11 RENEWABLE ENERGY POLICY IN VIETNAM
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energy sector. Domestic banks have demonstrated only a limited capacity
to provide capital sufficient to finance renewable energy projects on a
large scale. More generally, they lack banking experience regarding renewable energy projects and the capacity to effectively evaluate renewable
energy investments.
Policy Challenges
Unbeneficial Market Framework. As mentioned in the National Renewable Energy Development Strategy (NREDS), the renewable energy
market will be established and promoted by prioritizing the investment
and use of renewable energy. Organizations and individuals with different
forms of ownership (private/public) will be encouraged to participate in
the development and use of renewable energy. Their legitimate rights
and interests will be protected under laws and regulations. However, the
market for renewable energy has not been established, and the support
mechanisms are not sufficient to attract investors to developing renewable
energy.
Moreover, a ESCO (Energy Service Company) system in Vietnam is
immature and there is no mechanism to promote the development of
ESCOs. Currently, the number of ESCOs is small, with only 6 ESCOs
established by 2015. Despite the important role of ESCOs in facilitating
the deregulation of the energy market, especially in terms of finance, the
development of ESCOs has not been clearly encouraged, and it would
take several years to promote ESCOs.
Feed-in Tariffs Alone Cannot Unlock Market Potential. FIT introductions have varying impacts on different forms of renewable energy. The
solar PV market has skyrocketed with an increase of installed capacity from
nearly zero before 2018 to 4500 MW by June 2019. This is attributed to
Decision 11/2017/QD-TTg, which was approved by the prime minister
in April 2017, mandating the same FIT for solar farms and rooftop
solar at 9.35 US cents/kWh. The second promising renewable energy
to enjoy subsidies is wind power with new a FIT launched in 2019,
and projects consisting of thousands of megawatts of new capacity now
awaiting approval by MOIT from 2020 onward. However, these FITs
are being passed through to consumers as they pay electricity bills. The
dilemma here is that the electricity tariff is relatively low, at 7–8 US
cents/kWh, and highly regulated. Consequently, these FITs are unlikely
to continue for a prolonged period, and this reality creates an opportunity
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energy sector. Domestic banks have demonstrated only a limited capacity
to provide capital sufficient to finance renewable energy projects on a
large scale. More generally, they lack banking experience regarding renewable energy projects and the capacity to effectively evaluate renewable
energy investments.
Policy Challenges
Unbeneficial Market Framework. As mentioned in the National Renewable Energy Development Strategy (NREDS), the renewable energy
market will be established and promoted by prioritizing the investment
and use of renewable energy. Organizations and individuals with different
forms of ownership (private/public) will be encouraged to participate in
the development and use of renewable energy. Their legitimate rights
and interests will be protected under laws and regulations. However, the
market for renewable energy has not been established, and the support
mechanisms are not sufficient to attract investors to developing renewable
energy.
Moreover, a ESCO (Energy Service Company) system in Vietnam is
immature and there is no mechanism to promote the development of
ESCOs. Currently, the number of ESCOs is small, with only 6 ESCOs
established by 2015. Despite the important role of ESCOs in facilitating
the deregulation of the energy market, especially in terms of finance, the
development of ESCOs has not been clearly encouraged, and it would
take several years to promote ESCOs.
Feed-in Tariffs Alone Cannot Unlock Market Potential. FIT introductions have varying impacts on different forms of renewable energy. The
solar PV market has skyrocketed with an increase of installed capacity from
nearly zero before 2018 to 4500 MW by June 2019. This is attributed to
Decision 11/2017/QD-TTg, which was approved by the prime minister
in April 2017, mandating the same FIT for solar farms and rooftop
solar at 9.35 US cents/kWh. The second promising renewable energy
to enjoy subsidies is wind power with new a FIT launched in 2019,
and projects consisting of thousands of megawatts of new capacity now
awaiting approval by MOIT from 2020 onward. However, these FITs
are being passed through to consumers as they pay electricity bills. The
dilemma here is that the electricity tariff is relatively low, at 7–8 US
cents/kWh, and highly regulated. Consequently, these FITs are unlikely
to continue for a prolonged period, and this reality creates an opportunity