Vietnam is powering ahead of the rest of Southeast Asia as it pushes for greater reliance on renewable energy.
The region, long criticized for lagging behind in its efforts to adapt to more sustainable ways, is still heavily reliant on coal consumption. Vietnam, however, has bold ambitions to use more renewable energy such as wind and solar.
The country is aiming to boost its power output produced by renewable energy to about 23% by 2030, according to Andreas Cremer, director of energy and infrastructure for Europe, Middle East and Asia at German investment firm DEG.
Citing the German Corporation for International Cooperation, a development agency, Cremer highlighted that 10.7% of the energy mix will be from renewables and 12.4% will be from hydro.
“The power development plan of Vietnam is evolving continuously,” Cremer told CNBC at the Asia Clean Energy Summit last week. The government’s renewables and hydro targets for its energy mix was raised from 16% in 2011 to 23% in 2016.
“That is actually quite impressive if you realize that they only changed their power development plan in 2016 and basically beginning of this year, they basically had nothing,” he said.
However, he said, the country was able to take more than 4 gigawatts of renewable energy capacity online by June — and that accounted for about 8.28% of Vietnam’s electricity supply mix, according to the country’s largest power company Vietnam Electricity.
“So I think that is quite an achievement,” he added.
Global energy consultancy firm, Wood Mackenzie, said Vietnam is now the leader in Southeast Asia’s solar photovoltaic (PV) market and has the largest installed capacity in the region. Solar PV is a technology that converts sunlight into electrical energy.
In an October report, Wood Mackenzie said Vietnam’s cumulative solar installation will reach 5.5 gigawatts this year — which makes up about 44% of Southeast Asia’s total capacity. In comparison, Vietnam produced just 134 megawatts — or 0.134 gigawatts — in 2018.
Cremer said it’s not likely for countries to fully replace coal. “It’s not realistic for those companies to cut out coal, and completely rely on renewables,” he said. Still, the trend is that policymakers and companies will try to replace coal with renewable energy for economic growth.
Economies will “need efficient electricity to grow,” Cremer said — especially as people continue to migrate into urban areas, such as mega-cities like Jakarta, Bangkok and Ho Chi-min city.
“People living there are clearly demanding better air quality. And that is another reason we are seeing a push for renewables,” he added.
Wind production costs have also come down in recent years, making its price almost comparable to relying on coal. That creates opportunities for governments, policymakers as well as private sector to invest in renewable energy options in Southeast Asia.
Wood Mackenzie said in its report that although Southeast Asia as a whole is still an emerging region in solar PV installations, its cumulative solar PV capacity is expected to reach 12.6 gigawatts this year, and is expected to grow almost threefold to 35.8 gigawatts in 2024.
“Large-scale solar will dominate the installation capacity for the next five years,” and the firm “expects small-scale solar to account for 32% of the capacity additions in 2024,” it wrote.