Energy transition opens new opportunities for Vietnam's supporting industry

Vietnam's localization rate is still low

Sharing at the seminar "Opening a new direction for the energy industry's support industry" organized by Industry and Trade Magazine on November 3, Mr. Chu Viet Cuong - Director of the Center for Industrial Development Support, Department of Industry ( Ministry of Industry and Trade ) said that currently in energy projects, especially wind power, solar power, hydropower and thermal power, the localization rate has changed significantly, but has not yet met the expectations of the Government.

Energy transition opens new opportunities for Vietnam's supporting industry - 1

Specifically, Mr. Cuong pointed out that in the field of wind power, Vietnam has only been able to localize about 25-30% of the equipment value, mainly in items such as: foundation, steel structure, piles, turbine tower and connection system. Some domestic enterprises such as CS Wind, TOMECO, Lilama, Dong Anh Electrical Equipment EEMC have the ability to produce and supply equipment and components that meet international standards.

In solar energy, the localization rate is about 35 - 40%, focusing on the production of support frames, wires, electrical cabinets, inverters and partly PV modules. Vietnam is currently a solar battery manufacturer in the Top 10 in the world , with the participation of enterprises such as Boviet Solar, IREX Solar, Vina Solar... However, the value chain of semiconductor materials, wafers, and cells still depends on imports.

Mr. Chu Viet Cuong acknowledged that the above results are a positive signal, but also show that Vietnam's localization rate is still much lower than that of other countries in the region, such as Thailand (60 - 65%) or Malaysia (55 - 60%) in the field of renewable energy. " The reason is due to limitations in finance, technology and modern equipment. In particular, the industry's high-quality human resources are still lacking. Another limitation is the technical barrier that "prevents" industrial enterprises supporting the energy industry from participating in the global supply chain," Mr. Chu Viet Cuong specifically stated.

Regarding this issue, Dr. Vu Van Khoa - Deputy Director of the Institute of Mechanical Engineering Research, frankly analyzed: Currently, there are more than 2,000 enterprises operating in the energy support industry, but only about 300 enterprises can participate in part of the global supply chain. Domestic enterprises still mainly perform low value-added stages, simple components, while core components (turbines, generators, control systems...) still have to be imported.

Meanwhile, from the perspective of enterprises directly implementing hydropower projects, Mr. Le Van An - Vice President of the Vietnam Association of Mechanical Enterprises, Chairman of the Board of Directors of Construction Electromechanical Corporation - JSC (Agrimeco), emphasized that Agrimeco has mastered the design, construction and installation of many key hydropower equipment, saving thousands of billions of VND in project costs. However, he also frankly warned that investors only focus on price criteria, and do not properly evaluate technical capacity, leading to price competition and quality risks.

Supporting industry - a key component of the energy sector

At this time, in the context of global energy transition, the need to develop clean energy - renewable energy, along with the roadmap to gradually reduce fossil energy sources, is putting Vietnam in front of a great opportunity to step up to a higher level in participating in the energy value chain. Accordingly, supporting industry becomes a key component, deciding the ability to master technology, increase the localization rate, and increase added value in the energy industry.

*The energy support industry still has a lot of room for development.*

Mr. Tran Kien Dung - ILO expert, Director of ProfM Vietnam Co., Ltd. said that to develop the supporting industry of the energy sector, there must be three pillars that determine the success of supporting industry enterprises.

Firstly , management capacity requires businesses to have a long-term strategic vision, establish an effective management system, and have short, medium and long-term development plans to operate stably and achieve set goals.

Second is technological capacity to access, master and increase the technological content in products, thereby increasing value in the global supply chain.

Third , human resources are the vital factor to ensure all management and technology systems operate effectively. Without high-quality human resources, there can be no strong business.

“ Accordingly, Vietnamese enterprises that want to make a breakthrough need to invest synchronously in three pillars: Management, technology and people to improve competitiveness and sustainable development ,” Mr. Tran Kien Dung emphasized.

According to Dr. Vu Van Khoa, in order for Vietnamese enterprises to participate deeply in the industrial chain supporting the energy industry, it is necessary to focus on four key factors.

Firstly, the Government and ministries and sectors need to soon issue a system of standards and technical regulations for domestic energy equipment and mechanical components, creating a legal basis for Vietnamese products to be used in projects. At the same time, it is necessary to stipulate a mandatory localization rate, forming a large enough market capacity for businesses to boldly invest.

Second, simplify procedures, shorten the approval process for standard products, helping businesses quickly commercialize research results and innovation.

Third, increase financial support through innovation funds, expand land funds for developing R&D centers, especially for businesses and research institutes that meet international standards in the energy sector.

Fourth, it is necessary to promote links between domestic enterprises and FDI, promote technology transfer, and plan energy manufacturing industrial clusters in advantageous areas such as Binh Thuan, Ninh Thuan, and Ba Ria - Vung Tau to reduce logistics costs and increase competitiveness.

On the business side, it is necessary to focus resources on products with large markets, invest in upgrading technology, machinery, management and human resources. Businesses must comply with green industry standards, industry certifications, build internationally standardized testing rooms and proactively link supply chains with domestic and FDI corporations to gradually participate deeply in the global energy value chain.

Sharing the same view, Mr. Chu Viet Cuong emphasized that the development of supporting industries for the energy sector is not only an essential factor and requirement to ensure national energy security but also a strategic step to affirm that Vietnam can master the new technology industrial value chain and move towards achieving the NetZero target by 2050. " With the support of the State, strong and proactive changes from businesses and with the scientific and technological foundation from research institutes and schools, I believe that in the coming years, Vietnam will rise strongly and confidently integrate deeply with the world in the energy sector " - said the representative of the Department of Industry.

According to the Adjusted National Power Development Plan for the 2021 - 2030 period, with a vision to 2050 (Adjusted Power Plan VIII), by 2030, Vietnam's total power capacity is expected to reach more than 236,000 MW, more than 3 times higher than present, with the proportion of renewable energy accounting for about 36%.
Along with that, many thermal power, gas power, hydropower, LNG power, and offshore wind power projects are being deployed across the country. Each project requires hundreds of thousands of technical details, steel structures, mechanical equipment, electric cables, valves, transformers, turbines, and control systems - products that the domestic supporting industry can fully participate in producing. Experts say that the renewable energy sector alone can create a billion-dollar market for Vietnam's supporting industry in the next 10 years.

Source: https://congthuong.vn/chuyen-dich-nang-luong-mo-co-hoi-moi-cho-cong-nghiep-ho-tro-viet-nam-428853.html