Vietnam Energy Outlook Report 2019 EN

MOIT
VIETNAM
SAVE ENERGY
SAVE EARTH ENERGY
OUTLOOK
REPORT
2019
Vietnam Energy Outlook Report 2019
Hanoi, November 2019
Copyright
Unless otherwise indicated, material in this publication may be used freely, shared or reprinted, but
acknowledgement is requested. This publication should be cited as EREA & DEA: Vietnam Energy Outlook
Report 2019 (2019).
Acknowledgements
Vietnam Energy Outlook Report 2019 is a publication prepared by the Electricity and Renewable Energy
Authority in Vietnam under the Ministry of Industry and Trade together with the Danish Energy Agency, and
supported by the Danish Embassy in Hanoi.
Contacts
Nguyen Hoang Linh, Senior Official, Department of Planning, EREA (MOIT), linhnh@moit.gov.vn
Jakob Stenby Lundsager, Long Term Advisor for the Vietnam-DEPP, jlun@ens.dk
Giada Venturini, Advisor, DEA , gve@ens.dk
Søren Storgaard Sørensen, Advisor, DEA, ssts@ens.dk
01
Foreword
In 2013, Vietnam and Denmark entered into a long-term cooperation agreement for the purpose of
strengthening Vietnam’s transition to a low-carbon economy. The Danish Energy Agency (DEA) cooperates with
the Ministry of Industry and Trade in Vietnam through the joint Energy Partnership Program between Vietnam and
Denmark (DEPP). The program is currently in its second phase (DEPP II, 2017-2020) and covers long-term
scenario modeling of the energy sector, the integration of renewable energy in the power grid and energy
efficiency in the industrial sector.
This Vietnam Energy Outlook Report 2019 (EOR19) is a central milestone in the DEPP long-term scenario
modeling activities and supports the development of Vietnam’s energy system in a more sustainable way
through implementation of cost-optimized policy and planning. The EOR19 is developed by the Electricity and
Renewable Energy Authority under the Vietnamese Ministry of Industry and Trade in close collaboration with the
Danish Energy Agency and supported by the Danish Embassy in Hanoi; consultants of the task were the Institute
of Energy and EA Energy Analyses. The report has been developed in an open process by involving energy
sector stakeholders in various workshops and working groups and by arranging Balmorel model training
workshops for Vietnamese stakeholders in the energy sector.
The first edition of the Vietnam Energy Outlook Report was published in 2017. At that time, it marked the initial
step of providing long-term scenario-based visions for the Vietnamese energy system and it created an
important foundation for energy system analysis based on state-of-the-art energy system models.
Today, the EOR19 takes this to a new level, with an updated and enriched modelling and strengthened scenario
analysis. The EOR19 is based on more solid input data, including high quality projections of prices for
technologies and fuels as well as energy demand, a more comprehensive set of energy models, linked together
to ensure a detailed and operational setup across all sectors. A key improvement in the EOR19 is that it includes
dynamic modelling of the Vietnamese power system divided into six regions.
Going forward, it is expected that the Energy Outlook Report will continue to be published once every two years,
thereby ensuring that the newest data and model improvements are used to back up decisions and discussions
on long-term energy planning in Vietnam.
The EOR19 is supported by a list of other reports and analyses, which serve as the background and contain data
and modelling methodologies behind the EOR19. This includes the EOR Technical Report, the Balmorel Data
Report, the TIMES Data Report, the Fuel Price Projections Report, the Vietnam Technology Catalogue, and the
Detailed Grid Modelling of the Vietnamese Power System Report. These are all publicly available.
02
Executive Summary
Executive Summary
For decades Vietnam has been one of the fastest growing economies in Asia with a GDP growth rate above 6%
per annum. The energy sector plays a significant role in the continued development of Vietnam, and access to
affordable and reliable energy will be critical for sustained economic growth. Achieving the necessary global
reduction of greenhouse gas emissions, as established under the Paris Agreement, depends heavily on the
development path of emerging economies like Vietnam.
Vietnam has a huge opportunity to embark on a sustainable development pathway, considering the large
opportunities for more efficient use of energy and the domestic resource potential for both solar and wind power.
Declining cost of these technologies as well as of battery storage gives Vietnam an advantageous option for a
green energy transition. However, such a pathway also entails certain challenges in expanding and integrating
renewable energy (RE) in the energy system and realizing the energy efficiency (EE) potential in the most
affordable way across sectors.
These challenges must be addressed by policy action. Based on well-documented and detailed modeling of the
energy system, the EOR19 provides a scenario-based foundation for policy action by shedding light on the
development of the energy system towards 2050. The report presents five scenarios (Figure 1) exploring
different least-cost development pathways of the Vietnamese energy system. The scenarios are not intended as
the “recommended” energy system pathways, but rather serve as indicative “what-if” scenarios from which
insights have been drawn on the relevant themes in the Vietnamese context. Thereby, the EOR19 intends to
guide policy makers and inspire deliberation on green transition, while delivering concrete input to the
forthcoming National Power Development Plan 8 (PDP8) and the Energy Master Plan.
C0 Unrestricted A theoretical scenario not taking policy constraints into account, such as
RE targets, restriction on coal-fired generation, successful EE penetration
A scenario where RE power sector targets in the REDS are fulfilled,

C1 RE target
without EE penetration
C1 scenario with the addition of the constraint of no investments in

C2 No new coal
new coal power plants after 2025
C1 scenario with the addition of least-cost EE technology penetration

C3 Energy effciency
rate of 50% in 2030 and 100% in 2050
C4 Combination The most ambitious scenario combining the three scenarios C1, C2 and C3
Figure 1: The five scenarios analysed and compared in the EOR19
The EOR19 shows that enhanced EE and development of RE at the highest level can deliver large and cost-effective
CO2 reductions, and reduce air pollution and dependency on fuel imports. Such a transition would require:
An early stop for investments in new coal power plants that would reverse the current trend of increasing
coal consumption.
Energy efficiency to be a priority. The results show that it is much more cost-efficient to invest in EE than
invest in more power plant capacity and that EE can contribute with important reduction of CO2 and fuel import.
Stable and transparent framework conditions for wind and solar power expansion, including stable plans
and targets, a transparent and coordinated approval system for projects (one-stop shop), and international
standard power purchase agreement (PPA). Results show that a 40% RE in the power mix in 2030 in
combination with EE is feasible, will not increase costs, and is needed to limit fuel imports.
03
Investments in the transmission grid and electricity storage capacity, which enable integration of maximum
RE capacity.
The EOR19 is structured around five themes: Energy Resources, Energy Efficiency, Renewable Energy, Power
System Balancing and Climate Impact and Pollution. In the following, key findings and recommendations for
each theme are summarized.
Energy resources
Key findings
Coal and Liquefied Natural Gas: The trend of increasing use of coal continues, but if coal expansion is
constrained, this trend can be reversed already in 2030. Liquefied natural gas (LNG) can replace coal in the
power sector at a higher cost but causing less environmental pollution.
Renewable resources: RE resources, like wind, solar, hydro and biomass, can supply up to 24% of the primary
energy by 2050 and achieve a RE share up to 59% in the power generation. Modelling results show that the use
of biomass in industrial combined heat and power (CHP) and power plants could bring higher economic benefits
than the current use for residential cooking. This indicates that biomass could become an important commodity
for reducing fuel import and CO2 emissions.
In 2030, all scenarios show a massive increase in import of coal and oil. Fuel import dependency can be
reduced from 59% to 51% in 2030 and from 72% to 61% in 2050, if RE and EE in combination successfully replace
most coal-fired power plants. The import cost can be reduced by EE measures, while limitation on coal does not
alone reduce import cost as it is replaced by expensive LNG. Increased road transport makes the historic trend
of increasing oil consumption continue, making it a major imported fossil fuel also in the long term. Based on
transport activity data from the Ministry of Transport, the EOR19 shows that a successful transformation of the
transport fleet to new and efficient vehicles, both passenger and freight, can lead to a 25% reduction of oil
imports in 2050.
Recommendations
Efficient use of domestic resources, i.e. biomass, wind and solar and other RE in combination with EE measures
are key elements to reduce import dependency of fuel for power generation.
Early actions to reduce the future coal demand are needed. This may include taxation on the use of coal or
limits on new coal-based power generation: Coal power plants built today will operate thirty years from now.
Therefore, to avoid lock-in effects, action in the short term is needed to reduce coal (import) dependence in the
long term. As a further benefit, a reduction in coal consumption can reduce air pollution and CO2 emissions.
Enhancing energy efficient vehicles by economic incentives and minimum efficiency standards: Oil will be
a major import fuel, and a focus on enhancing energy efficient vehicles will reduce oil import dependence.
Mobilizing domestic biomass potential for energy production: Policy measures such as favorable
feed-in-tariffs and investment subsidy schemes are examples of measures that can promote efficient biomass
use and change in fuel use from coal to biomass.
Energy efficiency
Key findings
EE savings outweigh EE costs: Increasing cost for technology investments in EE at 7 and 16 billion USD in 2030
and 2050 respectively, will be more than outweighed by savings in fuels and supply sector investments, resulting
in total savings of up to 3 and 30 billion USD in 2030 and 2050 respectively.
Considering the targets set out in the Vietnam National Program on Energy Efficiency and Conservation for
the period 2019-2030 (VNEEP3), even more ambitious EE penetration remains cost-effective, as the EOR19
least-cost EE scenarios go beyond the high 2030-targets in VNEEP3.
04
Executive Summary
Savings on electricity generation and energy consumption: The combined effects of electricity demand
savings and industrial CHP could reduce investment in new power plants due to 10% and 29% lower power
demand in 2030 and 2050, respectively, according to modelling results. Implementation of EE technologies can
reduce final energy consumption by 12% in 2030 and by 20% in 2050, primarily reducing oil consumption in
transport and energy consumption in the industry and residential sectors.
CO2 emission savings: Implementation of EE technologies can reduce annual CO2 emissions by 83 Mt in 2030
and by 237 Mt in 2050 in the power, industry, and transport sectors.
The most important areas for EE include the industry sector (process heat for cement, iron and steel, pulp and
paper, and textile), the transport sector (cars, motorcycles, trucks, and buses), and the residential sector
(cooking, air conditioning, and lighting).
Recommendations
Ambitious energy efficiency measures should be highly prioritized in PDP8: EE is one of the key elements in
reducing costs for power plant investments. The coming PDP8 should take EE into account and focus on
harvesting both the economic and environmental potential of EE. Making the utility companies co-responsible for
energy savings has been successful in some countries and could therefore inspire Vietnam on bringing financial
benefits for the utilities and their customers, as well as economic benefits for the society in general.
Continue and enhance the current energy efficiency policy (VNEEP3): More ambitious EE penetration than
outlined in VNEEP3 remains cost-effective. In order to fulfill this target, it is important to e.g. enhance minimum
efficiency performance standards, fuel economy standards in transport, energy audits and energy management
systems (ISO 50,001 and similar schemes) in all major energy-intensive facilities, and develop voluntary
agreements schemes with fiscal and financial incentives.
Focus on barriers to facilitate large investments in energy efficient technology in the demand sector:
Implementation of EE can have many informational, regulatory, financing and market barriers not covered by the
EOR19, which focus on least-cost technology deployment. Some of these barriers can be addressed by trading
energy savings.
New investments in industrial CHP plants: It is recommended to implement incentives to support investments
in industrial CHP plants, in which the use of local resources, e.g. biomass, should be prioritized.
Renewable energy
Key findings
Wind and solar power will be more cost-effective than coal in 2030 for the first 20 GW installations in the best
locations. The cost-effective capacity threshold will increase to more than 100 GW in 2050, due to anticipated cost
reduction in wind and solar technologies. The least-cost power mix requires a capacity build-up equal to 1 GW/year
for wind and 1-2 GW/year for solar PV in the period 2020-2030. While the best wind and solar projects are
competitive, they require increased upfront investments compared to conventional power production.
Hydro and bioenergy: While unused hydro power potential is small, bioenergy has a potential to play an
increasing role in industrial CHP and power production. However, the two main RE building blocks of the energy
system remain solar and wind.
Offshore wind development: The assessment of 6 potential locations for offshore wind indicates that this
technology is very attractive as early as in 2030.
Land-use: International experiences show that onshore wind power can easily be combined with agriculture.
The largest solar capacity deployed in the EOR19 is in the South Region (76 GW in 2050), where PV will only take
up 1.6% of the area of the region.
05
Recommendations
RE must be in focus in the coming PDP8 to ensure the necessary basis for the RE expansion for the next 10
years. Ensuring investments in the power grid is crucial to enable more RE integration and avoid costly
curtailment of wind and solar. Furthermore, special attention must be given to wind power which in a least-cost
perspective would develop to generate more power than solar in the next 10 years. Finally, an ambitious RE
target in the power mix in 2030 based on detailed scenario analysis should be included.
For a successful wind and solar development in Vietnam, it is crucial to have stable, simple, transparent,
and competitive enhancing framework conditions for RE projects, characterized by:
Simplicity: A one-stop shop where RE developers have a single point of contact;
Stability: Stable and long-term plans and targets for RE expansion reduce the risk for the investors and
support building up of local supply chains;
Transparency: Transparent process for developing RE projects and close dialogue with market players
along with an International standard PPA builds trust and reduces the risk, thus attracting more investors;
Competition: For large scale wind and solar PV projects, it is important to expose the developers to
competition to drive down prices, as the international experiences with RE auctions have shown (IRENA, 2017).
A framework for the development of offshore wind should be established already in the short term as
offshore wind power is a knowledge-intensive technology and requires high upfront investments.
The awareness of local authorities, citizens, and stakeholders should be enhanced to ensure acceptance
and facilitate local citizens to benefit from RE projects: The Planning Law1 already stipulates the increased
involvement of local authorities in the planning processes. Thus, to realize the large expansion of RE projects,
not only national energy planning but also provincial involvement must be activated.
Power system balancing

