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What mechanism should be put in place to encourage investment in renewable energy?

In order to meet Vietnam’s commitment at the COP26 conference, Power Master Plan VIII is being adjusted in the right direction in accordance with the roadmap to reduce the proportion of coal power and increase the share of renewable energy (NLTT) to reduce gas emissions that cause environmental pollution. However, many experts today are asking, “What mechanism to attract investment in renewable energy?”

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What mechanism should be put in place to encourage investment in renewable energy?

Opportunity to shift renewable energy.

Despite being a potential country in terms of renewable energy (solar power, wind power, etc.), Vietnam’s use of this energy source is still insufficient. The main reason is that the barriers related to mechanisms, policies, implementation organization, etc. have limited the implementation of renewable energy projects to put the power source into practical use.

According to experts, this is an opportunity for Vietnam to make a strong commitment to transforming energy into green, clean, and sustainable energy. It should be noted that, thanks to the Prime Minister’s incentive mechanisms, renewable energy in Vietnam has made significant progress in recent years. According to Electricity of Vietnam (EVN) data, the total installed capacity of renewable energy sources as of October 31, 2021 was 20,644MW. Hydropower accounted for 29.60 percent, solar energy for 22.57 percent, and wind energy for 5.16 percent. As a result, the potential for renewable energy development in Vietnam is enormous, with plenty of space.

Vận hành thương mại (COD) thành công dự án Nhà máy điện gió Đăk Hòa 49,5MW

The orientation of Vietnam’s national energy development strategy to 2030 (Power Master Plan VIII) has clearly stated the importance of diversifying energy sources, with a focus on developing energy sources. Clean energy, renewable energy, increasing the proportion of RE in total primary energy consumption to more than 32% by 2030 and to around 44% by 2050.

With the existing foundation, the Government’s encouragement, and the new price policy mechanism, Vietnam is facing the opportunity to transform the energy structure, in which renewable energy is an inevitable trend for sustainable development in future.

A transparent, long-term mechanism and sustainable infrastructure are required.

Indeed, the Government’s incentive mechanisms have created a strong motivation to attract investment capital from domestic and foreign enterprises into the field of renewable energy over the past few years.

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Policies to encourage investment in renewable energy development in Vietnam, particularly decisions on solar and wind power purchase prices in Decision 11/2017/QD-TTg dated April 11, 2017 and Decision No. 13/2020/QD-TTg dated April 6, 2020, and Mechanism to support the development of wind power projects in Decision No. 37/2011/QD-TTg and amended and supplemented in Decision No. 39/2018/QD-TTg, have set a new trend in power source investment and development in Vietnam.

According to the Department of Electricity and Renewable Energy, the Ministry of Industry and Trade is currently studying and amending the Electricity Law to have facilities to socialize power transmission activities, in order to remove important bottlenecks in energy infrastructure, in order to attract economic sectors with conditions to participate in the development of the energy sector.  Simultaneously, the Ministry of Industry and Trade continues to research and recommend to the government mechanisms and policies to encourage private investment in renewable energy development in the coming years, such as: Auction mechanism, direct electricity trading mechanism Contractor for investor selection…

According to the series of IEREA2021 Workshops from the experience of renewable energy developing countries such as Denmark, India, Germany, the United States and the United Kingdom, some proposed mechanisms for use in Vietnam include: bidding, the close participation of local authorities at all levels, etc.

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Vietnam’s nascent renewable energy industry is approaching a critical juncture in its development. As a result, IEREA 2021, in the spirit of “sharing is caring,” is a bridge to bring many sincere friends to Vietnam, to support Vietnam’s renewable energy industry, to not only share successes, but more importantly, to candidly discuss mistakes on the development paths of various countries around the world.

The implementation of these mechanisms, according to the Electricity and Renewable Energy Department, will take more time, but it will be fairer and more transparent for investors, ensuring harmony and balance between the development of electricity and renewable energy and transmission grids and renewable energy power projects. Please visit and follow the website https://www.pecc3.com.vn/ to update the latest information on electricity industry construction consultancy.

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