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 on the South China Sea and borders China to the north. In the south it 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 is a north-south direction. This means that it has a long coastline near 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 the relatively high degree of energy independence of Vietnam. Coal is still used extensively in the power sector as fuel for power plants. At the same time, Vietnam still has rich, high-quality coal deposits that continue to be used in power generation. Coal as an energy source will slowly be replaced by renewable energies.

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. 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

Vietnam has excellent conditions for the production of wind energy in the mountainous regions and along the southeastern coast. 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 problem will be milder than in other places because Vietnam has excellent conditions for year-round wind energy production. For many wind energy producers from Europe, Vietnam can help to build a footprint in the East Asian market, which will grow significantly in the next ten years. 

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!


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