Key findings
Balancing the power system is technically and economically feasible, even with high shares of solar PV and
wind power. Even at 33% wind and solar share in 2050, the system can be balanced with 74 GW battery storage,
mainly in the South region, and 53 GW investments in transmission capacity.
Large amount of batteries in the long term: Electricity storage is key to balancing of wind and especially solar,
with around 0.5 MW for each MW of wind and solar in 2050. As short-cycle (few hours) storage favors batteries
as a least-cost storage solution, there will be a gradual shift in the balancing role from the current hydropower to
battery storage technology in the long term. If battery prices do not decrease as expected, wind and pumped
hydro will have a larger role in the future, yet PV and batteries will still be the main RE building blocks.
Full transmission grid assessment shows that in 2030, necessary grid investments amount to 30% of total
power system investments.
Recommendations
A stepwise approach to integration of wind and solar power is recommended: In the short term, focus should
be on expansion for transmission capacity to ensure RE integration and to avoid costly curtailment of wind and
solar. In the long term, electricity storage is key to balancing of wind and especially solar.
Removal of market barriers to ensure timely introduction of electricity storage should be investigated and
addressed, thus laying out the favorable market conditions.
1
Law No. 21/2017/QH14 issued by the National Assembly dated November 24, 2017
06
Executive Summary
Other means for balancing the system and reducing the need for storage not analysed in the EOR19 should
be addressed; this includes power trade with neighboring countries and other flexibility measures. Increased
trade can bring multiple benefits, here among improved competition, security of supply, sharing of reserves,
reduced need for storage and improved balancing in relation to hydro (wet/dry years), wind and solar. Flexibility
measures in thermal power plants, pumped hydro, demand response and further development of forecasting
systems can facilitate the integration of wind and solar power.
Climate and pollution

Key findings
CO2 emissions from the energy sector are increasing quickly. The combined effect of EE, RE and LNG can
reduce CO2 emission by almost 20% in 2030 and 40% in 2050, primarily in the power sector. The industry and
transport sector also give significant contributions, if EE is successfully implemented.
Coal is the main source of CO2 emissions and contributes across scenarios with 65% to 75% of total CO2
emissions from the energy system. Departing from new coal investments and increasing the consumption of LNG
can save 53 million tons of CO2 in 2030, while the total system costs increases by approximately 1 billion USD.
Additionally, if EE is enhanced, Vietnam will realize both cost and emissions savings.
Compared to the Nationally Determined Contribution (NDC) Business-as-usual scenario, emissions from the
energy sector will be reduced by 19% in 2030 in the C1 RE target scenario (the national unconditional NDC target
is 8%). When further including EE and a stop for new coal investments (C4 Combination scenario), CO2 emission
reductions exceed 30% in 2030 (the national conditional NDC target is 25%).
Emissions from coal in the power sector impose a large health cost on society. In 2030 all scenarios result in
a health cost of pollution in the range of 7-9 billion USD. Assuming no increase in the level of flue gas cleaning,
the cost of air pollution from the power sector reaches 23 billion USD/year, corresponding to 2% of GDP (C1 RE
target scenario) in 2050. This value is reduced to 7 billion USD in the C4 Combination scenario, where EE, RE
and LNG can give large health cost savings in the long term.
Recommendations
Introduce incentives to reduce CO2 emissions and other air pollutants including taxes, emission trading
schemes or other forms of market systems: The introduction of incentives to reduce CO2 emissions and other
air pollutants would support RE investments and promote a phase-out of carbon intensive fossil generation
plants.
Harmonization of all government RE targets and emission targets for future planning will ensure that the
plans support the green transition. This includes a continuous monitoring and comparison of RE targets, energy
system efficiency and emission targets. Specifically, this would mean that the coming PDP8 and Energy Master
Plan should be aligned with government targets on GHG emissions, e.g. in the NDC or in line with the Paris
Agreement.
Tighten air pollution control measures in power generation and industry and include health costs of
pollution in energy system modelling and planning, including PDP8. Health costs already today impose a
large cost on society, and pollution from power plants is rising. Health externalities are often not considered in
economical evaluations of energy planning. Inclusion of such measures would highlight the real cost of energy,
especially relevant for coal power.
Adjust the 2030 CO2 target to be more aligned with restrictions on coal, realization of cost-efficient EE
measures and expansion of RE technologies. A more ambitious NDC target is possible and could bring
Vietnam direct advantages on reduced fuel import dependence, less air pollution, and lower energy system
costs.
07
Vietnam Energy Outlook Report 2019 Contents
Contents
Foreword. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 02
Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 03
Contents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 08
Figures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 09
Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Abbreviations and Acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1
1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.1 Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.2 Current energy and climate policy targets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.3 Purpose of the report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.4 Analysis preconditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2. Scenarios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3. Key modelling results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.1 Primary and final energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.2 Power system . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.3 Energy system costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.4 Key indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4. Energy Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.1 Status and Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.2 Energy Resource Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.3 Policy Outlook and Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5. Energy Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.2 Energy Efficiency Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 1
6. Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
6.2 Renewable Energy Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7. Power System Balancing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
7.1 Status and Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
7.2 Power System Balancing Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 1
7.3 Policy Outlook and Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
8. Climate Impact and Pollution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
8.1 Status and Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .72
8.2 Climate Impact and Pollution Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Annex: Modelling framework and key assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
A.1 Energy modelling framework and key assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
A.2 TIMES – Energy system model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 1
A.3 Balmorel – Power system model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
A.4 PSS/E – Transmission grid model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 1
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
08
Vietnam Energy Outlook Report 2019 Figures
Figures
FIGURE 1: The five scenarios. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 03

FIGURE 2: The five scenarios. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
FIGURE 3: REDS RE target. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
FIGURE 4: Total primary energy supply (TPES) and RE share in TPES across analysed scenarios. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
FIGURE 5: Evolution of total final energy consumption (TFEC) by sector in the analysed scenarios. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
FIGURE 6: Generation capacity in the power sector for the five analysed scenarios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
FIGURE 7: Annual electricity generation from central power production and power demand. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
FIGURE 8: Energy system costs and power system cost per MWh . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
FIGURE 9: Historical Vietnamese TPES from 2007 to 2017 by fuel type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
FIGURE 10: Historical development in energy import/export balance and the related import dependency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
FIGURE 11: Consumption of domestic resources across analysed scenarios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
FIGURE 12: Optimal allocation of biomass to the different sectors across scenarios. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
FIGURE 13: Changes in TPES by fuel compared to C1 RE Targets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
FIGURE 14: Imported fuels and share of net energy imports in TPES across analysed scenarios. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
FIGURE 15: Trends for TFEC in 2007-2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
FIGURE 16: Changes in annual discounted system cost compared to C1 RE Target scenario. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
FIGURE 17: Percentage change in TFEC compared to C1 RE Target scenario and VNEEP3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
FIGURE 18: Effects of EE measures and industrial CHPs compared to the C1 RE Target scenario. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
FIGURE 19: Percentage change in TFEC by sector compared to the C1 RE Target scenario. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
FIGURE 20: Economic energy saving potential by end-use and by sector compared to the C1 RE Target scenario. . . . . . . . . . . . . . . . . . . . . . 45
FIGURE 21: RE (TPES) development in Vietnam in the period 2007-2017 and RE power capacity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
FIGURE 22: Renewable energy sources and their share in TPES for all analysed scenarios. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
FIGURE 23: Electricity generation from wind and solar.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
FIGURE 24: Power production by fuel type and peak load in the period 2008-2018. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
FIGURE 25: Battery and transmission capacity across analysed scenarios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
FIGURE 26. Hourly dispatch in the C1 RE target scenario in week 39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
FIGURE 27: Duration curve for the total generation of wind and solar power. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
FIGURE 28: Transmission capacity under increasing penetration rates of RE for 2050. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
FIGURE 29. Curtailment of wind and solar at increasing shares of RE generation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
FIGURE 30: Electricity generation and annual demand per region. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
FIGURE 31: GHG emission by energy sector in 2014. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
FIGURE 32: Trends for CO2 emissions by sector and total system cost in all five scenarios. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
FIGURE 33: CO2 emission reduction by sector compared to C1 RE target scenario. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
FIGURE 34: Change in total system costs and total CO2 emissions compared to C1 RE target scenario. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
FIGURE 35: Cost of pollution by type in all five scenarios for power sector only. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
FIGURE 36: Energy modelling framework for EOR19. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
FIGURE 37: Concept of operation for the Balmorel Model. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... 86
FIGURE 38: Existing and committed interconnectos in Vietnam. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
FIGURE 39: Annual electricity demands per transmission region. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
FIGURE 40: Maximum domestic coal use. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
FIGURE 41: Maximum domestic natural gas use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
FIGURE 42: Resource limits on biomass and MSW fuel use implemented in the Balmorel Model. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... 90
FIGURE 43: Resource limits for onshore wind generation per region and wind speed class . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
FIGURE 44: Solar potential and full load hours per region implemented in Balmorel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
FIGURE 45: Location of solar PV and wind power plants (2020) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
FIGURE 46: Total system costs in 2030, including additional grid costs based on the PSS/E analysis. . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . 94
09
Vietnam Energy Outlook Report 2019 Tables
Tables
TABLE 1: Specific targets mentioned in current energy and climate policy of Vietnam. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
TABLE 2: Themes of the EOR19 and related challenges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
TABLE 3: Key indicators for the analysed scenarios in 2030 and 2050. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
TABLE 4: PV expansion and land areas for the year 2050 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
TABLE 5: Wind power expansion per region and the total potential per wind class. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
TABLE 6: Key values for the dynamics of the system . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
TABLE 7: Key values for solar and battery technologies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
TABLE 8: Key values for wind, solar technologies and transmission in the C1 RE target scenario. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
TABLE 9: GHG emission inventories in Vietnam in the period 1994 - 2014. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
TABLE 10: CO2 emissions across the scenarios in comparison with NDC-BAU and mitigation scenarios. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
TABLE 11: Primary demand drivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
TABLE 12: Import and export fuel prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
TABLE 13: Electricity import prices and bounds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
TABLE 14: Biomass and waste potentials and prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
TABLE 15: Recommended grid reinforcements and total transmission capacity on interfaces recommended based on PSS/E. . . . . . . . . . . . . . . . . . . . . . . . 93
TABLE 16: Costs related to the grid expansion recommendations between 2020-2030. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
10
Vietnam Energy Outlook Report 2019 Abbreviations and Acronyms
Abbreviations and Acronyms
BAU Business-As-Usual
CFL Compact Fluorescent Lamp
CHP Combined Heat and Power
CO2 Carbon dioxide
CO2eq Carbon dioxide equivalent
DEA Danish Energy Agency
DEPP Energy Partnership Program between Vietnam and Denmark
EA EA Energy Analyses
EE Energy Efficiency
EIA Environmental Impact Assessment
EOR19 Vietnam Energy Outlook Report 2019
EREA Electricity and Renewable Energy Authority
ESCO Energy Service Companies
EVN Vietnam Electricity
FiT Feed-in-Tariff
GDP Gross Domestic Product
GHG Green House Gas
GOV Government of Vietnam
GSO General Statistics Office of Vietnam
IE Institute of Energy
INDC Intended Nationally Determined Contributions
LCOE Levelized Cost of Electricity
LNG Liquefied Natural Gas
MEPS Minimum Energy Performance Standard
MOIT Ministry of Industry and Trade
MONRE Ministry of Natural Resources and Environment
MOT Ministry of Transport
MSW Municipal Solid Waste
NDC Nationally Determined Contribution
NGO Non-Governmental Organizations
PDP Vietnam Power Development Plan
PM2.5 Atmospheric Particulate Matter with a diameter of less than 2.5 micrometers
PPA Power Purchase Agreement
PV Photovoltaic
RE Renewable Energy
REDS Renewable Energy Development Strategy
R&D Research and Development
RPS Renewable Portfolio Standards
TFEC Total Final Energy Consumption
TPES Total Primary Energy Supply
UNDP United Nations Development Program
UNFCCC United Nations Framework Convention on Climate Change
VEPF Vietnam Environment Protection Fund
VGGS Vietnam Green Growth Strategy
VNEEP3 Vietnam National Program on Energy Efficiency and Conservation for the period 2019-2030
VRE Variable Renewable Energy
WB World Bank
WHO World Health Organization
11
1
Introduction
1. Introduction
1.1 Background
For decades Vietnam has been one of the fastest These challenges must be addressed by policy
growing economies in the region and in the world. actions backed by solid energy system planning
Since 1990 the average annual growth in GDP has grounded on holistic analyses of long-term energy
been more than 6%, with economic growth expected scenarios. This EOR19 provides exactly that: Mid- to
to continue in the future. Economic development has long-term perspectives of energy system operation
been the key to improvements in the quality of life, and investment to be used as a guide for policy
and has resulted in a dramatic drop in poverty rate. makers and energy planners when balancing both
While economic growth is high priority for the economic and environmental issues, along with
Vietnamese government, governmental strategies ensuring security of supply. In this perspective, the
emphasize that the fast development needs to uphold report represents an important input to the
sustainability at the same time. forthcoming PDP8 and the Energy Master Plan.
With its rapid economic growth, Vietnam is becoming
an important actor in the global agenda – both from 1.2 Current energy and climate policy targets
an economic and an environmental perspective. The
The Government of Vietnam has several key policies
rapid economic growth results in quick growth of
for sustainable energy development with four main
energy demand and greenhouse gas emissions.
pillars: EE, RE, energy market and climate change.
Achieving the reduction of greenhouse gas emissions
The current main policies for shaping the future
as agreed under the Paris Agreement (UNFCCC,
energy development in Vietnam comprise:
2016) depends heavily on the development path of
Vietnam and other emerging economies. At the same Law on Energy Efficiency and Conservation
time, the global energy market has witnessed a (LEEC)2: promoting energy efficiency and
remarkable decline in the cost of renewable energy conservation activities through regulations,
technologies, as well as of battery storage. This gives standards and incentives.
Vietnam the opportunity to embark on a sustainable
development pathway, considering the large Electricity Law and Amendment of Electricity Law3:
opportunities for more efficient use of energy and the prescribing the electricity development planning
domestic resource potential for both solar PV and and investment; electricity saving; electricity
onshore and offshore wind. markets and others.
The development of the energy sector plays a key Vietnam Green Growth Strategy (VGGS)4:
role in supporting the country’s economic introducing GHG reduction targets aiming to
development. Economic growth requires secure and reducing fossil fuel and promoting renewable
affordable supply of energy to all of the society and energy.
economic sectors. At the same time, to ensure a Law on Environment Protection5: promoting clean
sustainable growth, the energy sector must be able to and renewable energy; environmental protection
attract the capital required to expand the fee; environmental protection fund; strategic
infrastructure and secure the efficient distribution and environmental assessment.
consumption of energy sources in the long term.
Renewable Energy Development Strategy (REDS)6:
To embrace these opportunities for the development setting RE targets in energy and power sectors;
of its energy system, Vietnam is facing new supporting schemes for RE development (Feed-in
challenges: how to ensure an efficient use of tariff (FiT); Renewable Portfolio Standard (RPS),
domestic energy resources; how to overcome the Net-metering etc.).
barriers for energy efficiency; how to utilize the
economic potential for renewable energy while National Program on Energy Efficiency and
securing a stable power supply, and how to Conservation for the period 2019-2030 (VNEEP3)7:
successfully contribute to mitigating climate change setting targets for reducing the final energy
and air pollution. consumption compared to a business-as-usual
baseline.
2
Law No. 50/2010/QH12 6
Prime Minister Decision No. 2068/2015/QD-TTg
3
Law No. 28/2004/QH11 and Law No. 24/2012/QH13 7
4
Prime Minister Decision 1393/2012/QD-TTg
5
Law No. 55/2014/QH13
14
Introduction
Intended Nationally Determined Contributions The current main policy targets for RE, EE and
(INDCs): submitted to the Secretariat of the United greenhouse gas emissions are listed in Table 1.
Nations Framework Convention on Climate Change
(UNFCCC).
The revised National Power Development Plan in

