From Zero to hero, the various case of Vietnam’s renewable energy

If you have visited Vietnam a few times over the past decade, you might have been amazed to see how quickly the country has changed. Vietnam has seen remarkable growth through the rapid expansion of the industrial sector, owing much of this success to COAL.

With more factories popping up, electricity demand grew 252% between 2018 and 2010. Coal took the spotlight from hydro as a primary source of electricity generation and took up a 47% share in 2018, compared to 21% in 2010. The demand for coal is due to increase as demand for electricity is expected to grow at 8.5% per annum over the next 5 years.

Now, if you have seen even one piece of media coverage of Greta Thunberg, you’ll instinctively know more coal does not sound great. So, what about using clean renewable energy instead? Isn’t Vietnam blessed with tropical sunshine and a windy 3,260 km coastline? Yes and yes.

In 2017, the government realised the natural endowment on their footsteps along with a bunch of important stuff like:

• coal is actually running out
• hydropower dams are underperforming as water scarcity induced by extreme weather events intensify,
• investments in coal plants aren’t attractive anymore and maintaining the coal status quo is expensive,
• and renewables got significantly cheaper and more technologically mature.

As such, a significant shift in the power market happened when the government offered a generous feed-in tariff of 9.35 US cent/KWh for solar projects, along with some very important policies. This scheme pays producers under long-term contracts a set fee for each kilowatt-hour they generate using solar panels.

Imagine: someone offers you a fixed payment for 20 years for a business you haven’t even started, would you jump on the opportunity? I hope you would because all the solar developers did in Vietnam. That has led Vietnam from zero to hero in 2 years: by the end of 2020, total installed solar power exceeded 19,400 MWp, ~25% of total national installed electricity capacity. That is installing about 6 coal plants’ worth of solar in 2020, by the way. That is HUGE and it shows that there’s no lack of technology or talent ready for the renewable game.

Solar developers have already overcome numerous challenges, such as navigating the nascent market and regulations (read: uncertainty), to deliver such an impressive outcome in barely 2 years. Unfortunately, the biggest challenges still await.

Unlike conventional power plants, RE doesn’t generate electricity on demand. When the sun works at its hardest at noon, it leads to an oversupply and an overload of the existing transmission lines. But there’s a lack of supply when the sun goes down. So what’s the point of having so much solar power but you can’t use it when you want?

Many experts are suggesting using batteries and pumped hydro to store excess energy. Currently, pumped storage at hydropower plants is the largest energy storage device we’ve got, but it’s limited by geography and water availability. Meanwhile, batteries are getting cheaper but it’s not yet cost-effective.

So the most long-term sustainable solution is updating the existing transmission and distribution infrastructure, along with using batteries. This combo will help us use renewable energy a lot more flexibly. If you have a brand new Ferrari, you’d want to build nice long roads to ride it whenever you want! The questions then remain: where’s the money – $130 billion to be exact – and more importantly, how soon can we fix this?