The National Power Development Plan (PDP8) for the years 2021 to 2030, with a focus on the year 2050, was released by the government on May 15. This is a crucial presumption in order to implement the Just Energy Transition Partnership (JETP) agreement with the G7+ nations in 2022 and progressively achieve the net zero emissions objective by 2050 that was declared at COP 26 in Glasgow in 2021. By promoting renewable energy sources including wind, solar, and hydroelectric power, this strategy focuses especially on minimizing the negative environmental effects of the power industry. PDP8’s ultimate goal is to lower Vietnam’s electrical industry’s greenhouse gas (GHG) emissions.
The power supply in Vietnam is expected to undergo a strong shift from traditional energy sources such as coal and oil to renewable energy sources such as wind power, solar power, and biomass following the implementation of the 8th Power Development Plan (PDP8). The share of renewable energy in the power generation mix is projected to reach 32% by 2030 and 67.5-71.5% by 2050. The capacity of coal-fired power plants is expected to gradually decrease from over 30,000 MW in 2030 to 25,600 MW in 2050, and there will be a transition to biomass/ammonia fuel. Natural gas power sources will be developed using domestic gas and imported Liquefied Natural Gas (LNG). Nuclear power will not be included in the plan.
According to the draft PDP8, the scale of solar and wind power is expected to reach approximately 19,500 MW and 28,480 MW by 2030, and increase to 168,900 MW and 153,550 MW by 2050, demonstrating Vietnam’s strong energy transition. Renewable energy accounted for 48.8% of the energy mix in 2020 (including hydropower, excluding Large Hydro), and this is projected to increase to 66.2% by 2050.
GHG emission control target of PDP8
Accordingly, the GHG emission control target of PDP8 is 204 – 254 million tons in 2030 and about 27 – 31 million tons in 2050. According to Climatewatch data, GHG emissions from the energy industry in Vietnam are around 299.55 million tons in 2019, including GHG emissions from electricity production in Vietnam at about 155.23 million tons. The forecast of the Business-As-Usual (BAU) Scenario says that in 2030, Vietnam’s energy industry will emit 678.4 million tons, of which GHG emissions from electricity production are about 452.3 million tons. It can be seen that PDP8 has set a target to reduce GHG emissions twice as much as the current one. With outstanding policies on reducing carbon emissions, PDP8 aims to a sustainable and environmentally friendly electricity generation industry.
Social & Private benefits & costs of PDP8
In terms of the overall benefits for the country, the energy transition, reduction of coal-fired power, increase in gas-fired power, and development of renewable energy sources have been planned with the goal of reducing GHG emissions. By 2035, CO2 emissions from the power sector are expected to peak at 239 million tons, and by 2050, it will be reduced to 30 million tons, aligning with the National Climate Change Strategy and ensuring the power sector’s contribution to the country’s carbon neutrality by 2050.
In terms of electricity costs, if PDP8 is implemented early, in addition to the climate change mitigation goals, green energy sources will bring better cost savings for each individual. Specifically, for traditional energy sources such as coal-fired and gas-fired power, the cost is heavily influenced by the price of fuels such as coal and natural gas. With increasing electricity demand and the depletion and instability of fossil fuel sources (due to the Russia-Ukraine conflict), electricity prices are expected to rise.
On the other hand, for wind power and solar power, technological advancements have shown a significant decrease in production costs over the past decade. The cost of solar power is expected to decrease to around 5-6 cents/kWh by 2030 and even lower thereafter. Currently, wind power has a comparable cost to gas-fired power, but it is projected to be lower than coal-fired power by 2030. In the draft PDP8, the estimated electricity prices are around 8.2-9 cents/kWh (1.9-2.1 cents/kWh) in 2030 and around 10.2-10.5 cents/kWh (2.4-2.6 cents/kWh) in 2050, including the costs of the grid, energy storage, and high-cost fuels (hydro, ammonia) after 2030.
Business Significance of PDP8
With a focus on renewable energy and clean energy sources like solar, wind, and natural gas power, PDP8 presents substantial business opportunities for companies involved in renewable energy generation, equipment manufacturing, and related infrastructure development. The plan sets the stage for significant investments in the electricity sector, encouraging research and development in clean energy technologies and sustainable solutions. Businesses in construction, engineering, and project management sectors can also benefit from the infrastructure development needs outlined in the plan.
Conclusion
PDP8 presents exciting opportunities for businesses involved in renewable energy, infrastructure development, and related sectors. Its focus on clean energy, investment prospects, and policy guidance make it a crucial framework for sustainable economic growth in Vietnam’s electricity sector. As businesses capitalize on these opportunities, they must also recognize the growing importance of disclosing their greenhouse gas (GHG) emissions across all scopes. This transparency is critical not only for aligning with global sustainability standards but also for meeting investor and regulatory expectations. Comprehensive GHG disclosure, especially in the context of energy and infrastructure projects, ensures that businesses contribute to and benefit from the shift towards a low-carbon economy.
Lead Author:
Lan Nguyen Co-Founder, Head of Science & Policy Email: lan.nguyen@nuoa.io
Ms. Lan Nguyen does her PhD research in Economics, Environment, Evolution, and Ecology at the prestigious Dartmouth College (USA). Her research focuses on green growth policy, natural resource management, and environment policy and ecology
Co-Author: Mai Le Former Business Analyst – Nuoa.io