the period 2016-2020 with the orientation to 2030
(revised PDP7)8: reducing the amount of coal power
plants compared to PDP7, enhancing security and
implementing innovations for new power plants.
Table 1: Specific targets mentioned in current energy and climate policy Vietnam
Target 2020 2025 2030 2050
Renewable energy
RE share in primary energy supply (REDS) 31% 32% 44%
RE share in total electricity 38%* 32%* 43%*

generation (REDS) 4% excl. hydro 15% excl. hydro 33% excl. hydro
Energy efficiency as compared to business-as-usual
Final energy demand saving (VNEEP3) 5-7% 8-10%
GHG emission reduction as compared to business-as-usual
Green growth strategy (VGGS) 10-20% 20-30%
Intended Nationally Determined 8% (unconditional)

Contributions (INDCs) 25% (conditional)
REDS (energy sector) 5% 25% 45%
* Including small and large hydro power, wind power, solar power, biomass, biogas and geothermal energy
8
15
1.3 Purpose of the report

The purpose of this report is to guide decision makers Externality costs, i.e. air pollution, are not a part of
and energy planners to achieve a sustainable green the optimization, with health costs discussed
transition of the energy system. The EOR19 presents separately.
and discusses the newest insights on the possible
long-term development pathways of the Vietnamese A 10% discount rate is applied across all
energy system, illustrated by a set of explorative and technologies in the least-cost optimization, which in
normative scenarios. The objective is to foster a wider the longer term may be interpreted as a
consensus and understanding of all parties on the conservative assumption unfavorable of
opportunities and challenges of the energy sector capital-intensive technologies such as wind and
and to support and inspire the debate about green solar.
transition. As already mentioned, the report and the Data for long-term studies will always be uncertain.
work behind it is intended to serve as a scientific and However, for the EOR19, considerable effort has
knowledge-based input to the forthcoming PDP8 as been made to develop and use sound input data,
well as the development of an Energy Master Plan. especially on power generation and fuel prices. To
consolidate the key results, a sensitivity analysis for
1.4 Analysis preconditions the power sector has been carried out (EREA &
DEA, 2019a).
The report is based on long-term energy system
analyses, derived from least-cost optimization of For more details on the modelling framework and the
investments in and operation of energy technologies, key input assumptions and data, the reader is referred
covering the whole energy system (both supply and to the Annex and the EOR19 background reports9.
demand) with a time horizon until 2050. These basic
conditions apply:
Model calculations are performed for the years
2020, 2030, 2040 and 2050.
The Vietnamese power system is divided into six
regions dynamically linked by transmission lines.
As a starting point, an update of the planned power
capacity in the revised PDP7 is included in the
models.
With a focus on the long-term analysis of the
system, more detailed short-term energy system
development (before 2030) is not in focus, and
ancillary services and peak load demand are not
analysed in the models.
Being a multiple scenario study, conclusions are
drawn by comparing scenarios, not by pointing out
a recommended scenario.
The scenarios have technology in focus and are
built by defining targets, i.e. the scenarios present
the optimal socio-economic least-cost pathways,
under certain conditions, with no direct accounting
of taxes and subsidies. The simultaneous least-cost
optimization is performed across sectors, except for
the transport sector, which is not model-optimized
and based on scenarios suggested by the Ministry
of Transport (GIZ, 2018a).
9
These include the Technical Report (EREA & DEA, 2019a), the Balmorel Data Report (EREA & DEA, 2019b), the TIMES Data Report (EREA & DEA, 2019c),
the Fuel Price Projection Report (EREA & DEA, 2019e), the Technology Catalogue (EREA & DEA, 2019f) and the PSS/E Report: Detailed grid modelling of the
Vietnamese power system (EREA & DEA, 2019d).
16
Introduction
The report is structured around five main themes, Following this introduction chapter, the remainder of
which reflect the key challenges for the future green this report is organized as follows: Chapter 2
transition of the energy system in Vietnam (Table 2). describes the scenarios analysed in the EOR19;
For each theme, a focus chapter covers: Chapter 3 reports the modelling results and compares
the scenarios across key indicators; Chapters 4-8
Status and Trends, describing the current context represent the main body of the report, where an
of Vietnam; in-depth analysis of the five themes of the EOR19 is
Energy Outlook, discussing the energy system undertaken, detailing the current status and trends,
development towards 2050; the future outlook resulting from the modelling results
and the policy recommendations for each theme. The
Policy Outlook and Recommendations, reflecting Annex illustrates the modelling framework and key
on how the challenges can be addressed. assumptions, for each of the models used in this
report.
Table 2: Themes of the EOR19 and related challenges
Theme Challenge
Energy Resources Efficient use of the domestic energy resources while respecting both economy
and environment
Energy independence and self sufficiency
Energy Efficiency Overcoming the barriers to investment in EE technology
Renewable Energy Utilizing the technical and economic potential for renewable energy
Optimal integration of solar PV, onshore and offshore wind
Power System Balancing Stable energy supply while integrating fluctuating solar and wind power
Investments and enforcement of power transmission grid network
Climate Impact and Pollution Mitigation of GHG emissions to deliver on the NDC obligations and the Paris Agreement
Effect on human health from air pollution from fossil fuels
17
2
Scenarios
2. Scenarios
Energy system modelling constitutes the basis for the The TIMES model, covering the whole energy
conclusions and recommendations detailed in this system, both supply and demand and fuel
report. Five core scenarios are designed to explore extraction
different futures for the Vietnamese energy system
The Balmorel model, covering a detailed
(Figure 2). As such, the scenarios are not intended as
representation of the power sector
the “recommended” energy system pathways, but
rather meant as indicative “what-if” scenarios from The PSS/E model, representing the detailed power
which insights have been drawn on the relevant grid
themes for the Vietnamese context.
More details on the methodology and model set-up
All five scenarios have been computed in the can be found in the Annex of this report. A set of
interlinked set-up comprising three energy models: alternative green power scenarios exploring different
power system RE-shares are not included in this
report but are described in the Technical Report
(EREA & DEA, 2019a).
A theoretical scenario not taking policy constraints into account, such as

C0 Unrestricted
RE targets, restriction on coal-fired generation, successful EE penetration
A scenario where RE power sector targets in the REDS are fulfilled,

C1 RE target
without EE penetration
C1 scenario with the addition of the constraint of no investments in

C2 No new coal
new coal power plants after 2025
C1 scenario with the addition of least-cost EE technology penetration

C3 Energy effciency
rate of 50% in 2030 and 100% in 2050
The most ambitious scenario combining the three

C4 Combination
scenarios C1, C2 and C3
Figure 2: The five scenarios
The five scenarios (Figure 2) illustrate different C1 RE target: This scenario includes the RE target
development pathways for the Vietnamese energy for the power sector, as set out in the current
system: Renewable Energy Development Strategy (REDS)
(see Figure 3) and without penetration of energy
C0 Unrestricted: This theoretical scenario efficient demand technologies.
simulates a future with no achievement of RE
targets or restrictions on coal-fired generation and C2 No new coal: Additional to the C1 RE target
without penetration of energy efficient demand scenario, this scenario implements a restriction
technologies. limiting investments in new coal power plants
starting from 2025, albeit domestic coal capacities
are allowed to be maintained.
20
Scenarios
C3 Energy efficiency: Additional to the C1 RE C4 Combination: This scenario combines the

target scenario, this scenario allows for three previous scenarios, i.e. the REDS target, the
investments in energy efficient (EE) technologies, coal restriction from 2025 and the high uptake of
with a 50% penetration rate of energy efficient energy efficient technologies.
demand technologies being a part of the least-cost
solution in 2030 and 100% in 205010.
43%
38% 38%
32%
RE target
2020 2030 2040 2050
Figure 3: REDS RE target (all RE sources incl. both small and large hydro) on annual power generation, as implemented
in all scenarios except for the C0 Unrestricted scenario. There is no REDS target for 2040, thus the scenario target used
in 2040 is a linear interpolation between 2030 and 2050 targets.
10
For the transport sector, the mentioned penetration rates are not implemented; instead, the measures included in the C3 Energy Efficiency scenario are
based on input from Ministry of Transport (more information in the Annex).
21
3
Key modelling results
3. Key modelling results

This chapter provides a summary of modelling results While the REDS RE targets for the power sector are
of the EOR19 across the five key themes. It reports the reflected in the EOR19 scenarios, the REDS also has
scenario results for primary and final energy targets for RE in TPES of 32% and 44% in 2030 and
consumption, power capacity (GW) and generation 2050, respectively. All of the EOR19 scenarios are far
(GWh), energy system costs, as well as it compares from fulfilling the TPES RE targets which would require
the scenarios using a number of key indicators. a much more extensive RE penetration covering also
other sectors than the power sector. Furthermore, it
can be noted that because increased energy
3.1 Primary and final energy
efficiency in C3 Energy efficiency scenario and C4
The total primary energy supply (TPES11) increases Combination scenario reduce fossil fuels as well as
about five times in the period 2017-2050 in the C1 RE RE in 2050, it can be said that EE technologies alone
target scenario, following the assumed growth across only to a limited extent contribute to increasing the RE
all sectors of the economy in Vietnam, thereby share on the longer term.
increasing from 3,200 PJ in 2017 to around 7,600 PJ in
2030, and 14,200 PJ in 2050. TPES is reduced in the
C2 No new coal scenario mainly, as gas turbines are
more efficient compared to coal power plants. EE
technologies implemented in the C3 Energy
efficiency scenario help reduce the primary energy
supply by 770 PJ in 2030 (10%) and by 3000 PJ in
2050 (21%) with respect to the C1 RE target scenario
(Figure 4). The C4 Combination scenario features the
lowest primary energy supply.
16,000 30%
14,000 25% 22%

24% 24% 25%
23% 23% 23%
12,000 21% 21%
20% 20%
19%
19% 20%
10,000 18% 18%
17% 17%
PJ
19%
14% 15%
8,000 15%
6,000
10%
4,000
5%
2,000
0 0%
C0-Unrestricted
C1-RE target
C2-No new coal
C3-EE
C4-Combination
C0-Unrestricted
C1-RE target
C2-No new coal
C3-EE
C4-Combination
C0-Unrestricted
C1-RE target
C2-No new coal
C3-EE
C4-Combination
C0-Unrestricted
C1-RE target
C2-No new coal
C3-EE
C4-Combination
2020 2030 2040 2050

