Vietnam Shifts Energy Strategy to Focus on Solar Power and Reduce Dependence on Coal and Gas

Vietnam is revising its energy plans so that there is more focus on solar power and less on natural gas and coal. It aims to get 16% of energy from the sun, almost four times the original target of 5%. This is happening as the country's economy keeps booming, driving its energy demand to grow in an exponential manner.

An initial draft of the new energy policy, to be completed in the near future, does not include the originally planned offshore wind schemes but prioritizes onshore wind, roof-top solar panels, and storage devices. Offshore wind and new gas projects have proven expensive and hard to install, while big solar farms are deemed less expensive and easier to build.

As the economy of Vietnam expands, the country's energy needs will expand leaps and bounds. The most recent estimate shows that Vietnam will need over 211 gigawatts of power by the year 2030, up by 40% from previous estimates. That is higher than Germany's present energy capacity.

This shift to solar energy is also prompted by the failure of some liquefied natural gas (LNG) projects to come on stream by 2030. The country, however, is shifting towards developing big solar farms to supply growing electricity demand.

The Vietnamese solar market saw meteoric expansion between 2018 and 2020 on the back of government incentives and philanthropic policies. At that point, Vietnam paced solar power development among some of the wealthier countries such as the United Kingdom. In 2020, however, new solar power project development slowed as the nation's aging electricity grid was unable to handle the increasing amount of clean energy being generated. This was an issue with the grid becoming overwhelmed since solar energy is only generated by the sun during the day.

The impact has been added consumption of coal, which is bad for the environment, for example, release of poisonous greenhouse gases. Vietnam is now expected to join the world's leading five coal importers, bumping Taiwan out of the top spot, according to the International Energy Agency (IEA). Coal consumption is also on the rise because the country is facing declining hydropower capacity, partly due to drought.

Apart from measures to expand solar power capacity, the country is also ramping up utilization of coal to meet the rapidly rising demand for electricity, driven by business relocations from China to Vietnam. The movement of factories into Vietnam, especially by titans such as Samsung Electronics, is placing formidable pressure on the energy grid.

Vietnam is Southeast Asia's second-largest coal producer, second only to Indonesia. It also brought in 50 million tons of coal in the first nine months of 2024, up 31% from the same period last year. The increased use of coal is amid efforts to cope with the growing energy demand despite efforts to go clean.

Vietnam's coal power plants are new, and the investors have yet to recover their capital. Vietnam will take longer to move away from coal than other countries with centuries-old power plants. Experts note that the country is building up clean energy capacity, but coal retirement will be phased out.

Renovating the country's grid, one of the country's highest priorities, has been falling behind the dizzying rise of renewable power generation. But progress is being made, and the country is gaining valuable experience in dealing with intermittent electricity sources like sunshine.

Apart from grid modernization, Vietnam has also taken measures to simplify the energy system. For instance, power-guzzling factories have been allowed to purchase electricity from power sellers directly. It is done to facilitate producers to meet their greenhouse gas goals and avoid grid strain.

While solar energy has been the most promising technology to bail the country out of its energy crisis, it also comes with problems. The largest limitation is the meager land around the factories to build new clean energy initiatives. As the country continues to expand its energy horizon, there is a daunting challenge of finding enough room for enormous solar farms.

Vietnam in the near future will increasingly add to its ability in clean energy and also struggle balancing the continued presence of coal in its energy mix. The push by the government towards massive solar farms, onshore wind, and storage is clear evidence of change in the sources of energy to cleaner and newer, although going completely away from coal won't be so simple.

With the new energy policy of the country, the challenge will be how to balance the rapid growth of the economy with the need for clean, green energy. The new energy policies of the government will do a great deal in helping Vietnam achieve its ambitious energy targets and lessening its reliance on climate-friendly coal and natural gas.

Source: Associated Press