Vietnam’s Energy Policy: An Amazing Energy Mix



Vietnam can live the renewable energy dream.

The Southeast Asian country has a variety of energy sources, including fossil fuels and renewable energies.

It is the diversity of available energy sources that makes Vietnam insensitive to disruptions in the global energy market.



1. Geopolitical energy landscape and the Strait of Malacca


Vietnam is located near the South China Sea and borders China to the north. In the south Vietnam touches the center of global energy trade, the Indonesian archipelago. Vietnam is not far from the hub of the energy world, namely the Strait of Malacca, through which most of the world’s oil and LNG flows. 

More importantly, Vietnam flows in a north-south direction. This means Vietnam has a long coastline adjacent to the South China Sea. This gives Vietnam great potential for maritime trade and energy imports, and the country has easy access to the world’s main energy sources. Vietnam can easily be supplied with hydrocarbon imports, including LNG and PNG. We see a similar trend in the European Union. Given Vietnam’s relatively easy access to the Strait of Malacca and its renewable energy potential, Vietnam’s strategic dependence on LNG supplies is not as serious as in the European Union. Vietnam’s southern location compared to other East Asian countries is an enormous advantage in terms of transport costs and the country’s energy security. 

China is the energy hub of the Eurasian continent, yet it is more dependent on hydrocarbon imports than Vietnam. Vietnam is to a certain extent the gateway for energy supplies to Northeast Asia. 


2. Fossil fuels: Coal has a significant share in power generation


Coal reserves contribute to Vietnam’s relative energy security and ensure that the energy sector functions effectively. Vietnam still has rich, high-quality coal deposits that continue to be used in power generation. 

Vietnam is located in a dense neighborhood of countries that are becoming more industrialized. Countries in this neighborhood are catching up to Western economies in industry and trade. Coal has served as the primary energy source to drive the industrialization of this Southeast Asian region. Similar to Vietnam, Thailand and Cambodia also consume lignite to meet their domestic energy needs. However, it must be said that among the three countries, Vietnam stands out for its diversity of renewable energy sources, which include hydropower, solar power, and wind power. This may explain why Vietnam has found it easier to switch from coal to renewable energy generation. Coal as an energy source will slowly be replaced by renewable energies. It seems rather unlikely that coal consumption will rise. There are many renewable energy sources available. Grid parity between solar energy and fossil fuels is in sight.


3. Hydropower


Hydropower is Vietnam’s true strength. Vietnam has abundant rainfall and rivers with the right gradient for building hydroelectric dams. Unfortunately, it is unlikely that there will be any other large hydroelectric power plant projects. Other hydropower-producing countries are in a similar situation, having exploited most of their existing hydropower potential. In many countries, little hydropower is added to primary energy consumption, and Vietnam is no exception. In contrast, Brazil is still experiencing significant growth in the construction of hydropower plants. So the hydroelectric potential in Vietnam is exhausted, but is already making a significant contribution. In Vietnam’s case, hydropower can be ideally combined with geothermal energy


4. Geothermal potential of Vietnam


Since Vietnam is relatively close to the Pacific rim, it has significant potential for geothermal heat generation. Nevertheless, the potential for using geothermal energy is not nearly as great as in the northern European countries or in Russia. It is possible to use the heat to generate electricity. However, there are better alternatives for renewable energies in Vietnam. In comparison, wind energy performs particularly well. Here there is still the greatest growth potential for electricity generation. The heat potential of geothermal energy is not as large as the geothermal potential in Indonesia. In comparison, Indonesia is a volcanically active region. 


5. Photovoltaics


The southern latitude means that Vietnam has a very high energy yield for solar radiation. Of course, this is true for many countries that are located on a similar latitude as Vietnam. It is worth noting that Vietnam stretches longitudinally from north to south. The further south you go, the stronger the solar radiation becomes. This will be the key to a diverse energy mix, and photovoltaics will make an important contribution to a transition to renewable energies. Photovoltaic systems should help to smooth the power curve when wind energy is temporarily unavailable. This is the biggest advantage of photovoltaics in the case of Vietnam.


6. Wind energy


Wind speeds are usually very high on flat mountain plateaus, in the lowlands, on the coast and by the sea. At very northern and southern latitudes, wind speeds are high due to air circulation, turbulence in the air, highs and lows, the extent of the atmosphere from the ground to the stratosphere, and jet streams.

Let’s take a look at the geography of Vietnam. The south of Vietnam is less mountainous than the north of the country. So Vietnam has excellent conditions for the production of wind energy in the mountainous regions and along the southeastern coast. The southeast is the point of contact between the lowlands and the sea. The mountains are flatter. The south touches the South China Sea, but is relatively close to the Western Pacific Ocean and is still accessible for wind turbine construction.

The southeast coast looks particularly promising, but otherwise the wind energy potential is quite limited due to its relative proximity to equatorial latitudes. This means that Vietnam can easily combine wind and solar energy all year round. This is a rare combination. In addition, Vietnam will still face the problem of storing electricity from wind turbines. This is important because there are regional variations in wind energy production. There are changing wind patterns within a year and between years. Vietnam’s location also means that cyclones and El Nino play a role in wind energy production.

For many wind energy producers from Europe, Vietnam can become the springboard for their expansion into new markets. Vietnam can help them create a footprint in the East Asian wind energy market, which is set to grow significantly over the next decade. 


7. Nuclear power


Vietnam has deliberately decided against using nuclear energy as part of its energy mix. The main reason is that there are suitable energy sources. The most suitable energy source in the case of Vietnam is hydropower with an energy yield similar to that of nuclear power


8. Vietnam’s considerable biofuel potential


Vietnam has a significant potential for the use of biomass for energy production. Vietnam’s potential is particularly pronounced in the area of converting algae into biofuel on the one hand and turning sugar cane into biofuel on the other. Although it is unlikely that biomass will play a significant role as part of Vietnam’s primary energy consumption between 2020 and 2030, the use of biomass for energy generation is expected to increase in the coming years.


9. Conclusion: Vietnam’s terrific energy profile


The best of all worlds: Vietnam can choose its energy source pretty much freely and can achieve energy independence. This will benefit Vietnam in the further industrialization. From the perspective of further industrialization, Vietnam has good prospects. Due to the availability of coal, LNG, domestic oil and gas reserves, Vietnam is a strong candidate for cheap electricity. Vietnam’s strengths are in the area of renewable energy: hydropower, solar, wind and geothermal energy. They all have huge potential in Vietnam, with wind and solar power set to grow most strongly. They all have huge potential in Vietnam, with wind and solar power set to grow most strongly. The assumption is that wind and solar energy have a high energy yield in Vietnam.

Although the South China Sea is shared by many nations, it is well suited for the development of offshore wind energy. This is partly due to the shallow waters and accessibility of the sea. On its periphery there are large population centers. It is conceivable that a hub could be built in the South China Sea to distribute offshore wind energy to all neighboring countries in a larger grid network. The Philippines has an ambitious renewable energy program. Vietnam could possibly cooperate with neighboring countries in the field of offshore wind energy. 


Many thanks for the shared interest in the energy world!



Disclaimer:


This article is just meant to inform the reader of recent developments in the energy industry at large and to share knowledge and insights with a wider audience. The author does not put forth investment recommendations. This article should not be taken as investment advice and the author cannot be held to account for investments made. For more information, please refer to the Legal Disclosure and Privacy Policy, which you can click on or find at the top of this page in the menu bar. 


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