Electricity Import Solar Wind Hydro Biomass
Oil Products Crude Oil Gas Coal RE share
Figure 4: Total primary energy supply (TPES) and RE share in TPES across analysed scenarios in the period 2020-2050
11
Total primary energy supply describes the total input of primary energy to the energy system. TPES is the sum of production and imports subtracting
exports and storage changes. Where primary energy is used to describe fuels, it is the energy available as thermal energy in the fuel. When solar and wind
energy is converted to electricity, the electricity made from wind and solar counts as the primary energy for these sources.
24
Following the trend observed for the TPES, the total The C3 Energy efficiency scenario and the C4
final energy consumption (TFEC12) will increase about Combination scenario have lower TFEC (app. 12% in
four times in the period 2017-2050, from 2,700 PJ in 2030 and app. 20% in 2050) compared to the other
2017 to about 5,100 PJ in 2030 and 10,000 PJ in 2050 scenarios, due to higher EE technology penetration
in the C1 RE target scenario (Figure 5). In this scenario, across sectors. This corresponds to a reduction in the
TFEC will increase by 6.6% p.a. in 2020-2030 and TFEC of up to 630 PJ by 2030 and 1,970 PJ by 2050,
4.4% p.a. in 2020-2050. In 2020-2030, commercial primarily due to a decrease in oil consumption in the
and industrial sectors have the highest growth rates of transport sector and power demand in the industry
7.4% p.a. and 7.0% p.a. respectively. For the whole and residential sectors.
period 2020-2050, the transport sector features the
highest growth rate of 5.1% p.a. In the C1 RE target
scenario, the industrial sector accounts for about half
of TFEC, increasing to 54% of TFEC by 2030 and then
reducing to 48% of TFEC by 2050. In 2030, the
transport sector accounts for 20% of TFEC, while the
residential for 18%, the commercial for 6% and
agriculture for 2% of TFEC.
12,000
10,000
8,000
PJ
6,000
4,000
2,000
0
C2-No new coal
C0-Unrestricted
C1-RE target
C2-No new coal
C3-EE
C4-Combination
C0-Unrestricted
C1-RE target
C3-EE
C4-Combination
C0-Unrestricted
C1-RE target
C2-No new coal
C3-EE
C4-Combination
C0-Unrestricted
C1-RE target
C2-No new coal
C3-EE
C4-Combination
2020 2030 2040 2050
Transportation Residential Industrial Commercial Agriculture
Figure 5: Evolution of total final energy consumption (TFEC) by sector in the analysed scenarios in the period 2020-2050
12
Total final energy consumption represents the energy delivered to end users, i.e. private and public enterprises as well as households. Final energy is
used in the manufacture of goods and services, space cooling, lighting and other appliance consumption as well as transport. Additionally, oil consumption
for non-energy purposes, i.e. lubrication, cleaning and bitumen for paving roads is included. Energy consumption in connection with extraction of energy,
refining and conversion is not included in the final energy consumption.
25
3.2 Power system

Large increases in the power demand result in a rapid As visible from Figure 7, restrictions on coal
expansion of the power generation capacity (Figure investments will increase the share of wind and solar
6). Across all scenarios, large increases in solar power generation, as well as replace the generation from
can be observed (e.g. 117 GW of solar capacity in the imported coal by imported LNG. In 2050, the RE share
C1 RE target scenario by 2050). This trend is (including wind, solar, bioenergy, small and large
prominent even in the C0 Unrestricted scenario, hydro) increases from 43% in the C1 RE target
where no RE goals are implemented, with 72 GW of scenario to 50% in the C2 No new coal scenario.
solar PV capacity being installed by 2050. Moreover, Power demand reduction due to EE measures results
the EOR19 shows that along with the PV expansion, in a reduction of the most expensive power
large expansion of batteries will occur to provide generation. In the C3 Energy efficiency scenario, less
storage for the RE power production (e.g. 74 GW of power is generated from coal and solar PV (compared
battery capacity in the C1 RE target scenario by 2050). to C1 RE target scenario) and in the C4 Combination
scenario the power demand reduction affects LNG
Furthermore, the scenarios feature a rapid increase in and PV generation (here compared to the C2 No new
capacity investments for both onshore and offshore coal scenario for measuring the EE effect). In general,
wind: by 2050, in the C1 RE target scenario, 19 GW of the generation from high quality RE potentials (high
onshore wind is installed, and all 6 GW of the wind speeds and high solar irradiation) is realized,
modelled available offshore potential is used. When thus constituting a larger share of the total generation.
no restrictions on coal generation are imposed, a In the C4 Combination scenario, the RE share reaches
large amount of coal is imported. In general, the 59% in 2050.
least-cost modeling approach chooses coal over
LNG, as it represents a cheaper fuel option. However,
when the expansion of coal-fired generation is
restricted (i.e. C2 No new coal and C4 Combination
scenarios), LNG represents a viable option to
supplement the RE development instead of coal.
300
250
200
GW
150
100
50
0
C0-Unrestricted
C0-Unrestricted
C1-RE target
C2-No new coal
C3-EE
C4-Combination
C0-Unrestricted
C1-RE target
C2-No new coal
C3-EE
C4-Combination
C0-Unrestricted
C1-RE target
C2-No new coal
C3-EE
C4-Combination
C1-RE target
C2-No new coal
C3-EE
C4-Combination
2020 2030 2040 2050

Solar Wind offshore Wind Hydro Other RE Biomass
Oil Imp. LNG Dom. NG Imp. coal Dom. coal
Figure 6: Generation capacity in the power sector for the five analysed scenarios
26
1,200 70%
59%
60%
1,000
50%
50%
800 44% 43% 43%
43%
39% 39% 40%
38% 38% 38% 37% 38% 38% 38% 40%
TWh
600 33% 33%
32% 30%
400 27%
20%
200
10%
0 0%
C0-Unrestricted
C1-RE target
C2-No new coal
C3-EE
C4-Combination
C0-Unrestricted
C1-RE target
C2-No new coal
C3-EE
C4-Combination
C0-Unrestricted
C1-RE target
C2-No new coal
C3-EE
C4-Combination
C0-Unrestricted
C1-RE target
C2-No new coal
C3-EE
C4-Combination
2020 2030 2040 2050
Electricity import Solar Wind offshore Wind Hydro Other RE RE share

Biomass Oil Imp. LNG Dom. NG Imp. coal Dom. coal
Figure 7: Annual electricity generation form central power production, import from neighbouring countries and power
demand (including transmission and distribution losses) in the five analysed scenarios
3.3 Energy system costs

The energy system costs cover annualized There is a relatively small difference among the
investment costs for power generation and scenarios in the amount of capital needed. In the C2
transmission capacity and annualized investment No new coal scenario, higher investments are
costs for energy end-use devices in the end-use needed to replace coal with RE and LNG. For the EE
sectors; operation and maintenance costs for all scenarios (C3 Energy efficiency and C4 Combination
sectors; and fuel costs for all sectors. Figure 8 shows scenarios), the increased investments in the demand
that the total annual energy system costs are more sectors are to a wide extent outweighed by reduced
than double from 2020 to 2030 as well as from 2030 power sector investments.
to 2050 in the C1 RE target scenario. It also shows that
a high penetration of EE in the C3 Energy efficiency Even though investment costs for existing and
and C4 Combination scenarios reduces the energy committed power plants are not included, the power
system cost by app. 3% and 9-10% for 2030 and 2050, system cost (USD/MWh) indicates that increased
respectively. This is explained by the fact that the share of RE and LNG in the C2 No new coal and C4
energy savings and power plant investment reduction Combination scenarios would result in higher costs
exceed the investment in EE. Please note that for the power system in 2030 and onwards. This is
investments in current and committed energy also associated with higher power prices.
components are not included and externality costs for Assessment of market-based power prices is not a
e.g. health effects are not accounted for. part of the EOR19.
27
350 80
68 70
300
62
59
60
250
Billion USD (2015)
48
USD (2015)/MWh
50
200 43 44 42
40
40
32 33
150
24 25 25 30
22 21
100
20
50 10 10 10 9 9
10
0 0
C0-Unrestricted
C1-RE target
C2-No new coal
C3-EE
C4-Combination
C0-Unrestricted
C1-RE target
C2-No new coal
C3-EE
C4-Combination
C0-Unrestricted
C1-RE target
C2-No new coal
C3-EE
C4-Combination
C0-Unrestricted
C1-RE target
C2-No new coal
C3-EE
C4-Combination
2020 2030 2040 2050
Fuel Supply investment Demand investment Fixed O&M Variable Power system
Figure 8: Energy system costs and power system cost per MWh (investment costs for existing and committed plants are
not included)
3.4 Key indicators

The key indicators for the analysed scenarios are The comparison across scenario results highlights the
presented for the years 2030 and 2050 in Table 3. following observations:
The indicators are shown both for the entire energy
system and zoomed-in for the power sector. The lowest system cost per year is achieved in the
scenarios where EE measures are implemented to
The system costs include annualised investment a higher extent (C3 and C4). Moreover, while
costs, fuel costs, and operation and maintenance restricting investments in new coal power plants will
costs for the particular year (Bn. 2015-USD). The RE increase the system costs, adding an EE focus
share for all sectors corresponds to the share of greatly reduces this cost increase (C4 Combination
renewables (incl. and excl. small and large hydro for scenario).
the respective column) in the total primary energy
supply (upper part of the table) and power generation The lowest CO2 emissions appear in the C4
(lower part of the table). Wind and solar (W&S) share Combination scenario, where both an EE focus and
represents the share of onshore wind, offshore wind no new coal investments are assumed.
and solar PV in the primary energy (upper part of the In 2030, the C2 No new coal scenario has the
table) and power generation (lower part of the table). highest RE share. However, the C4 Combination
The fuel import dependency is calculated as the scenario realizes the highest RE penetration in the
share of net imported fuels (PJ) in the total primary long term.
energy supply (TPES) (upper part of the table) and of
imported fuels (PJ) in the power sector primary energy The lowest import of fuels both in energy (PJ) and
supply (lower part of the table). cost terms is found in the C4 Combination scenario.
28
All scenarios fulfil the REDS target for RE (incl. small Looking across all the indicators, a combination of
and large hydro) in the power sector (except for the efforts promoting RE and EE while limiting new
C0 Unrestricted scenario in 2050). For the REDS investments in new coal-fired power plants allows to
target for RE excl. hydro power in the power sector, it achieve the best results when considering system
is the same case, but for this indicator the C3 Energy cost, climate effects, RE integration and reduced fuel
efficiency scenario does not fulfil the target in 2050. import (C4 Combination scenario). However, while the
This indicates that the lack of policy measures or high modelled scenarios show the benefits of accelerating
penetration of EE technology alone is not enough to the green energy transition in Vietnam, further
ensure REDS targets for the power sector to be met. analyses, deliberation and prioritization by policy
makers are all needed to determine the
recommended energy development pathway for
Vietnam.
Table 3: Key indicators for the analysed scenarios in 2030 and 2050
for the entire energy system and for the power sector
System CO2 RE RE share W&S Fuel Fuel Fuel

costs emissions Share* excl. share imports imports import
(Bn. USD) (Mt) (%) hydro (%) (PJ) (Bn. USD) depen-
(%) dency
(%)
C0 Unrestricted 118 515 17% 13% 3% 4,460 42 60%
C1 RE target 119 521 17% 13% 3% 4,510 42 59%
2030
C2 No new coal 121 468 20% 16% 5% 3,940 44 54%

C3 Energy efficiency 116 438 20% 16% 3% 3,660 33 54%
All sectors
C4 Combination 116 424 21% 16% 4% 3,380 34 51%

C0 Unrestricted 282 1015 15% 13% 5% 11,090 121 75%
C1 RE target 285 942 18% 16% 8% 10,360 114 72%
2050
C2 No new coal 300 722 22% 20% 11% 8,490 112 66%
C4 Combination 259 572 24% 21% 10% 6,640 82 63%
C0 Unrestricted 25 279 33% 15% 13% 1,880 7 50%
C1 RE target 25 279 33% 15% 13% 1,890 7 49%
2030
C2 No new coal 25 226 43% 25% 22% 1,360 6 38%

Power sector
C4 Combination 21 220 40% 20% 15% 1,270 5 39%

C0 Unrestricted 59 546 32% 23% 22% 4,780 20 68%
C1 RE target 63 468 43% 34% 33% 3,970 17 60%
2050
C2 No new coal 68 258 50% 41% 40% 2,450 23 45%

C4 Combination 43 185 59% 46% 42% 1,150 8 29%
* Including wind, solar, bioenergy, small and large hydro
29
4
Energy resources
4. Energy Resources
4.1 Status and Trends
During the last decades, Vietnam has experienced at 14.5% p.a., followed by coal at 11.3% p.a. The share
increased economic activity, industrial development, of coal increased from the third largest fuel source in
urbanisation, increased transport demand, improved 2007 to the largest in 2017. Meanwhile, the share of
energy access and rising living standards. These are biomass fell from being the largest contributor in
major drivers for growing energy consumption. 2007 to the third largest in 2017. Oil, growing at the
rate of 4.3 % per annum, is the second largest fuel
During the period 2007-2017, Vietnamese total source. Solar and wind have historically only
primary energy supply (TPES) grew at 4.7% p.a., contributed to a very small share in TPES. An
thereby increasing from 1,900 PJ in 2007 to 3,000 PJ overview of the historical Vietnamese TPES is
in 2017. Hydropower experienced the highest growth presented in Figure 9.
3,500 25
3,000 20 21
20 20 19
19 19 20
18 18 18
17
2,500
15
2,000
GJ/USD
PJ
1,500
10
1,000
5
500
- 0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Electricity import Hydro Other RE Biomass

Gas Oil Coal Energy intensity (GJ/USD)
Figure 9: Historical Vietnamese TPES from 2007-2017 by fuel type. The relatively stable energy intensity implies a
coupling between TPES and GDP. TPES (2007-2014) is based on (IE, 2017). TPES (2015-2017) is based on (GSO, 2019).
While having been a net energy exporter for a long imports. The historical development of the energy
time, Vietnam became a net energy importer in 2015, import/export balance and the related import
due to a recent increase in domestic activities and a dependency is displayed in Figure 10 for the period
policy limiting coal exports13. This rate continued to 2007-2017.
grow quickly, primarily driven by increased coal
13
32
Energy Resources
1,500 30%
20%
18% 20%
1,000
7% 10%
500
-4% 0%
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
PJ
-10%
-12% -11%
-500 -14% -14%
-20%
-22%
-1,000 -26%
-30%
-1,500
-40%
-43%
-2,000 -50%
Export Import Net energy import Import dependency in TPES
Figure 10: Historical development in energy import/export balance and the related import dependency in the period
2007-2017. TPES (2007-2014) is based on (IE, 2017). TPES (2015-2017) is based on (GSO, 2019).
Vietnam has abundant coal resources (anthracite and An important gas field in the Central region is
subbituminous) in the North region. However, expected to start production by 2023-2024, so as to
domestic coal exploitation has supply bounds due to supply the power generation and the petrochemical
technical (underground location) and economic industry. With the limited domestic supply, and being
(uncompetitive compared to other resources) in the early stages of RE development, Vietnam is
reasons. Crude oil and natural gas are being expected to rely much on imported energy sources in
extracted mainly offshore in the South, but the the coming years.
reserves are expected to be depleted by 2020-2030.
4.2 Energy Resource Outlook

