GROWING WIND, SOLAR, AND GAS POWER IN VIETNAM: SHORT-TERM PROPOSALS AND LONG-TERM POLICIES

At a recent international workshop in Ho Chi Minh City titled “Policies for Developing Wind, Solar, and Gas Power Projects in Vietnam,” organized by the Electricity and Renewable Energy Authority (Ministry of Industry and Trade) and the Science Council of Vietnam Energy Magazine, experts shared ideas and debated. Based on these discussions, the organizers have submitted a report to the Prime Minister and the Central Economic Commission, suggesting policies and mechanisms to boost these energy sources soon.

I. Current Status of Gas, Wind, and Solar Power in Vietnam:

1. Gas Power (Domestic and Imported LNG)
   Gas power, using both local gas and imported LNG, is a key step toward achieving zero carbon emissions. It produces less CO2 and pollution compared to other sources and can quickly adjust output to balance the grid, especially as renewable energy grows. The government should plan large LNG power hubs that connect the LNG value chain (gas, power, and ports) to keep gas and electricity prices affordable. Long-term, large-volume gas supply contracts for clusters of power plants are needed to lower costs and ensure stable operations.
2. Gas Power Today
   Vietnam currently has 15 gas power plants with a total capacity of about 8,000 MW. However, local gas fields are running low, while demand for gas is rising. No new gas power projects have started in recent years. LNG technology is complex, patented, and requires huge investments—especially since it involves a chain of projects. A fair gas pricing policy is needed to balance the interests of the government, businesses, and consumers.
3. Foreign Investment in Gas Power
   Right now, Vietnam needs independent power producer (IPP) projects funded by foreign investors and international banks. This requires a strong legal framework and reliable power purchase agreements (PPAs) that convince lenders. Gas power investors have asked for exchange rate guarantees, government backing for buyer obligations, and a commitment to buy up to 90% of the electricity produced.
4. Challenges for Wind, Solar, and Gas Power
   Despite strong growth, these energy sources face big hurdles: poor planning, slow permit processes, and no offshore wind zoning yet. Technology relies heavily on foreign suppliers. Rapid wind and solar growth has unbalanced the power system. Financial risks depend on pricing policies and management skills. Land clearance and compensation remain tough issues for all projects.
5. Offshore Wind Development
   Building offshore wind farms can take 7-11 years (from planning to testing). This calls for a clear legal framework, including a long-term vision, sea space allocation, grid connections, tax incentives, and support for local supply chains.
6. Renewable Energy Growth (2019-2021)
   Over three years, Vietnam’s power capacity surged by 18% annually, mostly from wind and solar. With renewables making up a big share, the grid faces stability issues like low system inertia, overloaded transmission lines, excess renewable capacity, forecasting errors, and risks of instability from faults or low short-circuit ratios.
7. Rooftop Solar Power
   There are still no national technical standards for rooftop solar systems. No rules exist for monitoring or controlling them, so grid operators can’t manage them. Guidelines on fire safety, land use, construction safety, environmental impact, and business registration are inconsistent. Rooftop solar’s effects on power quality (like voltage issues or flickers) need study and solutions. Plus, the old pricing policies for solar and wind power have expired, with no new ones in place yet.

II. Key Challenges in Policies and Mechanisms:

1. Gas Power Challenges
   Experts say gas power is a must for transitioning to zero carbon. It cuts emissions and adjusts quickly as renewables grow. Many gas projects are registered, but none have started operating in years. For electricity to cost 8-9 cents/kWh, LNG prices need to be at or below 12 USD/MMBTU, with 80-90% of output guaranteed. Long-term, large-scale contracts are key to affordable LNG prices despite global uncertainties. Gas prices should adjust with electricity prices. Investors also want government guarantees for loans, currency exchange, and payments from buyers.
2. Wind and Solar Power Challenges
   The Feed-in-Tariff (FIT) prices for solar (Decision 13/2020) and wind (Decision 39/2018) have expired. New pricing frameworks for renewables are urgently needed. As renewables grow, technical issues—like grid instability—require more flexible backup sources like gas power or energy storage.

III. Proposals and Recommendations:

1. For Gas Power Projects

• Plan large LNG power hubs linking gas, power, and ports for reasonable prices. The Ministry of Industry and Trade and the Prime Minister should set a pricing framework for LNG power, guarantee output levels, and allow gas price changes to reflect in electricity prices—or provide clear guidance on this.
• The government should decide firmly on loan guarantees, exchange rate protection, and payment assurances for gas power, ensuring fairness for all types of businesses.
• Investors can secure competitive LNG prices if they sign long-term contracts. The government should create policies to support these contracts and help with investment loans.

1. For Wind and Solar Power Projects

• Set new electricity purchase prices for wind and solar soon. FIT prices expired long ago, leaving finished projects unable to sell power and new investors hesitant. Pricing policies should be long-term and market-adjusted so investors can plan risks.
• Urgently issue pilot Direct Power Purchase Agreements (DPPA) and bidding mechanisms for project developers, based on new wind and solar price frameworks for EVN and investors to negotiate PPAs.
• Allow rooftop solar for self-use (not selling to the grid) but set technical standards to protect the grid.
• Offshore wind takes years to develop. To hit 7 GW by 2030 (as in the draft Power Plan VIII), create a national sea space plan, clear legal rules for surveys and sea allocation, and plan centralized transmission for offshore wind.

1. General Issues for Wind, Solar, and Gas Power

• Land clearance is always tricky. Improve land policies with clear, fair processes for permanent land acquisition, limited-use compensation, and temporary construction impacts.
• Balance different power sources. High renewable shares strain the grid. Encourage investment in support services like pumped hydro, battery storage, and grid upgrades, plus promote electric vehicles and charging stations to boost renewable use.
• Set rules or conditions for developers to support local products and services, encouraging partnerships between local suppliers and foreign project developers.

Source: Vietnam Energy Magazine