International community encourages continued collaboration to support Viet Nam’s road to Net-Zero

Viet Nam has been actively striving to achieve its net-zero target by 2050, a commitment made at COP26. It is projected that  renewable energy (RE) generation  could increase to 39.2% of total power generation, demonstrating how the government has emphasized the importance of RE in the country’s energy transition roadmap and to the decarbonization of its industries.

Recent policy discussions relevant to Viet Nam’s net-zero target have focused on the following: the Direct Power Purchase Agreement (DPPA), the implementation of Power Development Plan VIII (PDP 8), rooftop solar incentives, Battery Energy Storage Systems (BESS) for ancillary services, and the Just Energy Transition Partnership (JETP). These activities are interconnected, and their successful implementation will be crucial to ensuring that Viet Nam’s net-zero journey and energy transition are just, equitable, aligned with its global commitments.

Indeed, international stakeholders have been around to actively engage and support the government of Viet Nam to achieve these goals. In August, a first-of-its kind mid-year “policy dialogue” among different stakeholders in the international community — representing large corporate energy buyers, philanthropic and impact investors, and international diplomatic and cooperation actors — was convened in Hanoi to highlight a positive and collaborative message to support Viet Nam's net-zero target and energy transition goals.

Key Policies Driving Viet Nam's Energy Transition

One of the most anticipated developments that have received media attention and positive feedback is the issuance of the DPPA decree in July, which signals the government’s support to allow renewable energy producers to sell electricity directly to private consumers. This is especially significant as businesses in Viet Nam, particularly FDI enterprises, increasingly take action to decarbonize their operations in line with global sustainability standards. These efforts drive the demand for renewable energy sources. The DPPA provides a critical mechanism for large corporations to achieve their sustainability goals by facilitating access to clean energy. The developments in DPPA was prefaced by the approval and release of the 8th Power Development Plan (PDP 8) in May 2023, which serves as the backbone for Viet Nam’s energy infrastructure planning and outlines a vision to significantly increase the share of RE in the country’s energy mix.

Policies on rooftop solar is another area of focus. Despite the initial success of Viet Nam’s rooftop solar program, recent changes in tariffs and policy uncertainty have affected investor confidence. The government has set the policy of limit   ing rooftop solar to self-generation and consumption, with the option to sell off only up to 20% of surplus electricity to the national grid to ensure grid stability. The development of further policies must now continue to ensure that rooftop solar becomes a key contributor to both government and corporate decarbonization goals.

The development of Battery Energy Storage Systems (BESS) as ancillary service provider will also need continued and comprehensive policy support. BESS will be an important feature in Viet Nam’s transition to net zero by 2050, especially in providing ancillary services that can stabilize the grid as more intermittent renewables are integrated.

The Just Energy Transition Partnership (JETP), announced in December 2022 through the signing of the  Political Declaration, is a flagship initiative to support and accelerate Viet Nam’s energy transition, and longer term green growth, ambition .  The JETP brings together international support from the International Partners Group (IPG) led by the UK and EU, alongside Canada, Denmark, France, Germany, Italy, Japan, Norway and the United States, alongside the Glasgow Financial Alliance for Net Zero banks – comprising 11 banks committed to mobilising private clean energy financing. The JETP commits to mobilise US$ 15.8billion to support Viet Nam’s energy transition, and through supporting the right policy reform and enabling environment, can help to unlock much larger flows of green finance to enable Viet Nam to achieve its ambitious net zero goals.

In April 2024, a consultation meeting with Viet Nam’s Ministry of Natural Resources and Environment (MONRE) and key public and private energy transition stakeholders identified a selection of projects that could serve as ‘first movers’ under the JETP package with IPG finance. Additionally, these type of public-private dialogues, alongside the development of a JETP-Viet Nam website can also help to share partnerships opportunities more widely, and facilitate new investments that support the country's energy goals.

Fostering Collaboration Among Different Stakeholders

A key factor in ensuring the success of Viet Nam's energy transition is enhancing coordination among various platforms and initiatives. This will help avoid duplicative efforts and ensure that the support and resources are allocated and utilized efficiently. Stakeholders — including corporate energy buyers, philanthropic funders, and the embassies of partner governments, with each bringing unique technical know-how and financial resources.  —Targeted cooperation and collaboration is needed to support a pivotal country like Vietnam meet its ambitious net-zero target.