Which resources will characterize the energy mix?
With the increasing trend for TPES, coal will be the an ample opportunity for RE development, thereby
main fuel source followed by oil in the upcoming possibly increasing the RE share. The RE share may
period (Figure 4). The projected growth in road increase well over 20% in 2050, if a restriction on new
transport activity will require increasing amounts of oil coal generation is in place.
products in the future, which will mainly be supplied
through foreign fuel imports in the long term. Fossil Most domestic fuels are fully utilized in all scenarios
fuels will therefore still account for the largest shares (i.e. coal, natural gas, crude oil, and biomass);
of primary energy supply across all scenarios. RE (incl. therefore, solar and wind energy, as well as imported
small and large hydro) accounts for about 20% of the fuels (i.e. oil, coal, and LNG), will be central for
TPES throughout the analysed period. However, while supplying the demand. While the consumption of
EE technologies and measures alone can have limited domestic coal, hydro, and biomass presents similar
effect on boosting the RE share, a restriction on trends across scenarios, the main differences in the
coal-fired power plants (as implemented in the C2 No domestic TPES are found in the shares of solar, wind,
new coal and C4 Combination scenarios) provides and imported fuels (Figure 11).
33
5,000
4,500
4,000
3,500
3,000
PJ
2,500
2,000
1,500
1,000
500
0
C0-Unrestricted
C1-RE target
C2-No new coal
C3-EE
C4-Combination
C0-Unrestricted
C1-RE target
C2-No new coal
C3-EE
C4-Combination
C0-Unrestricted
C1-RE target
C2-No new coal
C3-EE
C4-Combination
C0-Unrestricted
C1-RE target
C2-No new coal
C3-EE
C4-Combination
2020 2030 2040 2050
Solar Wind Hydro Biomass Crude Oil Gas Coal
Figure 11: Consumption of domestic resources across analysed scenarios in the period 2020-2050
Biomass resources are allocated among power towards power generation in the long term, if EE
generation, industries, and residential sectors. A shift technologies are implemented to a wider extent
may occur from the residential uses (i.e. cooking) (Figure 12).
towards industrial facilities in the medium term and
1,400
1,200
1,000
800
PJ
600
400
200
0
C0-Unrestricted
C1-RE target
C2-No new coal
C3-EE
C4-Combination
C0-Unrestricted
C1-RE target
C2-No new coal
C3-EE
C4-Combination
C0-Unrestricted
C1-RE target
C2-No new coal
C3-EE
C4-Combination
C0-Unrestricted
C1-RE target
C2-No new coal
C3-EE
C4-Combination
2020 2030 2040 2050
Industry Power Residential
Figure 12: Optimal allocation of biomass to the different sectors across scenarios
34
Energy Resources
If no new coal-fired power plants are developed after The effects of EE measures on the demand side will
2025, a combination of solar PV, natural gas and wind mainly reduce the consumption of fossil fuels like coal
will substitute the coal use up to 2030. Afterwards, in and oil, with the development of solar PV also being
the period 2030-2050, imported LNG will be the affected by the lower electricity demand in the EE
major fuel alternative to supply especially the industry scenarios (C3 No new coal and C4 Combination
sector, albeit at a higher total system cost (Figure 13). scenarios).
3,000 0%
-4%
2,000
-7% -5%
1,000
-11% -11%
-10%
PJ
0
-15%
-12%
-1,000 -15%
-20%
-2,000 -21%
-20%
-3,000
-27% -25%
-4,000
-5,000 2030 2040 2050 2030 2040 2050 2030 2040 2050 -30%
C2 vs. C1 C3 vs. C1 C4 vs. C1
Electricity Import Solar Wind Hydro Biomass

Oil Products Crude Oil Gas Coal Percentage change
Figure 13: Changes in TPES by fuel due to C2 No new coal, C3 Energy efficiency and C4 Combination compared to the
C1 RE target
How dependent on fuel imports will Vietnam be?

Import of fossil fuels will play a key role; however, dependency, measures for reducing imported fuels
increasing RE shares and enhancing EE measures can will enhance the national security of energy supply in
reduce the need for import of fuel for power the coming decades. A combination of EE efforts and
generation. Coal, oil and gas are needed to meet the a restriction on new coal power plants may reduce the
energy needs of the growing Vietnamese economy in reliance on imported fuels to 63% by 2050, with some
the coming decades, with the share of imported energy decrease in the total system cost (about 7.7% by 2040
expected to increase in the future. Imported coal is and 9.3% by 2050, when comparing the C4
mainly used to supply the power generation. Crude oil Combination scenario with the C1 RE target scenario).
and oil products are mainly required for transport EE measures help reduce energy demands, thereby
activities. Imported LNG will be valuable for industries lowering the imported fuel requirements. On the other
as well as for the power sector, especially in a future hand, an increased import of LNG as the main
with no new coal power plants. Imported fuel alternative to substitute coal will raise the total system
dependency will increase quickly to 51% - 60% by 2030, cost, due to the higher fuel price and large fuel
then to 63 -75% in 2050 across scenarios (Figure 14). infrastructure expenditures, while partly mitigating the
GHG emissions from the power and industry sectors.
In the C1 RE target scenario, imported fuels will In the transport sector, results show that a successful
contribute to almost 60% of TPES by 2030 and 72% by transformation of the transport fleet to new and
2050 with very large amount of coal and oil products. efficient vehicles can lead to 25% reduction of oil
Bearing in mind the increasing trends of import imports.
35
12,000 90%
80%
10,000 75%
72%
73% 70%
69%
66%65% 66% 69%
60% 59% 62% 63%
8,000 60%
PJ
54% 54%
51%
50%
6,000
40%
31% 32% 31%
4,000 29% 30% 30%
20%
2,000
10%
0 0%
C0-Unrestricted
C1-RE target
C2-No new coal
C3-EE
C4-Combination
C0-Unrestricted
C1-RE target
C2-No new coal
C3-EE
C4-Combination
C0-Unrestricted
C1-RE target
C2-No new coal
C3-EE
C4-Combination
C0-Unrestricted
C1-RE target
C2-No new coal
C3-EE
C4-Combination
2020 2030 2040 2050
Electricity Oil Products Crude Oil Gas Coal Import share in TPES
Figure 14: Net imported fuels and share of net energy imports in TPES across analysed scenarios
A sensitivity analysis has been carried out to assess penetration of energy efficient technologies can
the robustness of the least-cost solution described further reduce the final energy demand, thus
above to price changes of imported fuels. Results increasing the level of energy independence in
show that the solution is robust to price variations Vietnam.
across the analysed scenarios, with only minor
substitution effects between oil and gas. A major Early actions to reduce the future coal demand
reason for this is that the need to comply with the are needed.
yearly RE requirement has higher influence on the
composition of the energy mix than the fuel prices.
More information can be found in the background Vietnam is today a net energy importer, registering a
Technical Report (EREA & DEA, 2019a). rate of around 20% import dependency in 2017.
Considering the relevance of securing a reliable and
4.3 Policy Outlook and Recommendations safe energy supply at the lowest cost, a diversification
of the energy mix can provide additional hedging
The expected continuation of the trend in the energy against risks of shocks in the market affecting a
demand growth in Vietnam, coupled with the specific commodity, thus increasing the resilience to
foreseen full exploitation of domestic fossil, hydro price volatility and uncertainty.
power and biomass resource potentials in the future
(especially crude oil and natural gas reserves), can Across the analysed scenarios, the general trend
pose a challenge to sustainable supply of energy at sees an increase in the imports of coal for power
the lowest system cost. A continued commitment to generation. To avoid coal lock-in effects14, action in
the RE targets for the power sector established in the the short term is needed to reduce coal (import)
REDS can reduce the reliance on energy imports after dependence in the long term. In this perspective, a
2030, particularly coal, by mobilizing the domestic RE constraint on coal consumption already before 2030,
resources to supply the power generation (i.e. mainly not least stemming from the pressure posed by
with solar but also wind power). Moreover, a stronger coal-fired power plants on the environment and
14
A situation where a country or region is tied to using coal because once the capacity, which usually has long technical lifetime, has been built it will be
the cheapest form of power production.
36
Energy Resources
people’s health, and the difficulty in financing new of higher fuel efficiency standards, followed by the
coal-fired power plant projects, would bring the promotion of fuel switching from the oil products to
combined benefit of reducing the import of coal and low-carbon option (e.g. electricity), as well as, on a
limiting air pollution. minor scale, modal shift from private to public modes.
Although effective in the long term, the The introduction of fuel efficiency standards would
implementation of such a transition should take into ensure the transformation of the transport fleet to new
account the existing lifetime of coal-fired power and efficient vehicles, both in the passenger and in
plants, commissioning and decommissioning plans in the freight segments. A gradual increase of the
the short term, eventual refurbishment projects efficiency standards can be considered, allowing the
including the introduction of emission control introduction of this regulation already in the short term
measures and the projected domestic coal reserves. and in alignment with the market landscape. Although
Furthermore, when considering LNG as a future not analysed in this report, blending requirements for
option to supply the industry and power sectors in the biofuels might be also investigated, especially for the
mid to long term (from 2030 onwards), its impact on heavy-duty segments. Importantly, at the same time,
the total cost of imported energy, as well as the the development of the adequate fuel and transport
possible effects on GHG and pollution emissions infrastructure (e.g. charging stations, railway
reduction should be taken into account. expansion) should accompany this transition.
To increase security of supply by lowering the
reliance on foreign energy imports and diversifying Mobilizing the domestic biomass potential for
the fuel mix, additional measures can be considered energy production can reduce the import of
targeting a regulation on fuel imports: fuel for industry and power sectors.
In the short term, it is advisable to undertake a

A policy focus on RE and EE offers the opportunity to
market analysis to evaluate the future supply
better utilize domestic resources, reduce the reliance
options, including fuel types, suppliers, locations,
on energy imports and abate GHG emissions.
transportation and transformation costs,
Untapped domestic energy potentials for power
development of receiving ports, terminals, storage
generation include RE sources, in particular, solar,
solutions and required fuel infrastructure.
wind (both onshore and offshore), and biomass.
In addition to costs, the development plan for
Domestic bioenergy resources can supply the power
additional terminals and fuel infrastructure should
generation, industry, and residential sectors in
consider the climate, environmental, social, and
Vietnam with a total potential around 1200 PJ. The
other benefits for the different options (i.e. mainly
optimal allocation of the Vietnamese bioenergy
coal and LNG): LNG can offer the advantage of
potential to the different end-uses analysed in the
being a cleaner energy source from both a climate
EOR19 illustrates how future energy needs might be
and air pollution perspective, as well as it could
increasingly met through the sustainable mobilization
enhance the operational flexibility of the power
of biomass resources with a shift away from the (rural)
system when integrating higher shares of RE.
residential use towards the industrial sectors. The
introduction of favorable tariffs and other market
Focus on enhancing energy efficient vehicles mechanisms for biomass use in the industrial sector
by economic incentives and minimum could support this shift, as well as promote a fuel
efficiency standards to reduce oil import switch from coal towards biomass, including for
dependence. industrial CHP plants.
The transport sector in Vietnam, as for most countries

in the world, is currently relying on oil products.
According to the analysis of the reserves’ projections,
these will firstly be domestically refined from local
crude oil (up to 2030) and mainly imported from
abroad afterwards. A combination of measures could
both reduce the energy demand and the reliance on
foreign resources, primarily through the introduction
37
SAVE ENERGY
SAVE EARTH
5
Energy efficiency
5. Energy Efficiency
During the period 2007-2017, the total final energy sectors with 6.4% and 5.2% p.a. respectively (Figure
consumption (TFEC) increased from 1,691 PJ in 2007 15). On the other hand, the final energy consumption
to 2,500 PJ in 2017, with a growth rate of 4.0% p.a. In in the residential sector decreased during the period
2010-2017, total GDP increased by 6.1% p.a. with the due to a trend involving displacing of traditional
highest growth rate in the industrial sector (7.4% p.a.) biomass use with electricity and other fossil fuels
and the commercial sector (6.8% p.a.). This economic (especially for cooking purposes in rural areas). By
growth resulted in an increase in energy 2017, the industry represented 53% of TFEC, followed
consumption, with the industrial sector showing the by transport and residential sector with the share of
largest average annual growth during the period 23% and 17% respectively.
(9.3%)15, followed by the commercial and transport
3,000
2,500
2,000
PJ
1,500
1,000
500
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Transport Residential Industrial Commercial Agriculture Non energy
Figure 15: Trends for TFEC in 2007-2017. TFEC (2007-2014) is based on (IE, 2017). TFEC (2015-2017) is based on (GSO,
2019).
Vietnam features a high energy intensity compared to activities have been carried out throughout the
other international contexts. In 2015, the primary country covering different economic sectors, with
energy intensity with respect to GDP was 20 good progress in the application of EE measures for
GJ/USD16 (IEA, 2017), while the world average user appliances and partly also in industrial facilities.
amounted to 8 GJ/USD. With the issuance of Law on On the other hand, EE has not been well promoted in
Energy Efficiency and Conservation in 2010, many EE the building and transport sectors.
15
Note however that this large growth figure for industry includes a large difference from 2014 to 2015, which is partially due to a change in data collection
methods that resulted in more detailed data being collected from industry.
16
For comparison, energy intensities for other fast-growing economies are: Thailand 14.2 GJ/USD, China 13.8 GJ/USD, Malaysia 10.9 GJ/USD, Indonesia 9.6
GJ/USD, the Philippines 8.4 GJ/USD.
40
Energy Efficiency
Energy efficiency policies and targets

