Energy market in Vietnam

Vietnam is one of the world's largest coal consumers and currently relies on fossil fuel for almost 40% of its electricity generation.

Vietnam's commitment at COP26 to reach net-zero emission by 2050 has resulted in the new Power Development Plan No. 8 (PDP 8), released in 2023, under which Vietnam would gradually phase out coal-fired generation.

With PDP8, Vietnam sets four goals for the energy transition: no new coal-fired power plants and the coal's share of national power production would fall to around 20% by 2030; an increase in renewable energy sources; early access to technologies using new primary energy such as green hydrogen and green ammonia; and an improvement of the transmission and distribution infrastructure of the national electricity system.

By 2030, Vietnam aims to draw a minimum of 30% of its energy from renewable sources, increasing to 67.5% by 2050. Offshore wind, from which Vietnam generated no power in 2020, should give the country 15GW by 2035, accounting for around 18.5% of the total power mix.

Key opportunities for Canadian energy companies in Vietnam

• CCUS for the Oil and Gas sector
• Hydrogen production technology
• Development of offshore wind power
• Battery Energy Storage System for utility scale
• Consulting service on carbon offset for climate projects
• Strong presence and competition from other Western and Asian countries: US, Germany, Japan, China and others.
• Bureaucracy: Vietnam's regulatory regimes and commercial law, and the overlapping jurisdictions of some government ministries can result in a lack of consistency in government policies.

Notable challenges for Canadian energy companies in Vietnam

• Strong presence and competition from other Western and Asian countries: US, Germany, Japan, China and others.  
• Bureaucracy: Vietnam's regulatory regimes and commercial law, and the overlapping jurisdictions of some government ministries can result in a lack of consistency in government policies.

Vietnam business landscape

Prior to PDP8, in late 2022, Vietnam signed the Just Energy Transition Partnership (JETP) with a group of donor countries known as the International Partners Group (IPG). IPG consists of G7 nations, plus the EU, Norway and Denmark. The JETP agreement aims to help Vietnam peak its emissions by 2030 and enable the country to source close to half of its power from renewable energy.

IPG countries pledged to raise $15.5bn to support Vietnam to pursue the energy transition. The funding is due to be mobilized over the next three to five years. Half of the money will come from governments, the Asian Development Bank and the International Finance Corporation and the World Bank's private sector arm. The rest will come from private investment coordinated by the Glasgow Financial Alliance for Net Zero.

Upcoming projects and events

• PetroVietnam - PVN is a national Oil and Gas Group that has various affiliates with dedicated business in upstream, midstream and downstream. PVN is under pressure to decarbonize their activities and they are studying to apply CCUS in offshore oil and gas production.
• Electricity of Vietnam – EVN is an SOE, the largest power generation corporation in Vietnam. It is planning to install 2 pilot BESS systems, each of 40MW.

Summary

Vietnamese economy is heavily reliant on exports and therefore is under pressure to pursue an energy transition as soon as possible. In the first stage of this transition, during the next 5 years, Vietnam will enjoy financial support under the JETP agreement. This is a good opportunity for Canadian companies who have required expertise and technologies to access the market.

For more information on Energy in the Vietnamese market, please contact:

Ms. Ngan Hoang
Trade Commissioner, Cleantech and Oil and Gas sector
Email: ngan.hoang@international.gc.ca