Green Energy Fuels Business Development

3:00:36 PM | 6/16/2023

In recent years, Vietnam has seen exceptionally strong growth in renewable energy, especially solar and wind power. The trend of the green energy transition is associated with a deep transformation of the national energy system and is forecast to have a great impact on socio-economic development.

Vietnam has excellent potential for renewable energy deployment, with an estimated 4 to 5 kWh per square mer for solar power and more than 3,000km of coastlines with consistent wind speeds for offshore wind capacity

Global trend

According to Mr. Hoang Quang Phong, Vice President of the Vietnam Chamber of Commerce and Industry (VCCI), developing green energy to reduce greenhouse gas emissions and fight climate change has become a global trend.

Immediately after the 26th Conference of Parties to the United Nations Framework Convention on Climate Change (COP26) held in Glasgow (UK) in November 2021, Vietnam took positive steps toward the target of reducing emissions and responding to climate change. The Government of Vietnam has issued the National Action Plan on Green Growth for 2021-2030; the National Strategy on Climate Change to 2050 and, at the same time, provided a comprehensive roadmap to realize commitments by creating a legal framework, encouraging and supporting the business community to implement emission reduction targets, together with sectors and localities.

The Government has also issued Decision 896/QD-TTg approving the National Strategy on Climate Change to 2050, which sets out a plan to reduce greenhouse gas emissions by sector.

Mr. Phong said that the recently-issued Power Development Plan VIII also agrees on the policy of developing the power structure in accordance with the spirit of Resolution 55-NQ/TW on the orientation of Vietnam’s national energy development strategy to 2030, with a vision to 2045, in which priority is given to the development of rooftop solar power, as well as self-produced and self-consumed solar power.

Power Development Plan VIII also sets the target that by 2050, the electricity output from renewable energy sources will account for 67.5-71.5% of the total electricity production of the whole system.

Mr. Nguyen Van Vy, Vice President of the Vietnam Energy Association, said that energy efficiency, renewable energy growth and electrification growth are fundamental elements for the energy transition. Energy efficiency enables economic growth with lower energy inputs. Over the past 15 years, energy demand in Vietnam has increased at an average rate of 8.6%, 1.36 times higher than the GDP growth rate of 6.3%. But, in the coming decades, with energy efficiency improvements and policies, primary energy demand will be equal to or lower than GDP growth.

In terms of growth, renewable energy will emerge as the fastest-growing energy source. The main renewable energy sources are biomass, hydroelectricity, solar, wind and ocean energy. Among these, solar and wind energy are growing rapidly. The fastest growth in renewable energy is occurring mainly in the electricity sector. From negligible capacity in the years before 2017, up to now, Vietnam’s solar power capacity has reached over 16,500 MW (of which 50% is rooftop solar power) and wind power capacity reached over 4,500 MW, equivalent to 30% of the total capacity of the national power system.

Solutions needed for electrical system safety

According to Mr. Vy, Vietnam’s energy transition is mainly characterized by the rapid growth of renewable energy, especially solar and wind energy. Oil, gas and coal will be affected differently by the energy transition because they have distinct characteristics and are used in a variety of sectors.

Flexible power sources in the power system (hydroelectricity and combined-cycle gas turbines) currently account for over 40% of the total capacity of the power system, so the growth in solar and wind power sources has not had much impact on operational safety in the system.

However, when renewable energy sources account for a high proportion, it is necessary to implement solutions to ensure safety and flexibility in the power system.

Mr. Vy said that the main solutions which should be focused on include improving the accuracy of weather forecasts to mitigate the uncertainty in renewable energy sources and developing such flexible power sources as hydroelectricity and pumped-storage hydroelectricity to adapt to transformation.

In addition, it is necessary to connect the national power grid with countries in the region; develop large-scale energy storage systems, invest in the development and renovation of the transmission grid system; assign local power units to manage and operate power sources that are connected to the grid distribution system and optimize the distribution system with distributed energy sources. Other solutions are to develop energy storage systems in wind and solar power plants and households using renewable electricity, as well as develop a smart grid to enhance demand-side management and make optimal use of renewable energy sources in the system.

“With good implementation of the above solutions, it is guaranteed that Vietnam’s energy system will succeed in transformation, contributing to the sustainable and efficient development of the energy system, in line with the trend of energy transition in the world,” said Mr. Nguyen Van Vy.

Enterprises switching to green power

Vietnam’s energy development strategy is set to ensure national energy security through measures that increase energy independence, prioritize the development of domestic energy sources and reduce import dependence in order to reduce energy vulnerability.

According to VCCI Vice President Phong, the current reality shows that only a few garment enterprises have chosen to buy renewable energy from rooftop solar power systems funded by foreign investors. However, many enterprises in manufacturing industries wish to use green energy to save operating costs and achieve a green certificate.

