There are still many barriers in attracting investment in renewable energy
According to the Electricity and Energy Working Group (Vietnam Business Forum), to keep up with the economic growth rate, the demand for energy consumption, especially electricity, has increased rapidly in the past two decades. The proportion of electricity consumption in overall energy demand nearly doubled in the period 2010 - 2018, from 15% to 27%. In the future, Vietnam's electricity demand will increase by an average of 6.5%/year in the period up to 2050 to meet the needs of socio-economic development.
In recent times, Vietnam's renewable energy industry has had a strong development with ambitious goals for wind power, solar power and rooftop solar power in the coming decades. The VIII Electricity Plan adjusts the target of renewable energy (excluding hydropower) accounting for 36% of total installed capacity by 2030 and up to 75% by 2050, with offshore wind power alone expected to reach 139 GW by mid-century. To achieve these goals, Vietnam needs to have strong support policies, a transparent legal framework and mobilize large investment capital. Despite its great potential in renewable energy development, Vietnam is still facing many barriers in attracting investment, especially from the private sector and international investors.
According to the report on the Production Energy Plan in Vietnam 4.0 - Enhancing the ability to attract capital for Vietnam's clean energy industry of the Electricity and Energy Working Group - complicated and inconsistent administrative procedures in policies are one of the main barriers in Vietnam. Complex licensing processes, prolonged time and lack of transparency make many foreign investors hesitant.
Support policies such as FIT price lists are unstable and often change, making it difficult to predict and plan for long-term projects. Currently, the FIT electricity price mechanism has ended but the bidding mechanism is not really clear, making it difficult for new renewable energy projects in Vietnam to develop.
Improving the investment environment, unblocking renewable energy capital flows
According to Dr. Dinh Tuan Minh - Director of the Center for Market Solutions for Economic and Social Issues - to be able to realize renewable energy development goals, Vietnam needs to develop specific solutions to improve the investment environment, especially creating conditions to attract large-scale long-term capital flows from foreign regions. This becomes even more urgent when many domestic enterprises still have difficulty accessing large and long-term capital to serve renewable power projects.
Vietnam has shifted from a fixed price mechanism (FiT) to a competitive bidding mechanism, but has not issued detailed instructions and specific legal frameworks. This lack of clarity has led to a decline in investor confidence. Therefore, it is necessary to soon complete a stable and transparent legal framework to unblock FDI flows into the clean energy sector. Vietnam also needs to invest in upgrading its technical infrastructure system, especially the national power transmission system. The current system has not met the growth rate of capacity from renewable energy sources, leading to local overload and waste of resources" - Dr. Dinh Tuan Minh emphasized.
Dr. Dinh Tuan Minh said that Vietnam needs to promote high-quality FDI attraction through practical incentive mechanisms. Vietnam should prioritize investors with strong financial capacity and modern technology; provide initial financial support for offshore wind power projects; at the same time, encourage technology transfer and enhance public-private dialogue to build long-term trust for investors.
"Developing supporting industries and improving domestic capacity are important factors to create momentum for the renewable energy industry. It is necessary to focus on investing in training high-quality human resources, improving the innovation system, and promoting the development of domestic supply chains to serve the clean energy industry, Dr. Dinh Tuan Minh stated.
Ms. Sunita Dubey - national representative of the Global Energy Union for People and Planets said that Vietnam needs to strengthen institutional cooperation between ministries, management agencies, and domestic and international financial institutions to attract investment capital for renewable energy in the coming time.