The National Target Programs on Energy Efficiency The major supporting schemes under the VNEEP3
and Conservation were implemented by MOIT in the include: legal framework, enhancement of legislation
period 2006-2015 (VNEEP1 and VNEEP2), and enforcement, promulgation of EE standards,
comprised many activities ranging from legal establishment of energy service companies (ESCO),
framework, capacity building, obligations for technical and financial support, capacity building,
designated energy users, support for energy audits, creating energy information systems, and establishing
soft loans, standard setting, energy labeling, an EE fund.
non-financial and financial incentives. VNEEP1 and
VNEEP2 achieved the energy saving ratios of 3.39% 5.2 Energy Efficiency Outlook
and 5.65% respectively (IE, 2016). Compulsory
labeling17 and minimum energy performance standard What will be the impact of energy efficiency?
(MEPS) programs under VNEEPs have been
One of the main effects of the application of EE
implemented for many domestic and industrial
measures is a reduction of the total energy system
appliances:
costs already in 2030, where a large decrease in fuel
Household: CFLs, fluorescent lamps, electronic and costs and a reduction of the power demand can more
magnetic ballasts, air conditioners, refrigerators, than offset the increase in the investments in the
washing machines, rice cookers, electric fans, end-use sectors. Compared to C1 RE target scenario,
televisions, LEDs and storage water heaters; the C3 Energy Efficiency and C4 Combination
scenarios are built with high penetration levels of EE
Service: photocopy machines, monitors, printers, technologies which allow the whole economic energy
fridges and laptops; saving potential to be realized (penetration rates
correspond to 50% by 2030 and 100% by 2050).
Industrial: distribution substations and electric
Moreover, these scenarios feature an increased
motors;
application of industrial combined heat and power
Transport: passenger cars (less than 9 seats) and (CHP) plants, based on biomass and natural gas.
motorcycles;
Even though additional investment in EE technologies
Power (MEPS only): coal-fired (efficiency of 41% for amounted to 7 and 16 billion USD (annualized) in 2030
unit from 600 to 800 MW), open cycle gas turbines and 2050 respectively, a large share of fuel costs and
(efficiency of 39% for units greater or equal to 300 investments in the power sector can be saved, thus
MW) and combined cycle gas turbines (efficiency of resulting in an overall reduction of the annual total
58.5% for unit of gas turbines greater or equal to system cost of 8.9% and 10.6% in 2030 and 2050
300 MW)18. (Figure 16).
The main financial support for EE activities has been

provided under VNEEPs, Vietnam Environment
Protection Fund (VEPF) and several loan packages by
development partners (WB, DANIDA etc.). However,
sustainable financial sources for EE activities remain
major barriers for realizing the EE potential in Vietnam.
The National Program on Energy Efficiency and
Conservation for the period 2019-2030 (VNEEP3) has
been approved by GOV in March 2019 with targets for
reducing the TFEC by 5-7% in 2025 and 8-10% in
2030 compared to the baseline development.
Besides these main targets, the program also has
different detailed targets for reducing electricity
losses, energy savings for different industrial
subsectors, scale of EE and green buildings, share of
industrial units with energy management system, fuel
economy for vehicles, etc.
18
Compulsory labeling started from 2012: 665 products in 2012; 1532 products in 2013, and 2655 in 2014.
19
Decision 24/2018/QD-TTg dated 18 May 2018 of the Prime Minister: for coal-fired generation units, the efficiency at the low thermal value and rated
capacity of the generation unit is determined at the cooling water temperature of 28°C and ambient temperature of 30°C; gas-fired generation units using
simple cycle gas turbines, the efficiency of the gas turbine unit (under ISO conditions); gas-fired generation units using combined cycle gas turbines, the
efficiency of the combined cycle gas turbine assembly (under ISO conditions) is determined according to the capacity of the simple cycle gas turbine.
41
20 0%
15
-2%
10 -3%
5
-4%
0
Billion USD (2015)
2030 2040 2050

-5 -6%
-10
-8%
-15
-20 -9%
-10%
-25
-11%
-30 -12%
Variable O&M Fixed O&M Demand investment

Supply investment Fuel Percentage change
Figure 16: Changes in annual discounted system cost in C3 Energy Efficiency scenario compared to C1 RE target
scenario
With the application of EE measures, up to 630 PJ by While no baseline scenario for the VNEEP3 targets
2030 and 1,970 PJ by 2050 can be saved in the TFEC, has yet been consolidated, if using the C1 RE target
compared to the C1 RE target scenario, which is scenario as baseline, the reductions in TFEC when full
based on energy use intensities of current technology EE potential is unlocked (C3 Energy Efficiency
stocks in 2014 and an assumed limited penetration of scenario) are higher than what is aimed in the
energy efficient demand technologies. This VNEEP3 with the energy saving targets of 5-7% in
corresponds to a reduction in the TFEC by 12% in 2019-2025 and 8-10% up to 2030. This indicates that
2030 and 20% in 2050, primarily due to a decrease in it is cost effective to introduce even more EE
oil consumption in the transport sector and power measures than what targeted in VNEEP3. Figure 17
demand in the industry and residential sectors. shows the percentage change in TFEC in the C3
Moreover, the EE activities can save annually 83 Mt Energy Efficiency scenario with respect to C1 RE
CO2 by 2030 and 237 Mt CO2 by 2050, as a sum of target scenario, as well as the comparison with the
the effects in the power, industry and transport targets aimed in VNEEP3.
sectors.
42
Energy Efficiency
0 0%
-100 -2%
-200 -4%
-4%
-300 -6%
PJ
-400 -8%
-8%
-500 -10%
-600 -12%
-12%
-700 -14%
2020 2025 2030
Transportation Residential Commercial Agriculture Industrial demand devices
VNEEP 3 '19-25 VNEEP 3 '26-30 Percentage change
Figure 17: Percentage change in TFEC in the C3 Energy Efficiency scenario with respect to C1 RE target scenario and
VNEEP3
EE activities reduce electricity generation 2050, with respect to the C1 RE target scenario.
requirements for centralized power plants by Decentralized sources may generate up to 2.9% in
reducing electricity demand. At the same time, 2030 and 8.6% in 2050 of the total electricity demand
electricity generation from decentralized power in the C3 Energy Efficiency scenario. The
sources (industrial CHP and decentralized solar PV) cross-sectoral EOR19 least-cost analysis shows that
increases in the long term as a result of the least-cost investing in EE technologies is more cost-effective
optimization and assumed larger potential for than investing in 6,000 MW and 23,000 MW of coal
industrial CHP in the future. EE activities in the C3 power in 2030 and 2050, respectively. Figure 18
Energy Efficiency scenario may save up to 10% of illustrates the effects of EE activities on electricity
centralized electricity generation in 2030 and 29% in demand and electricity generation requirements.
43
1,200 35%
29%
30%
1,000
25%
800 21%
TWh
20%
600
15%
400 10%
10%
200 4% 5%
0 0%
2020 2030 2040 2050
Savings compared to C1 Centralized Decentralized Total percentage reduction
Figure 18: Effects of EE measures and industrial CHPs in C3 Energy Efficiency scenario with respect to the C1 RE target
scenario. “Decentralized” consists of approximately 80% industrial CHPs and 20% decentralized solar PVs.
Which are the most important areas for EE?

Different sectors feature different levels of energy measures will reduce the TFEC by 8.9% (247 PJ), 11.0%
savings, when introducing high penetration rates of (34 PJ), 22.7% (210 PJ) and 13.4% (142 PJ) for industrial,
EE technologies in the C3 Energy efficiency scenario commercial, residential and transport sectors
compared to the C1 RE target scenario. By 2030, EE respectively (Figure 19).
0%
-5%
-10%
-15%
-20%
-25%
-30%
2020 2030 2040 2050
Commercial Industrial Residential Transportation
Figure 19: Percentage change in TFEC by sector in the C3 Energy Efficiency scenario with respect to the C1 RE target
scenario
44
Energy Efficiency
600
500
400
PJ
300
200
100
-100
Commercial Industrial Residential Transport Commercial Industrial Residential Transport
Space Cooling
Space Heating
Water Heating
Industrial - Feedstock
Industrial - Machine Drive
Industrial - Other Facilities
Industrial - Process Heat
Cooking
Lighting
Refrigeration
Space Cooling
Water Heating
Car & Motorcycle
Commercial
Train
Water
Building Equipment
Cooking
Lighting
Space Cooling
Space Heating
Water Heating
Industrial - Feedstock
Industrial - Machine Drive
Industrial - Other Facilities
Industrial - Process Heat
Cooking
Lighting
Refrigeration
Space Cooling
Water Heating
Car & Motorcycle
Commercial
Train
Water
Building Equipment
Cooking
LIghting
2030 2050
Figure 20: Economic energy saving potential by end-use and by sector in the C3 Energy Efficiency scenario, compared
to the C1 RE target scenario
In the industrial sector, the cement, iron and steel, biomass resources from residential use to more
textile and food are the main subsectors for EE efficient industrial CHPs or other central power plants.
improvements. EE measures in heat processes In addition, with the projected increase in the cooling
contribute to 61% of the total energy saved followed demand, the introduction of efficient air conditioners
by machine drive (21%) and facilities (18%) by 2030 plays a central role in reducing energy consumption
(Figure 20). In the period to 2050, EE improvement in in the residential sector.
the process heat for the cement, iron and steel, pulp
In the commercial sector, lighting is the main area for
and paper, food, and textile subsectors is the most
EE improvements with employment of efficient
important area for realizing the energy saving
lighting devices. Cooking and space cooling are also
potential. Under industrial machine drive, efficient
important areas for energy savings with e.g.
motors and variable speed drive applications are also
installation of efficient air conditioners.
important in all subsectors, especially for iron and
steel and textile production after 2030. Additionally, In the transport sector, road transport is one of the
efficient lighting (as part of the EE improvement in main areas for EE improvements with significant
industrial facilities) is needed in all industrial contributions from car, motorbike and other
subsectors and should be prioritized by industrial commercial vehicles (bus and truck) mainly due to the
factories. introduction of higher fuel economy standards. An
In the residential sector, efficient cooking, space increasing large share of oil products for transport is
cooling and lighting are the three main areas for EE imported, thus making EE in transport a very important
improvements. Employment of efficient cook stoves focus area.
and fuel switching to LPG and electric cooking stoves
in rural households are very important to reallocate
Power use in transport has not been analysed in the EOR19, yet the international trends in development
and cost reduction of e-vehicles19 support the expectation that electro-mobility might become a focus
area for Vietnam as well. If the electrified transport is supplied by the expansion of RE, it will have the
potential to increase EE, reduce air pollution and reduce oil import dependency.
19
EA (2019), "Global EV Outlook 2019", IEA, Paris, www.iea.org/publications/reports/globalevoutlook2019/.
45
5.3 Policy Outlook and Recommendations

The successful and cost-effective transition of the
It is recommended to continue and enhance
energy system requires both higher penetration of
the current EE policy (VNEEP3).
renewable energy and a reduction in energy
consumption through EE and energy conservation
measures. Vietnam has a large potential for EE, and The VNEEP3 promotes an important strategy for an
the EOR19 shows that EE can significantly reduce total increased level of EE investments. A continuation and
energy system costs through investments in energy adherence to the program is critical for ensuring the
efficient technologies and improvement of transition of the energy system towards affordable
manufacturing processes. Investments in end-use and reliable energy access and a more efficient use of
efficient devices (e.g. industry and residential sectors) energy resources. The EOR19 shows that the
have the potential to reduce the energy demand, in analysed EE activities achieve and exceed the high
turn resulting in a reduced need for investments in targets in VNEEP3 in 2030. This means that the
additional power plant capacity. However, Vietnam investments in energy savings proposed in the EOR19
faces the challenge of efficiently exploiting the full are cost-effective and will introduce even more EE by
potential in energy savings, due to barriers at the 2030 compared to the VNEEP3. This could be
institutional and financial level. achieved, among other things, by introducing or
enhancing the following measures:
Ambitious energy efficiency measures should Minimum efficiency performance standards (e.g.
be highly prioritized in PDP8. appliances in buildings, air conditioning) and
mandatory energy labeling for energy appliances;
The EOR19 reveals a large economic and
Fuel economy standards in transport, through
emission-abating potential for energy efficient
economic incentives for EE and low-carbon
technologies, albeit the accounting of costs for
transport vehicles, as well as preparing
carrying out EE policy measures (audits, reports,
infrastructure for electric vehicles;
information campaigns, etc.) is not included in the
analyses. EE can bring about the combined effect of Energy audits and energy management systems
fuel and cost savings, with effects across all economic (ISO 50,001++) in all major energy-intensive
sectors, thereby reducing the amount of imported fuel facilities;
as well as environmental and climate impacts. The
least-cost implementation of EE can give 5% and 11% Voluntary agreement schemes with fiscal and
savings in energy system costs in 2030 and 2050 financial incentive schemes for quantified and
respectively, as well as provide important CO2 savings certified energy savings;
compared to the C1 RE target. Introduction and pilot testing of trading of energy
The potential for power demand savings is great if EE savings (e.g. auctions and competitive tendering of
is successfully implemented; large savings in power certified energy savings) with a focus on electricity
plant investments can be realized. The coming PDP8 savings;
should take EE into account and focus on harvesting Diversification and expansion of the demand for EE
both the economic and environmental potential of EE. service providers, such as licensed energy
Making the utility companies co-responsible for managers and energy auditors, as well as energy
energy savings could inspire Vietnam on how to efficient technology suppliers through improved
integrate EE in the PDP8, bringing financial benefits marketing and improved and diversified training.
for the utilities and their customers, as well as
economic benefits for the society in general.
46
Energy Efficiency
Focus should be set on barriers to facilitate It is recommended to implement incentives to