Notably, according to Mr. Phong, there are currently no specific regulations and instructions for investing and installing the solar self-consumption model, so many enterprises are still unclear when it comes to investment and installation. Therefore, the Government, together with the enterprises, needs to create a comprehensive solution package to effectively solve this problem.

Synchronous standards across the country needed

Mr. Vu Duc Giang

Chairman of Vietnam Textile and Apparel Association

Vietnam’s textile and garment industry currently has about 3 million employees. In the first quarter of 2023, export turnover was estimated at about US$12 billion. The textile industry had early access to green energy sources, including rooftop solar power. Access to renewable energy brings many benefits, especially in areas with large consumption.

The approval of Power Development Plan VIII is a great step, but it is necessary to standardize regulations on management to have synchronous standards across the country, especially for energy panels.

Rooftop solar developers and traders also need to set a vision, ensuring the safety of installation and operation of the solar panels in order to provide effective products for customers. In addition, regulators need to consider feeding the surplus electricity back to the grid to generate revenue for enterprises using renewable energy, thereby helping them reduce costs and enhance competitiveness.

To encourage enterprises to adopt green practices, it is necessary to have specific mechanisms to attract investment and ensure the harmonization of business interests. Besides, rooftop solar developers need to take into account the quick handling plan for the installation and operation process. On the path towards international integration, with the mentioned factors, green development is a key factor for sustainable development.

Businesses need a mechanism for green energy exploitation

Mr. Nguyen Hoai Nam

Deputy General Secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP)

Roof voltage is an urgent issue for the business community. It is not only mentioned in the roadmap of the Government and a requirement on emission reduction and green production, but also the issue of costs. In addition, if we fulfill these criteria, we will gain advantages, especially in trade with countries.

For the seafood industry, there are currently nearly 900 large-scale enterprises nationwide, most of them specializing in frozen seafood products. Therefore, keeping the freezer temperature at -40 degrees to preserve products is one of the most important issues. Generally, cold storage units use 380V electricity, thus the demand for energy is very high, and we have to fulfill environmental commitments with customers.

Hence, for VASEP member enterprises, roof voltage is a very urgent issue. With Power Development Plan VIII, we request that the Government quickly issues a guiding mechanism to help enterprises meet the environmental requirements from importing countries, properly implement the national strategy on green growth and circular economy development, as well as reduce energy costs.

At the same time, functional agencies such as the Ministry of Industry and Trade are recommended to quickly create mechanisms for businesses to soon invest and install rooftop solar power systems. Moreover, the government is recommended to soon have a new guiding mechanism for installing rooftop solar systems so that companies specializing in this field can apply and help VASEP member enterprises to install the systems.

Reviewing regulations for specific guidance

Mr. Tran Thanh Binh

Deputy Director of the Sales Department of the Vietnam Electricity Group (EVN)

Rooftop solar power is a beneficial field for investors, businesses and people, as well as the electrical system. It is an on-site distributed power source with low transmission costs. Along with that, it also helps to utilize the socialized resources.

However, in the past time, we have encountered many problems. Rooftop solar power is a new field that has developed rapidly in the short term and attracted many investors. Nevertheless, some investors do not fully understand legal regulations. Still, many investors do not consider fire safety, environment, or procedures for obtaining an electricity activity license. Because of that, there have arisen some problems such as violations of regulations on land use, fire prevention and safety construction.

In addition, a number of relevant standard mechanisms have not yet been specifically formulated and promulgated, causing some investors to not fully understand and not comply. Therefore, it is necessary to check and review those regulations for specific guidance.

Stability needed for investors to feel secure in adopting green practices

Mr. Nguyen Hai Anh

Vice General Director of Shinec Joint Stock Company, Investor of Nam Cau Kien Eco-Industrial Park

Tenants in Nam Cau Kien Eco-Industrial Park always focus on green energy, particularly roof voltage. The newly released Power Development Plan VIII is seen as a positive signal, but still the regulations, licensing procedures and the term “self-consumption” are not clear. Therefore, we hope that management agencies will soon provide clear guidance and specific mechanisms for investors to build a development plan.

Regarding the feasibility study or environmental impact assessment reports, in fact, small-scale rooftop solar power projects have been implemented in the industrial park. According to the current Environmental Protection Law, rooftop solar power is not considered to cause any negative impacts on the environment. Therefore, it is not suitable to require the industrial park to re-install a solar power system.

Regarding policy stability, investment in renewable energy has a long payback period, thus enterprises wish to have specific mechanisms and policies to avoid massive development. At the same time, it is necessary to soon complete the direct selling mechanism because this directly affects investors. Without policy stability, investors do not dare to implement projects.

Source: Vietnam Business Forum