as wind power and solar power have actively supported the supply of electricity to the North when many provinces and cities lack sources, and the load increases in the period of May – June 2021. That also contributes to ensuring electricity supply for the whole period of 2021 - 2025, reducing greenhouse gas emissions and other pollutant emissions.

According to the draft Power Plan VIII submitted to the Government by the Ministry of Industry and Trade, the proportion of renewable energy sources in the total capacity of the power system will increase sharply in the future, accounting for 40.6% of the total system capacity electricity system by 2045. In which, wind power and solar power will be the main drivers, while biomass power and small hydroelectricity will account for a negligible proportion.

The main point of view in the draft Power Master Plan VIII is to reduce coal power and strongly encourage the development of renewable energy and new energy. In the field of renewable energy, it is necessary to ensure system efficiency and balance. In particular, offshore wind power plays an important role and will be prioritized in the coming period.

Data from Vietnam Electricity show that the total installed capacity of renewable energy sources as of October 31, 2021, reached 20,644 MW. Of which, hydroelectricity accounts for 29.60%, solar energy is 22.57%, wind energy is 5.16%, gas accounts for 10%, oil is approximately 2%, and biomass accounts for 0.28% of total power capacity.

Analyst Rahul Bhatia of HSBC Global Research assessed that Vietnam has the best potential for renewable energy development in the ASEAN region. Besides, foreign investments are driving the growth of this industry.

According to FiinRatings, in the medium and long term, the renewable energy industry has relatively good prospects because electricity demand in Vietnam is forecasted to continue to grow at a high rate, up to 8-9%/year.

 

Compiled by VietnamCredit

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