large investments in energy efficient support investments in industrial CHP plants.
technology in the demand sector.
The combined effects of EE and new investments in
Large cost-effective energy saving potentials can be industrial CHPs could reduce electricity generation for
found in all sectors: transport, industry, commercial centralized plants by 10% in 2030 and 29% in 2050.
and residential sectors, with the EOR19 analyses Such investments could prioritize the use of local
pointing towards the most cost-effective areas and resources, e.g. biomass. However, incentives are
subsectors for EE investments. However, the needed for the enhanced CHP applications in
implementation of EE can have many informational, industries to overcome barriers for fuel supply
regulatory, financing and market barriers not covered availability and economies of scale for industrial
by the EOR19 which focuses on least-cost technology cogeneration.
deployment. Some of these barriers can be
In the industry sector, especially all manufacturing
addressed by trading energy savings. International
industries requiring simultaneously large amounts of
experiences have demonstrated that this can
process heat and power, CHP plants can reduce the
optimize the effort and channel investments towards
energy requirements through the combined provision
the lowest hanging fruits. One example comes from
of process heat and power. The expansion of this
Denmark, where utilities have taken responsibilities
technology option should be supported by adequate
for implementation of EE measures and have initiated
regulation, e.g. cost reflecting tariffs (also on hourly
auctions for energy savings.
base) and options of selling excess power to the grid.
Importantly, the regulation should cover measures on
emission control for all plants, as the current
regulatory framework covers only large CHP
installations (4-15 GW capacity).
47
6
Renewable energy
6. Renewable Energy
Vietnam has a high potential for RE, including hydro, has a total potential of about 6.7 GW, with more than 3
solar, wind, biomass, and waste. The RE share in the GW already in operation. The total technical potential
total primary energy supply (TPES) was 37% in 2007. of biomass resources is about 7 GW for power
However, this share has been gradually reduced to production, while solid waste power is 1.5 GW, of
22% in 2017. Biomass and hydro power have been the which currently only 0.3 GW is utilized. RE sources
main types of RE in Vietnam up to now. In 2017, with high future potential for development are wind
biomass and hydro accounted for app. 51% and 49% and solar power. There was only a small amount of
of the RE energy mix, respectively, while solar and solar and wind capacity in operation before 2018, but
wind accounted for very small amounts in TPES. it has been increased strongly in 2019 (with 4.5 GW of
solar and 0.45 GW of wind at the end of June 2019)
Up until 2019, the medium and large hydropower (EVN, 2019).
sources (about 20 GW capacity potential20) have been
almost fully utilized. The small hydropower resource
900 25
800
20
700 19 20
600 16 16
15
15
500 13
GW
PJ
11
400
10
8
300 7
6
200 5
5
100
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Biomass Renewables Hydro RE capacity in power
Figure 21: RE (TPES) development in Vietnam in the period 2007-2017 (left axis) and RE power capacity (right axis),
both incl. small and large hydro. Note that the large jump from 2014 to 2015 in biomass supply is partially due to
change in data collection methods. RE (TPES) for 2007-2014 is based on (IE, 2017) and 2015-2017 is based on (GSO,
2019) while the RE capacity is based on (NLDC, 2018).
In Vietnam, solar PV has the greatest potential, Vietnam. By August 2019, the total size of registered
although limited by the demand for land use (the investment projects reached about 32 GW of which
average land use rate is about 1.1-1.2 ha/MW 10.3 GW is approved for additional planning up until
depending on efficiency21). The solar potential used in 2025; however, not all may be realized. With the large
the models is up to 380 GW (economic potential22 in expansion being approved, the transmission grid
(Institute of Energy, 2018)), but the distribution is not development has difficulties in meeting the
uniform across regions but concentrated in the South, operational schedule of all projects since procedures
South Central, and Highlands regions. Due to the for construction investment and capital arrangement
solar promotion mechanism ending in June 2019, are causing delay in transmission projects.
solar power projects are currently booming in
20
Potential of RE from the draft report on Vietnam RE Development Plan to 2035, Institute of Energy, 10-2018.
21
Decision 11/2017/QD-TTg, dated 11/4/2017.
22
For the least-cost modelling, the technical potential is the preferred input from which the model determines economic feasibility. For solar PV, the lack
of input data means that using the technical potential would result in an overestimation of competitive potential for PV. To avoid this, the economic potential
has been chosen as input for solar PV.
50
Renewable Energy
The total potential of onshore wind power used in the Wind power development encouragement
models is around 217 GW (considering wind speed mechanism - Decision No. 39/2018/QD-TTg dated
over 4.5 m/s, height of 80 m, technical potential in September 10, 2018: the purchase price is 8.5 US
(Institute of Energy, 2018)), mainly concentrated in the cents/kWh for onshore wind projects and 9.8 US
South, Highlands, and South Central regions. With cents/kWh for offshore projects in operation before
Vietnam’s new mechanism, many investors have November 2021.
submitted wind power projects with the total capacity
The mechanism of supporting the development of
reaching 10 GW of which about 5 GW is approved for
grid-connected biomass power projects in Vietnam
additional planning, mostly in the South and South
- Decision 24/2014/QD-TTg dated March 24, 2014:
Central regions. As mentioned for solar PV, the
the feed-in tariff for biomass power is 5.8 US
transmission grid may not be developed in time to
cents/kWh.
connect all wind projects in the period up to end of
2021, when the support mechanism ends. Although The mechanism to support the development of
wind power has a large potential and only takes a solid waste electricity projects - Decision No.
limited amount of land (limit of direct land-use is 0.35 31/2014/QD-TTg dated May 5, 2014: the purchase
ha/MW23), only the best wind locations can compete price for direct solid waste-fired power plant is
with the rapidly decreasing costs for solar power. 10.05 US cents/kWh, the purchase price for landfill
solid waste-fired power plant is 7.28 US cents/kWh.
In addition, Vietnam has a long coastline and a great
potential for offshore wind, especially in the South Renewable energy policy targets in Vietnam can be
and South Central regions, which have a relatively mentioned:
shallow seabed, convenient for offshore wind
Vietnam renewable energy development strategy
construction. For example, according to an
(REDS) until 2050 was approved by the Prime
assessment (ESMAP & World Bank, 2019) for offshore
Minister in Decision No.2068/QD-TTg dated
wind in Ninh Thuan sea area, the average wind speed
November 25, 2015, stating that the share of
is about 10 m/s; for the area extending to the Southern
produced electricity from renewable energy (incl.
coastline, the average wind speed is 7 m/s. This area
both small and large hydro) in the total national
has the technical potential for offshore wind up to 76
electricity production should reach about 38% by
GW. However, offshore wind potential needs to be
2020; 32% in 2030, and about 43% in 2050.
studied more in the coming period.
Revised PDP7: it is expected that RE sources
A number of challenges are being raised when (including small hydropower, wind, solar and
developing large amounts of wind and solar power biomass) will account for 21% of the national power
sources, including the ability to integrate and balance generation capacity by 2030.
wind and solar power into the energy system, the
ability to reinforce and expand the transmission grid
and land use requirements, especially for large solar
parks.
Renewable energy policies and targets

Existing mechanisms to encourage and support RE
development in Vietnam are as follows:
Solar power development incentive mechanism -
Decision No. 11/2017/QD-TTg dated April 11, 2017:
implementation of Feed-in-tariff mechanism, where
the solar electricity purchase price is 9.35 US
cents/kWh for projects put into operation before
July 2019. This decision is valid until June 2019, and
now a new tariff mechanism is being drafted and
has not yet been approved.
23
Circular No.02/2019/TT-BCT, “Regulation on implementation and sample power purchase agreement for wind projects”, dated 15 January 2019.
51
6.2 Renewable Energy Outlook

What will be the development of renewable
energy technologies?
Biomass and hydro power are the two major sources main RE building blocks of the energy system is solar
of RE that are currently used in Vietnam. In the future, and wind. While the REDS targets for the RE share in
the use of these sources will continue and is the power sector are met in all scenarios, the RE
expected to be supplemented by power from wind shares for TPES are significantly lower than the REDS
and solar PV. The costs of wind and solar power have target, even in the most ambitious combination
been reduced dramatically over the last five years. scenario (32% in 2030 and 44% in 2050). This
Vietnam has excellent solar resources, mainly in the indicates that the REDS targets for the RE share in the
Southern part of the country. The wind resources are TPES are over-ambitious and not harmonized with the
in general low to medium; however, at specific sites targets in the power sector. See more in section 8.3
good wind resources exist. Additionally, very good where target harmonisation is recommended.
wind resources exist offshore, e.g. close to the coast
of Ninh Thuan. The energy output from hydropower has been
calculated based on a normal weather year. During a
The EOR19 shows that the primary RE sources are dry year, production from hydropower sources is
mainly biomass (wood, bagasse, rice husk, etc. used lowered by up to 25%. A sensitivity analysis to test the
in households and industry) and hydro in the short impact of such a reduction shows that more wind and
term with significant increases in solar and wind solar will be added (about 5-10 GW in 2030, 2040 and
energy in the longer term (Figure 22). RE shares in 2050) to fulfil the RE requirement, and the total
TPES have a slightly decreasing trend in future years, system costs will increase by about 6% in 2030 and
primarily due to a large increase in fossil fuel about 3% in 2050 in the C1 RE target scenario.
consumption. Unused hydro power potential is small,
bioenergy has a potential to play a larger role in
industrial CHP and power production, but the two
3,500 30%
3,000 25%
24% 24% 25%
23% 23% 23%
22%
21% 21%
2,500 20% 20%
19% 18% 20%
19% 19%
18%
17% 17%
2,000
15%
14% 15%
PJ
1,500
10%
1,000
5%
500
0 0%
C0-Unrestricted
C1-RE target
C2-No new coal
C3-EE
C4-Combination
C0-Unrestricted
C1-RE target
C2-No new coal
C3-EE
C4-Combination
C0-Unrestricted
C1-RE target
C2-No new coal
C3-EE
C4-Combination
C0-Unrestricted
C1-RE target
C2-No new coal
C3-EE
C4-Combination
2020 2030 2040 2050

Solar Wind Hydro Biomass RE share
Figure 22: Renewable energy sources and their share in TPES (incl. small and large hydro) for all analysed scenarios
52
Renewable Energy
What will be the role of wind and solar in the

power system?
In the EOR19, it becomes clear that wind and solar values. Additional analysis to the EOR1924 shows that
power will play an important role in the future. Even in with increasing wind and solar shares, the total
the theoretical C0 Unrestricted scenario, where there energy system cost slightly increases across
are no renewable energy requirements, there is scenarios, with a rapid increase in capital costs (e.g. in
significant generation from wind and solar. This 2050, a share of 30% wind and solar, can be achieved
indicates that wind and solar technologies are with capital cost constituting 53% of the total power
attractive even without subsidies, as a result of lower system costs; with 70% wind and solar, this share
costs for wind and solar than e.g. coal-fired becomes 80%). Therefore, in the transition from
generation. From a least-cost perspective, more than conventional power production to wind and solar,
20 GW of the best locations for wind and solar will be access to capital becomes more crucial, even
cheaper than coal in 2030, increasing to about 90 GW considering the expectation that the investment costs
in 2050. of wind and solar PV will decrease drastically in the
coming 30 years. The Vietnamese Technology
Wind and solar power are attractive in the scenarios,
Catalogue (EREA & DEA, 2019f) provides the
as they have low operation and maintenance costs
complete overview of the projected cost
and no fuel costs. The upfront investment costs have
development of wind and solar (as well as other
been decreasing over the years and now result in
technologies), as used in the EOR19.
competitive LCOE (Levelized Cost of Electricity)
59%
400 60%
350 50%
50%
TWh produced by wind and solar
43% 44% 43% 43%

300
40%
38% 38% 38% 39% 39% 37% 38% 38% 38% 40%
250 33% 33% 32%
200 27% 30%
150
20%
100
10%
50
0 0%
C0 Unrestricted
C2 No new coal
C3 EE
C4 Combination
C0 Unrestricted
C2 No new coal
C3 EE
C4 Combination
C0 Unrestricted
C2 No new coal
C3 EE
C4 Combination
C0 Unrestricted
C2 No new coal
C3 EE
C4 Combination
C1 RE target
C1 RE target
C1 RE target
C1 RE target
2020 2030 2040 2050