Platforms like the Asia Clean Energy Coalition (ACEC) have so far played a key role in facilitating cross-sector dialogue, bringing together energy buyers and sellers to form a unified corporate voice that drives market reforms and industry transformation. ACEC consists of more than 40 world-leading renewable energy buyers, sellers, and financiers in Asia, including companies that are among the most important foreign direct investors in Viet Nam such as Nike, Cisco, Dell, Apple, Amazon, Google, META, Samsung Electronics, Unilever, Ingka Group/IKEA, ib vogt, Iberdrola and MUFG Bank. ACEC’s goal is to help its members achieve their decarbonization objectives with a clear 2030 timeline, positioning renewable energy procurement at the center of this objective. The DPPA is precisely one of the crucial policies that can support ACEC’s members’ goals.  More needs to be done for the DPPA, however. Suji Kang, Program Director at the Asia Clean Energy Coalition (ACEC), emphasized the need for further advocacy to monitor the DPPA charges and associated fees, align market operations and master plan of PDP8, promote technological innovation in grid capacity, and enhance the regulatory environment to support renewable energy investments. Buyers are in the process of identifying potential projects and developers but face challenges in negotiating across varying project sizes and are looking for more support in verifying developer eligibility and credibility.

The Global Energy Alliance for People and Planet (GEAPP), a philanthropic initiative led by IKEA Foundation, The Rockefeller Foundation and the Bezos Earth Fund, has put its focus on BESS and other storage technologies to fully realize the benefits of a green energy transition for Viet Nam. GEAPP, in partnership with the Asian Development Bank and RMI, is currently supporting EVN in developing a pilot 50MW/50MWh BESS project in Northern Viet Nam that requires a $30 million investment. This project is expected to demonstrate the strategic value of BESS and pave the way for market expansion, while also identifying and addressing the policy frameworks necessary for scaling adoption. Sunita Dubey, GEAPP’s Viet Nam Country Representative, highlighted that there is currently a lack of legal or policy framework for BESS due to the novelty of the technology, limit   ing revenue models at the moment. Furthermore, no tariffs have been approved for BESS to date, and the ancillary services market is still in its nascent stage. Throughout these issues GEAPP is actively supporting the government in order to establish the appropriate policy mechanisms to enable broader deployment of BESS as soon as possible.

Anna Gibson, Climate Counsellor from the British Embassy Hanoi, has shared her reflections on the JETP, expressing that the JETP is not solely about financing but embodies the spirit of cooperation between Viet Nam and the global community to meet shared climate goals. She noted that the facilitation of multi-faceted stakeholder views in policy and project level dialogues will unlock the full potential of the initiative, harnessing the potential of both the public and private sector. In fact, there needs to be a clear line of sight between PDP8 and JETP project pipeline to align partnership efforts with national planning. The advancement of key policies that were mentioned earlier, from the DPPA to rooftop solar, as well as the amendment of the Electricity Law, shall altogether contribute to refining the regulatory framework and enhance availability of resources to meet the goals set forth in the JETP declaration. For Viet Nam, these developments provide a solid foundation for the JETP to translate big picture financial mobilization goals into the implementation of specific projects that catalyse Viet Nam’s longer term clean energy transition.

A Call for Continued Collaboration

While there have been several policy wins achieved to support Viet Nam’s net-zero target, an impressive feat and commendable effort indeed, more needs to be done. Viet Nam’s net-zero journey underpinned by an energy transition powered by renewable energy, is a shared endeavor that requires the commitment of all relevant stakeholders. This transition not only aids in combating climate change but also drives Viet Nam's economy toward a sustainable future, bolsters its global competitiveness, and unlocks new opportunities for trade and investment in green industries. This will require maintaining an open and sustained dialogue between the government, local industry players, and the international community. Viet Nam’s net-zero pledge at COP26 in Glasgow set the foundation, but it is through continuous collaborative action that these commitments will be realized. Over the next crucial years leading to 20230 the focus shall be on continuously developing and refining policies while taking decisive action. By fostering open communication and orchestrating alignment including with and among international partners, Viet Nam can undertake a cohesive and comprehensive energy transition strategy that will propel Viet Nam towards achieving its net-zero targets in a just, equitable, and sustainable manner.