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The National Power Development Plan VIII - A Remarkable Step in Vietnam's Energy Transition

Updated: Oct 20, 2023

The approval of the National Power Development Plan for the 2021-2030 period, with a vision towards 2050, after extensive two-year development, has garnered significant attention from investors and experts in the renewable energy sector. In its current iteration, PDP VIII embodies an ambitious transformation in Vietnam's energy generation landscape. This transformation entails a substantial departure from coal-based energy sources and a substantial emphasis on renewables and emerging technologies, including battery storage, hydrogen, and ammonia. These strategic adjustments align closely with the government's global commitments, as Vietnam strives to achieve a NetZero carbon footprint by the year 2050.

According to this plan, Vietnam is committed to achieving a renewable energy share of approximately 30.9% - 39.2% by 2030 and aims for an impressive 67.5% - 71.5% by 2050. Additionally, the plan envisions the creation of two inter-regional renewable energy industrial and service centers in certain well-positioned regions such as the North, the South Central, and the South. The plan also targets developing renewable energy sources and producing new energy for export. By 2030, the export capacity of this energy source is projected to reach approximately 5,000 - 10,000 MW, signifying a breakthrough in Vietnam's renewable energy development.

Towards 2050, the total capacity of power plants will be 490,529-573,129 MW (excluding export and renewable energy for new energy production), with the most significant proportion of solar power, as illustrated in the figure below. Notably, coal is targeted to be completely phased out by 2050 through either decommissioning or transition of fuel, showcasing Vietnam's strong commitment to clean and sustainable energy. The PDP VIII also lays out targets for newer technologies such as battery storage, biomass, waste-to-energy, hydrogen, and ammonia fuel in Vietnam’s market, aiming to provide potential investors and developers with a vision to introduce and expand these technologies in Vietnam’s context.

It is estimated that the total investment in the development of the power source and transmission grid is equivalent to 134.7 billion USD, of which investment in the power source is about USD 119.8 billion (average USD 12.0 billion)/year), the transmission grid is about USD 15.0 billion (average USD 1.5 billion/year). For the 2031-2050 orientation, it is estimated that the need for investment capital to develop the equivalent power source and transmission grid is equivalent to USD 399.2-523.1 billion and will be accurate in the next planning.

The National Power Development Plan (PDP) VIII shows us the picture of Vietnam's electricity industry in the next 30 years, and also opens up bright growth opportunities for electricity industry enterprises. Notably, electrical infrastructure construction and installation enterprises will benefit most clearly thanks to the large amount of work planned in the National Power Development Plan (PDP) VIII. Typically, TV2 and PC1 will be the enterprises that benefit the earliest from this point of view.

PDP VIII signifies a great milestone in Vietnam's economic progress for the current decade, with a forward-looking perspective toward the year 2050. The nation's bold aspiration to transition towards renewable energy within the framework of PDP VIII has notably captured the interest of a diverse spectrum of international investors, especially those engaged in the renewable energy sector. Prospective investors can explore a multitude of opportunities within this promising industry, poised for prosperous investments and robust returns. Achieving such success, however, hinges upon the thorough execution of pre-investment assessments encompassing commercial, tax, legal, and technical facets. Virtus Prosperity's expertise in conducting thorough pre-investment analysis encompassing commercial, tax, legal, and technical considerations can guide potential investors toward successful investments and robust returns in this dynamic industry landscape. Although questions remain, the release of PDP VIII has provided all industry stakeholders with a clearer view of Vietnam’s priorities moving forward. Virtus Prosperity stands ready to assist investors in navigating the myriad opportunities and challenges presented by PDP VIII and facilitate informed investment decisions aligned with the nation's sustainable development goals.💡🌍

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