Attracting investment in the renewable energy sector is a key solution that Vietnam and countries around the world are striving to promote in order to advance the green economy and enhance energy self-sufficiency.
According to the Draft Plan for the Implementation of the Eighth National Power Development Plan (Power Plan VIII), the investment capital required for power projects is estimated at approximately USD 135 billion by 2030. The Government of Vietnam has approved the Strategy for Renewable Energy Development in Vietnam to 2030, with a vision to 2050.
Specifically, the contribution rate of renewable energy sources to the power mix is targeted at: “Approximately 5% by 2020, around 25% by 2030, and about 45% by 2050.” These targets pose a challenge in terms of attracting investment capital for Vietnam’s renewable energy transition process.
To address this challenge, countries around the world have adopted various measures, ranging from policy interventions and financial mechanisms to support the energy transition and industrial transformation, to improving energy efficiency, tackling environmental pollution, and protecting and enhancing natural capital.
Many governments are adopting a “carrot and stick” approach, including green taxes on environmentally harmful activities, stricter regulations, and new environmental standards and certification systems for energy efficiency, emissions, and pollutants.
In addition, governments are also implementing loans and subsidies to support green investments in sustainable agriculture, renewable or low-carbon energy sources, energy-efficient buildings, public walkways and cycling infrastructure, as well as electric vehicle infrastructure.
For example, Germany has committed EUR 2.5 billion to electric vehicle infrastructure and provided a EUR 9,000 subsidy per vehicle to encourage the adoption of electric vehicles. In Shenzhen, China, three major bus companies were encouraged to transition to electric buses through an annual subsidy of USD 75,500 per vehicle.
Meanwhile, in Vietnam, the installed capacity of rooftop solar power has increased by 2,435% since the beginning of 2019, mainly driven by the solar feed-in tariff (FIT) support program. In addition, Vietnam is also discussing amendments to the Electricity Law to establish a legal framework for attracting investment in renewable energy and new energy sectors.
Ms. Sunita Dubey, Country Representative of the Global Energy Alliance for People and Planet (GEAPP), stated that Vietnam has made significant progress in its energy transition process; however, the country still faces several challenges in expanding renewable energy capacity.
Ms. Sunita Dubey, Country Representative of GEAPP in Vietnam (second from left), during a visit to the BESS system at Saigon Hi-Tech Park (Photo: TG&VN)
One of these challenges is regulatory and policy uncertainty, which causes hesitation among investors. In addition, ensuring sufficient financial resources for large-scale projects as well as community-level initiatives remains a significant barrier.
Sharing the same view, Mr. Nguyễn Xuân Thắng, Vice Chairman of the European Chamber of Commerce in Vietnam (EuroCham Vietnam) and General Director of Schaeffler Vietnam, stated at the 2024 Investment Legal Support Forum themed “Attracting Investment in Renewable Energy Projects and Promoting Green Economic Growth” held in Ho Chi Minh City on September 20, 2024, that one of the major challenges for businesses investing in this sector is the delay in issuing regulations and implementation guidelines. This has created obstacles for investors operating solar power projects after 2020 and raised concerns among investors planning to develop new renewable energy projects.
According to Ms. Sunita Dubey, to address these challenges, Vietnam needs to establish clear legal frameworks and predictable investment roadmaps to build investor confidence and minimize risks. The financial gap can be addressed through blended finance models, green bonds, and partnerships with various organizations to mitigate investment risks. At the same time, attracting investment through proactive land-use policies and comprehensive planning is also crucial to building trust and reducing delays in project development.
By aligning infrastructure upgrades, policy reforms, and comprehensive strategies, Vietnam can overcome challenges, effectively attract capital, and accelerate the renewable energy transition process.