In a strategic shift, Vietnam is updating its energy strategy to prioritize large solar farms while reducing its reliance on coal and natural gas. The rapidly expanding economy now sets an ambitious goal to derive 16% of its energy from solar power, a significant increase from its previous target of just 5%.
A draft policy, anticipated to be finalized soon, eliminates plans for offshore wind turbines in favor of enhancing onshore wind capacity, rooftop solar initiatives, and energy storage solutions. Offshore wind and new gas projects have been found to be costly and challenging, whereas large solar farms are more economical and straightforward to develop.
Vietnam is focusing on the expansion of sizable solar farms to address the growing power demand. With an estimate of requiring over 211 gigawatts of energy by 2030, Vietnam’s economic growth projections exceed previous assessments by 40%, positioning it beyond Germany’s current total energy capacity.
The adjustment acknowledges an upsurge in potential power consumption by 2030, alongside delays in liquefied natural gas (LNG) projects, which are not expected to be completed by the deadline, according to Giles Cooper, an energy policy expert at Allens, an international law firm based in Hanoi.
Solar power experienced a rapid boom in Vietnam between 2018 and 2020, fueled by favorable government policies, propelling the nation ahead of neighboring and wealthier countries like the United Kingdom. However, the push for new solar capacity hit a pause in 2020 as Vietnam’s overburdened electricity grid struggled to cope with the increased load, especially since solar energy is only available when the sun shines.
“The market saw a dramatic slowdown,” noted Dimitri Pescia from Agora Energiewende, a Berlin-based think tank.
Vietnam’s usage of coal—a major contributor to greenhouse gas emissions—has escalated, placing it among the world’s top coal importers, surpassing Taiwan, as per the International Energy Agency.
Like many nations, Vietnam must upgrade its outdated grid system to match the accelerated growth in clean energy production. Significant improvements have been made, allowing Vietnam to better handle energy sources that are not consistently available, Cooper mentioned.
In an effort to mitigate grid stress and help manufacturers such as Samsung Electronics meet their climate goals, authorities have permitted energy-intensive factories to procure electricity directly from producers. Nonetheless, the endeavor faced challenges due to limited space for building renewable energy projects near factories.
According to Cooper, solar energy is seen as the most viable technology to initiate these direct purchases.
While bolstering its clean energy capacity, Vietnam is also increasing its coal consumption. This move partially compensates for the hydropower shortfall caused by drought and facilitates the rising energy demands stemming from industrial shifts from China to Vietnam.
As Southeast Asia’s second-largest coal producer, trailing Indonesia, Vietnam imported 50 million tons of coal in the first nine months of 2024—a 31% rise, as reported by the government.
Pescia observed that many of Vietnam’s coal plants are relatively new, with operators yet to recover their investments, suggesting that phasing out coal will be a longer-term endeavor.
