The clean energy project is still awaiting the removal of bureaucratic obstacles.

Besides a few projects that are making efforts to be completed ahead of schedule, there are many power generation projects that are not progressing and are waiting for the removal of obstacles related to mechanisms in order to realize the goals and plans that have been set.

There has been very little progress on new projects related to gas-fired power, offshore wind power, and onshore wind power.

The national power grid currently has an installed capacity of approximately 85,000 MW, including 16,700 MW of solar power, 5,900 MW of wind power, and 5,688 MW of small hydropower. Because these power sources lack accompanying battery storage systems, they are heavily affected by weather conditions, resulting in unstable 24/7 electricity production throughout the year, unlike coal-fired, gas-fired, and large hydropower plants with reservoirs that store water year-round.

In 2021, the system's peak load capacity (Pmax) reached 43,518 MW, in 2022 it reached 45,434 MW, and in 2023 it reached 46,348 MW, meaning growth only fluctuated around 1,500 MW/year. However, entering 2024, the system's Pmax is expected to exceed 49,500 MW, an increase of approximately 3,000 MW compared to 2023. This growth rate is comparable to the period before the Covid-19 pandemic.

This situation necessitates the early introduction of new power sources to ensure that "electricity leads the way, creating conditions for economic development."

Sparse construction projects

360 MW is the capacity of the two generating units of the Ialy Hydropower Plant Expansion Project, invested by Vietnam Electricity Group (EVN), with a total investment of nearly VND 6,400 billion. Construction began in June 2021, and the project is currently in the final stages of construction to bring the two generating units into operation in the fourth quarter of 2024. Therefore, it will take approximately three years to add 360 MW of electricity to the system.

Despite initial setbacks, the Hoa Binh Hydropower Plant Expansion Project, also invested in by EVN, with a capacity of 480 MW, is now entering its peak construction phase with the goal of generating electricity by mid-2025.

Typically, the time required to complete and approve the Feasibility Study and other necessary legal documents for an LNG power plant project takes approximately 2-3 years. Following that, it takes another 2-4 years to negotiate the Power Purchase Agreement (PPA) and secure financing, depending on the investor's capacity, experience, and financial resources. The construction and commissioning time for a 1,500 MW plant averages 3.5 years.

This project commenced in January 2021, after being halted for a year to address issues related to incidents and to seek approval from relevant authorities for resumption of construction. To add 480 MW of new electricity to the system, the Hoa Binh Hydropower Expansion Project will need more than four years.

Launched in December 2021, the Quang Trach 1 Thermal Power Project (1,403 MW capacity) is scheduled to begin generating electricity from Unit 1 in June 2026 and from Unit 2 in December 2026.

At first glance, the Quang Trach 1 Thermal Power Project seems to have a larger capacity and a construction time of only 4 years. However, upon closer examination, this project was initially launched in July 2011, 13 years ago. Due to the inability of the previous investor to complete the project, it was handed over to EVN in October 2016 for continued implementation, and construction officially commenced in December 2021 after approval from relevant authorities.

Among the power projects accelerating construction to completion is the Nhon Trach 3 and 4 LNG-fired Thermal Power Plant Project of the Vietnam Oil and Gas Group ( Petrovietnam ).

With investment approval granted in February 2019, the Engineering, Procurement, Construction, Installation, Commissioning and Acceptance Contract (EPC Contract) for the Nhon Trach 3 and 4 Projects was signed in March 2022, aiming for the Nhon Trach 3 Power Plant to officially begin commercial operation in November 2024 and the Nhon Trach 4 Power Plant to officially begin commercial operation in May 2025.

Apart from the aforementioned power generation projects currently under construction, there are no other significant power generation projects in the construction phase that could soon add new power sources to the system.

Remove obstacles to accelerate clean energy projects.

According to the Power Development Plan VIII, the total capacity of gas-fired power plant projects to be invested in, constructed, and put into operation by 2030 is 30,424 MW (23 projects). Of this, the total capacity of gas-fired power plants using domestically extracted gas is 7,900 MW (10 projects), and the total capacity of gas-fired power plants using LNG is 22,524 MW (13 projects).

According to information from the Department of Electricity and Renewable Energy (Ministry of Industry and Trade), apart from the Nhon Trach 3 and 4 gas-fired power plant projects, most gas-fired power plant projects currently in the investment preparation phase have not made much progress.

Due to the time-consuming implementation procedures, not many of the ongoing gas-fired power projects are expected to become operational before 2030. These include the O Mon Power Center, Nhon Trach 3 and 4 Power Plants, and Hiep Phuoc Power Plant, with a total capacity of approximately 6,000 MW.

The remaining projects can only become operational by 2030 if the Power Purchase Agreement (PPA) is finalized and loan financing is secured before 2027.

The main reason why these LNG power projects are not easily gaining traction is that private investors have not yet seen the clear benefits to confidently invest, given the current and drafted mechanisms.

Not only gas-fired power projects, but also new offshore and onshore wind power projects have seen little progress. The pilot study on the development of offshore wind power to meet domestic electricity needs, proposed by the Ministry of Industry and Trade in July 2024, shows that from now until 2030, no additional megawatts from this source will be added to the system.

Many experts believe that the investment cost for offshore wind power is high, approximately US$2.5-3 billion per 1,000 MW, with a construction time of 6-8 years from the start of the survey. Currently, Vietnam does not have any offshore wind power projects that have received investment approval or been assigned to investors.

Furthermore, Vietnam lacks a complete and accurate database on wind speed and wind potential surveys for each region and locality, as well as for the entire country, and the current state of the terrain and seabed depth.

According to EVN, the selling price of electricity from offshore wind power plants is quite high, around 11-13 US cents/kWh. Furthermore, because there are no offshore wind power projects yet, the investor requirements regarding production commitments, PPAs, currency conversion, and related financial issues are unclear.

Since there are no offshore wind power projects in Vietnam, it is not yet possible to fully assess the system of norms, unit prices for construction, surveying, and design related to this type of project. Therefore, a review is needed to develop and issue regulations accordingly.

In particular, because there are too many issues in the implementation of offshore wind power projects that have not yet been concretized in policies and mechanisms, the Ministry of Industry and Trade believes that selecting international investors to carry out pilot projects may present many unforeseen difficulties and complexities, and proposes assigning large state-owned enterprises in the energy sector to implement the pilot projects.

Nearly two months after the Ministry of Industry and Trade reported on the offshore wind power situation as described above, Equinor – the giant energy group controlled by the Norwegian state – has canceled its investment plans in Vietnam's offshore wind power sector and will close its Hanoi office, despite having only opened in May 2022.

Previously, at the end of 2023, Orsted – a company in which the Danish government holds a controlling stake – also decided to withdraw from the Vietnamese market to pursue other plans. At that time, Orsted argued that the mechanisms for selecting investors and selling electricity – whether through direct commercial negotiations based on price ceilings, competitive bidding, or fixed-price transactions – were unclear, raising concerns because it was difficult to predict stable revenue streams from the project.

Not only are LNG power projects and offshore wind power projects facing challenges with no end in sight, but onshore wind and solar power projects are also experiencing little progress. The main reason is that current policies are unclear or not attractive enough to private investors.

To achieve the current total system capacity of 85,000 MW, the electricity sector has undergone 70 years of construction and development. Therefore, the goal of increasing capacity to 150,489 MW by 2030, nearly doubling the current level in the next six years, will be difficult to realize without attractive and groundbreaking policies.