Clean Energy Catalyst for Sustainable Economic Development

As climate change poses growing difficulties, transitioning to clean energy is essential for sustainable development. Vietnam, with its strong economic growth, recognizes the importance of renewable energy, both for environmental protection and ensuring energy security, while supporting long-term economic growth.

Clean energy, including renewable sources such as solar power, wind power, hydropower and biomass, is becoming a core element in the global sustainable development strategy. The goal of reducing greenhouse gasses, protecting the environment, and ensuring energy security for future generations requires each country to switch from fossil fuels to renewable energy. In Vietnam, the application of clean energy plays an important role in achieving sustainable development goals and international commitments on climate protection.

Vietnam leads Southeast Asia in solar power capacity, reaching 17 GW by 2023, nearly double the total capacity of ASEAN countries. However, Ms. Elva Wang, Regional Director at Trina Solar, said that Vietnam's potential for renewable energy development remains vast. Despite this, renewable energy currently makes up just over a third of the country’s total electricity capacity, with fossil fuels still dominating power production.

With electricity demand in Vietnam expected to grow 5-7% annually in the coming years, the government has set long-term plans to boost renewable energy use. A key goal in Power Plan 8 is to phase out coal-fired power by 2050 and increase solar power capacity to 34%, up from 23% in 2022. The plan also targets energy storage growth, aiming for 300 MWh by 2030 and 26 GWh by 2050.

Many major energy corporations recognize the growth potential of Vietnam's clean energy market and are actively investing in solar energy projects. Typically, First Solar, a famous thin-film solar module manufacturer from the U.S., has invested in Vietnam with a total committed capital of up to US$1.2 billion. This corporation currently has two factories in Cu Chi district, Ho Chi Minh City, with a total investment of US$830 million.

In Bac Giang, JA Solar Investment Group has implemented three projects in Quang Chau and Viet Han industrial parks with a total investment of US$589 million. By April 2023, two projects in Quang Chau Industrial Park had come into operation. In addition, Trina Solar has also put into operation a solar panel factory in Thai Nguyen province with an investment of up to US$203 million in August 2023.

These projects not only contribute to national solar power capacity but also help create many job opportunities and promote the local economy. Large solar power plants such as Dam Tra O plant (Binh Dinh) with a capacity of 51 MW or Vinh Long plant (49 MW) have become symbols of clean energy development in Vietnam.

To continue developing renewable energy and increasing the proportion of clean energy in the total national electricity output, experts recommend that Vietnam should continue to promote policies to support investment in the renewable energy sector, while promoting research and application of new technologies to optimize the efficiency of solar power plants.

One of the important solutions is to develop energy storage systems, helping to optimize the use of renewable energy, especially solar energy, in the context of unstable sunlight. In 2023, VinFast Company and ON Energy Green Energy Joint Stock Company of KTG Group signed a strategic cooperation agreement to develop the application of energy storage batteries for rooftop solar power systems in Vietnam. This is an important step to optimize the use of renewable energy.

In addition to solar projects, the electric vehicle market in Vietnam is also growing strongly, creating a strong link with the demand for clean energy. Vietnam is currently the country with the largest electric motorbike market in ASEAN and the second largest in the world, after China. According to HSBC, the electric vehicle market in Vietnam has strong growth potential, with sales of electric motorbikes and electric cars forecast to exceed 2.5 million units by 2036.

Government support policies, such as exemption of registration fees for electric vehicles and exemption of import tax for battery electric vehicles, will promote the transition to electric vehicles, thereby reducing dependence on fossil fuels and contributing to the country's sustainable development goals. VinFast, one of Vietnam's major electric vehicle manufacturers, also plans to increase production capacity to 1 million vehicles per year and aims to export electric vehicles to ASEAN countries, especially Indonesia.

To promote the development of renewable energy, according to experts, Vietnam needs to build a reasonable policy mechanism and support investment in clean energy projects. The government has introduced a number of tax incentives and fixed electricity prices for investors in renewable energy, but there is still a need for strong reforms in the legal system to attract more investment capital, especially from the private sector. In addition, programs to encourage research and development of new technologies also need to be strengthened to improve the efficiency of renewable energy use, while reducing investment costs.

Vietnam has been on the right track in developing renewable energy, but to achieve sustainable development goals, promoting the use of clean energy is an important task. This is an opportunity not only to protect the environment but also to promote the green economy, create jobs and ensure energy security.

By Giang Tu, Vietnam Business Forum