With a high average annual total radiation, Vietnam is considered a place with special potential for developing solar power. In the world trend of restructuring the energy industry towards a clean and sustainable direction, the solar industry is expected to be a major contributor to the country’s renewable energy capacity in the near future.
Overview of Solar Energy in Vietnam
For years, Vietnam, like many other developing countries, relied on coal as the cheapest and easiest option to meet energy needs. However, technological progress and growing environmental concerns have made renewable energies more attractive.
In 2017, solar energy played almost no part in Vietnam’s energy strategy. By the end of 2019, Vietnam surpassed Malaysia and Thailand to reach the largest installed capacity of solar panels in Southeast Asia. The country found itself with 5 gigawatts (GW) of photovoltaic projects, far exceeding the 1 GW by 2020 target. 
According to the World Bank, Vietnam currently has the most comprehensive installed solar power capacity in Southeast Asia, with 16,500MW generated in 2020. Moreover, Vietnam was among the top 10 nations globally, with the most solar energy capacity installed in 2020.
Source: IRENA 
According to the IRENA Renewable Energy Statistics 2021, the installed solar PV capacity in Vietnam was around 16,504 MW in 2020, up from 4,898 MW in 2019. The growth results from massive deployments of solar PV installations in Vietnam, particularly for utility projects.
Source: IRENA Renewable Energy Statistic 2021 
The Solar Energy Market in Vietnam
The Vietnam Solar Energy market is moderately fragmented. Some of the major companies operating in the market include Song Giang Solar Power JSC, Vietnam Sunergy Joint Stock Company, Sharp Energy Solutions Corporation, Berkeley Energy Commercial & Industrial Solutions, and Tata power solar system LTD.
The country’s solar PV capacity increased from 86 MW in 2018 to about 16,500 megawatts (MW) in 2020. In 2021, electricity production from solar energy accounts for about 10.8% of the total electricity output of the whole system. Vietnam’s solar photovoltaic power industry has recently experienced strong development and this is only the beginning of the process. The country’s energy transition is away from coal. Rooftop solar power also accounts for a significant proportion of total solar power capacity in Vietnam. consequently, Vietnam has surpassed Thailand as the ASEAN country with the greatest installed solar power capacity. 
Rooftop solar will account for approximately half of Vietnam’s total solar capacity by 2030. With a promising solar energy production environment, international investors will have difficulty passing up such lucrative investment prospects.
According to international experts, if it continues to expand the renewable energy industry, Vietnam will quickly gain a higher position in the market, possibly even surpassing countries like Australia or Italy in terms of solutions. innovation and development of renewable energy.
Key Driven for Solar Energy
Suitable natural conditions
Vietnam is a country located at the equator, with a tropical climate. The intensity of solar radiation is stable over four seasons. Therefore, the amount of heat and sunlight shining through our country every year is very large.
Feed in tariffs (FiTs)
FITs help incentivizes developers and manufacturers to invest in renewables (solar, wind) across several levels (utility-scale, rooftop, onshore, offshore, etc.)
Vietnam has created several schemes that reduce tax deductions from income and equipment importation for those involved in renewables:
Power Development Plan VII (PDP8)
The latest draft of Vietnam’s Power Development Plan still highlights a focus on the growth of renewables, which signifies long-term commitment.
The capacity of Vietnamese enterprises
Local enterprises have cooperated with and received large investment capital from many experienced global energy corporations such as Orsted (Denmark), Hitachi (Japan), and Enterprise Energy (Singapore).
Increasing consumer demand
In the past, solar energy was often focused on underground mining at large projects. But now, the needs of Vietnamese people are increasing, solar energy can be exploited by making rooftop solar panels.
Solar Energy Investments
Vietnam will be a focal point for solar energy financiers and investors. This is due to the wide variety of green energy opportunities like investing in solar energy.
Vietnam has invested heavily in solar. Over the years, Vietnam has also undertaken a significant number of solar projects, most notably, The Dau Tieng Solar Power Complex, which is Southeast Asia’s largest solar project.
Besides, solar energy projects in Vietnam have attracted a lot of FDI and private investment in the past few years. In 2021, attracting many new and large-scale projects with USD 5.7 billion, accounting for 18.3% of the total registered investment capital, has helped the electricity generation and distribution industry to rank 2nd among the attracting industries.
Billions of dollars have been poured into solar and wind power projects, showing that Vietnam has great potential for renewable energy, especially solar and wind power. Vietnam recorded a series of “million dollars” solar power projects from foreign investors such as Tata Power plant with a capacity of 300 MW in Ha Tinh, Hanwha factory with a capacity of 100-200 MW in Thua Thien Hue, GT & Associates, and Mashall & Street Ltd factories with a capacity of 150 MW in Quang Nam.
According to a report by VietinbankSC, the rates will increase. This means the value of the local renewables market will hit USD 714 billion and keep developing for at least 25 years. According to the bank, between 2020 and 2030, the market for solar power will grow by 12.8%. Meanwhile, the market for wind power will sort by 34.2% annually. 
Source: Global Climatescope 
Despite the Covid-19 pandemic, the renewable energy sector in Vietnam has a positive outlook. This is because investments are considered less risky compared to other forms of investments. And as a result of the global recession, investors may continue to invest in safe options such as renewables. There is significant potential in the Vietnamese renewables market and the country seems committed to adopting renewable energy as a primary source of energy in the future.
The lower demand during the pandemic in 2020
Due to oversupply, in 2021, Vietnam will cut 1.3 billion KWh of renewable energy. More seriously, the lack of strict controls, impactful investment in transmission infrastructure, and a clear solar development vision contribute to this incomplete capacity of solar electricity. [7
Financial challenges in the energy sector
Although the government tried to liberalize the policies and ease domestic and foreign investors into entering the local renewable energy market, challenges remain. These include lack of clarity over future energy prices, insufficient capital and funding opportunities, un-bankable power purchasing agreements (PPA), and more. 
Due to this, the private sector’s participation remains limited, which is another drawback for ensuring the country’s energy security.
Climate change and physical capacity issues
Vietnam is among the six most affected countries by climate change. The strong typhoons, riverine floodings, and drought, paired with the fact that the ocean level is projected to rise 75 centimeters by 2050, complicate the development and operation of the local energy grid.
Currently, Vietnam lacks the needed smart grid equipment and the capacity to manage supply and demand to speed up the renewables transition. In some parts of the country, the energy distribution network still isn’t reliable.
Additionally, current and potential investors are facing numerous challenges in limited qualified human resources, underdeveloped supporting industries, uncertain future energy prices, and low feed-in-tariffs. There is also a legal risk for foreign investors due to the unbankable Power Purchase Agreement, raising serious concerns for investors and creditors.
In the trend that the world is shifting the structure of the energy industry towards a clean and sustainable direction, Vietnam is considered as a potential place to develop alternative energy, especially solar power. Besides, with proper strategic planning and increased support for investment, Vietnam can leverage the opportunities provided by the solar boom and cement its position as a renewables leader in Southeast Asia.
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