Solar Wind offshore Wind RE share Wind + Solar share
Figure 23: Electricity generation (TWh) from wind and solar together with RE share (incl. both small and large hydro)
and the solar and wind share
24
More analysis is described in the technical report (EREA & DEA, 2019a).
53
Figure 23 shows the development of wind and solar in Solar power

the EOR19. Across all scenarios, the generation from
wind is larger than that from solar in 2030. Wind Utility-scale PVs require land for the installation.
produces more power (TWh) per GW than solar, as it Typical key values are 1.1-1.2 ha/MW. In the C1 RE
operates at higher full load hours. Across scenarios target scenario, the least-cost investment in PVs
the least-cost power mix requires a capacity build-up amounts to 117 GW in 2050 (see Table 4). This will
equal to 1 GW/year for wind and 1-2 GW/year for solar require a total land area of 1,545 km2 or 0.5% of the
PV in the period 2020-2030. However, when further total land area in Vietnam. The largest solar capacity
cost reductions are realized and the best onshore deployed in the C1 RE target scenario is in the South
wind sites are fully utilized, solar will dominate along region (76 GW in 2050), corresponding to 1.6% of the
with development of offshore wind. total region area. Only unused land is considered in
the scenarios, and a standard and a high land cost are
Further important observations include: used to qualify different locations for PV installations.
Across scenarios, only land with low costs has been
The scenarios show, that after 2030, the adherence utilized (50% of the total potential in each region). The
to the RE power sector targets in the REDS (C1 RE only exception is C2, where 10% of the high cost land
target scenario) results in much higher shares of area is used in the South region in 2050.
wind and solar (13% and 33% in 2030 and 2050,
respectively). The expansion of solar PV in the EOR19 is
concentrated in the South region. Solar PV in this
If no new coal power plants are built after 2025 (C2 region is attractive from a least-cost perspective,
No new coal scenario), even more wind and solar because of the good solar resources and the large
become part of the least-cost power mix (22% and power consumption in Ho Chi Minh City. Even though
40% in 2030 and 2050, respectively), with the RE it represents a small share of land, the 76 GW of solar
share reaching 50% in 2050. capacity in the South region in 2050 implies a huge
Reduced power demand of around 30% in 2050 development in one single region with an average of
(C3 Energy efficiency scenario) means that the RE more than 2 GW every year all through the period to
target can be met with lower absolute generation reach the capacity in 2050.
from RE. In this scenario, wind and solar power will
be reduced while hydro and biomass remain the
same.
Combining no new coal and EE (C4 Combination
scenario) results in the highest long-term RE share
of 59% in 2050, with the highest wind and solar
share of 42%. However, the reduced power
demand results in a less extensive expansion of
capacity than the C1 RE target scenario.
Table 4: PV expansion and land areas in the C1 RE target scenario for the year 2050
Total PV capacity Required Share of Share of

Region Total area
potential (C1, 2050, GW) area (C1, total potential
(km2)
(GW) 2050, km2) area
North 116,459 7 3 44 0% 50%
North
41,587 1 0 5 0% 50%
Central
Center
26,536 9 1 8 0% 7%
Central
Highland 54,508 127 23 304 0.6% 18%
South
27,527 85 14 179 0.7% 16%
Central
South 64,335 152 76 1,005 1.6% 50%
All 330,952 381 117 1,545 0.5% 31%
54
Renewable Energy
Alternative solar power

The type of solar PV technology analysed in the EOR19 is utility-scale PV. Other types may compete with
this technology and become more attractive. Currently the fixed tilt PV solutions are the most attractive;
however, one or two axis tracing solution could also be economic in the future. Also concentrated solar
power (CSP) can be an option. With CSP, the energy is collected as thermal energy, making it possible to
store energy in a thermal storage – and generate the power independently of the actual solar influx.
Rooftop PV can also supplement the utility-scale PV, bringing the benefit of space optimization, as no
land is needed for the installation. Since the rooftop PV provides decentralized generation, i.e. on top of
the electricity demand, investment in grid reinforcement may be lower. However, if the installation is
small (1-20 kWac ), the cost of the installation is likely to be more expensive (per kW) (IRENA, 2017). In a
least-cost perspective, economy of scale is likely to make utility-scale PV more attractive. Rooftop PVs
exist in large volumes in many countries25. This has often been motivated by simplified taxes and
subsidies or net-metering system that allow free interaction with the local grid. Medium size PV
installations (e.g. 100 kW – 1 MW) connected to industry and commercial end-users can have the benefit
of scale for installation, while still being close to the demand.
Wind power
The expansion of wind power in the EOR19 is For each region, three different wind profiles have
concentrated in the South Central and Highland been used: high, medium and low wind class. None of
regions (Table 5). While in the C1 RE target scenario it the low wind areas are attractive for investments
is attractive to expand wind power in the next 10 years across the analysed scenarios. Compared to solar PV,
in the South Central, Highlands, and South regions, onshore wind requires much less land, and
after 2030 the expansion is focused on the South international experiences show that onshore wind
Central region. can easily be combined with agriculture, which makes
it easier to integrate in Vietnam.
Table 5: Wind power expansion per region and the total potential per wind class for the C1 RE target
scenario. Green: potential is used completely; orange: potential is used partially by 2050.
Unit: GW Potential
Region 2020 2030 2040 2050 Low Medium High
North Onshore 0.5 0.5 12.1 0.4 0.1
North
Onshore 0.0 0.2 1.4 9.3 1.2 0.2
Central
Center
Onshore 0.1 0.2 0.2 0.2 9.8 1.2 0.2
Central
Highland Onshore 0.1 3.6 3.6 5.0 57.0 13.8 3.6
South
Onshore 0.6 3.8 7.1 9.2 25.6 5.5 3.7
Central
South
Offshore 2.5 5.0 6.0 - - 6.0
Central
South Onshore 0.5 2.5 2.5 2.5 56.6 16.8 0.3
Total 1.3 10.1 19.1 24.8 170.4 38.9 14.1
25
In 2016, utility-scale PVs represent around 60% of the total global PV capacity, while residential and non-residential PV each was around 20% (IRENA,
Cost and competetivenes of solar PV, 2017).
55
Offshore wind is attractive in Vietnam

In the EOR19, lack of data means that offshore wind has only been represented by six sites, all close of
Ninh Thuan in the South Central region. These sites are examples of offshore locations with the highest
wind speeds (average wind speed of 10 m/s), each with a potential of 1,000 MW. However, as a complete
mapping of the offshore potential has not been performed, future studies could focus on the resource
assessment and mapping of offshore wind potential at national level, including considerations on wind
speed variability, sea bed conditions, navigation routes and distance to coast.
The assessed offshore wind potential becomes attractive in 2040 across all scenarios or even in 2030,
if there is a stop for new coal power plants (C2 No new coal scenario). The offshore wind has higher
investment costs and much higher production compared to onshore wind. In the past years, a strong
international technology development within offshore has resulted in a drastic decline in costs for
off-shore wind. This decline is expected to continue as described in the Vietnamese Technology
Catalogue (EREA & DEA, 2019f). Offshore wind also has the advantage of not taking up land, which is a
main concern in Vietnam.
In 2040, the EOR19 concludes that 36% of the assessed offshore potential is a part of the least-cost
power mix even without RE targets (C0 Unrestricted scenario), which means that this specific potential
is highly competitive even compared to coal power already in 2040. In 2050 across all scenarios, close
to all analysed areas will be fully utilized, which emphasizes that offshore wind should be a part of the
future power mix in Vietnam.

While Vietnam has a limited potential for bioenergy Solar PV is booming in Vietnam, so a special
and expansion of hydro power, the potential for wind attention must be given to wind power, which in a
and solar renewable energy is great. Currently, only a least-cost perspective should be developed to
small amount of this potential is utilized, and the generate more power than solar in the next 10
challenge ahead is to ensure deployment of RE at the years. Wind power has a strong advantage in taking
lowest cost and to integrate it into the power system up little land compared to solar PV, and the
for the benefit of fuel import reduction, climate, and integration of agriculture and wind power is a
environment. common practice in other countries, e.g. Denmark.
The EOR19 shows that for Vietnam the least-cost An ambitious RE target in the power mix in 2030
power generation in the C4 Combination scenario based on detailed scenario analysis should be
includes app. 40% RE share (incl. both small and large included to have a clear and stable vision for RE
hydro) in 2030 and almost 60% in 2050. expansion.
RE must be in focus in the coming PDP8 to For a successful wind and solar development
ensure the necessary basis for RE expansion in in Vietnam, it is crucial to have stable, simple,
the next 10 years. transparent, and competitive enhancing
framework conditions for RE projects.
The forthcoming PDP8 will be a crucial framework for
the energy system development, especially on a Such a framework should be characterized by:
10-year horizon. Reaching 40% power generation
Simplicity: A one-stop shop where developers
from RE in 2030 will require a planning focus on wind
have a single point of contact and where all
and solar power, which must be addressed in the
information, approval, EIA, grid connection, and
PDP8:
licenses are handled.
Ensuring investments in the power grid is crucial
Stability: Stable and long-term plans and targets
to enable more RE integration and avoid costly
for RE expansion reduce the risk for investors and
curtailment of wind and solar.
support building up a local supply chain.
56
Renewable Energy
Transparency: A transparent process for

developing RE projects and close dialogue with The awareness of local authorities, citizens,
market players along with an international and stakeholders should be enhanced to
standard PPA builds trust and reduces risk, thus ensure acceptance and facilitate local citizens
attracting more investors for large-scale RE to benefit from RE projects.
projects.
Competition: For large-scale wind and solar PV The EOR19 shows that large expansion of up to app.
projects, it is important to expose the developers 75 GW of solar PV in the southern region of Vietnam
to competition to drive down prices, as in a long-term perspective (2050) is cost efficient. To
international experiences with RE auctions have realize such an extensive expansion not only national
shown (IRENA, 2017). While a FiT regime is energy planning but also provincial involvement must
well-suited to kick-start a market for RE, it also has be activated. The Planning Law26 already stipulates
drawbacks as it is difficult to adjust the FiT to the the increased involvement of local authorities in the
dynamic market conditions. The competitive nature planning processes but also awareness, acceptance
of auctions is the state-of-the-art measure of cost and ownership of citizens, private sector and NGO’s
efficient large-scale RE deployment. are needed for the transition to be a success and for
the local society to embrace the opportunities of
knowledge, job creation, and technology transfer. An
A framework for the development of offshore example of a measure to increase ownership is to
wind should be established already in the short ensure that the neighbors of RE plants get a share of
term as offshore wind power is a the profit, e.g. by offering them shares in the RE plant.
knowledge-intensive technology and requires
high upfront investments.
The assessment of potential locations for offshore

wind near Ninh Thuan in the EOR19 shows that this
technology is attractive in 2040 or even in 2030
depending on the power system development. While
offshore wind can present higher full load hours and
thereby higher outputs compared to solar PV, as well
as occupying little land area, it is an investment,
technology and knowledge-intensive industry.
Obtaining the least-cost potential for offshore wind
will require a solid framework already in the coming
years, including:
Pilot projects for offshore wind farms;
Official targets for offshore wind expansion;

Data availability including wind speeds, sea bed
conditions and environmental impact assessment
(EIA);
Preparation for education of workforce to be able

to carry out the projects;
Continuation of the Feed-in-Tariff regime to support
the new market until it is ready to be exposed for
competition.
26
Law No. 21/2017/QH14 issued by the National Assembly dated November 24, 2017.
57
7
Power system balancing
7. Power System Balancing

Power systems must balance second by second, i.e. By 2018, the entire power system in Vietnam has
demand and generation must match. Traditionally, the around 49 GW of installed generation capacity, of
main challenge has been to balance the variation in which large hydropower plants account for 35%, coal
demand. In Vietnam, coal-based plants have been thermal power plants for 38%, gas turbine for 15%,
used as base-load generation; natural gas-based small hydro power plants for 6%, and others including
plants have been working in the medium demand oil, power import and RE for nearly 6%. The peak load
range, and hydropower has been supplying the peak of the entire power system in 2018 was 35 GW (NLDC,
demand. Many existing coal-based power plants in 2018), resulting in a raw reserve rate of the power
Vietnam have a low flexibility, e.g. with minimum system up to 40.7%. The total electricity generation
generation of 70% of full load. This is in line with the from the system amounts to about 220 TWh in 2018,
function as base load. However, the role as base load of which the coal thermal power production (91.6 TWh)
capacity could be changed when more variable RE, contributes with the largest share (42%), hydro
mainly wind and solar, will be integrated into the generation with 38%, and gas thermal generation with
energy system. Coal-based power plants may 19% (Figure 24).
internationally have minimum loads as low as 25%27.
250 35 36
31
200 28 30
25
22 24
TWh
GW
150 20
19
15 17 18
100 14
12
12
50
6
0 0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
El. import Solar Wind Hydro Biomass

Oil Gas Coal Pmax (GW)
Figure 24: Power production (left axis) by fuel type and peak load (Pmax, right axis) in the period 2008-2018. Data is
based on (NLDC, 2018)
The high proportion of hydropower in Vietnam local power capacity due to a series of power plant
represents the main source of flexibility in the power constructions being behind schedule. In the North,
system, which represents a favorable condition for there are two main power generation types, coal and
integrating variable RE sources. On the other hand, hydro, while hydropower generation is the main
existing thermal power plants have low flexibility. power source in the Central region. The South has
three main power generation types, i.e. gas, coal and
Installed capacity in the North and North Central hydro. Gas power plants currently hold the largest
regions is becoming redundant due to the large power production.
coal-fired power plants which will come into operation
in the coming years, while the South tends to lack
27
See reports about power plant flexibility: Flexibility in thermal power plants. With a focus on existing coal-fired power plants (Agora Energiewende, 2017);
Flexibility in the Power System. Danish and European experiences (Danish Energy Agency, 2015); and Thermal Power Plant Flexibility (Clean Energy
Ministerial, 2018).
60
Power System Balancing
When looking deeply into the development of the 7.2 Power System Balancing Outlook
power sources for the Northern, the Central and the
Southern part of Vietnam, the power system could The EOR19 studies power system balancing by
face some obstacles. The development of the power focusing on the variability of the system. That is, how
installations is not balanced with the load demand dynamic is the balancing? What is the average and
required in each region, thus causing great pressure near maximum change in the system balance from
on the transmission system. In addition, as hour to hour? The latter is used as a simple indicator
hydropower accounts for a large share of the power for variability, and it can be based on the electricity
generated, the seasonality of water resources can demand or the residual demand (demand minus
affect the operation of the power system. generation from wind and solar).
The revised PDP7 lists the power sources which are How can Vietnam balance the future power
expected to be developed in the period up to 2030, system?
as approved by the Prime Minister in March 2016. Across all analysed scenarios for the Vietnamese
However, by the beginning of 2019, there have been power sector, a significant development in the
many changes in the energy landscape and the capacity of solar and wind power is expected. As
viewpoint on development of the power system by shown in Figure 23, wind power generation
the Vietnamese Government in the coming period. dominates over solar in the first period, while the
The most significant of them are the cancelation of the situation is reversed in the longer term, when solar
planned Ninh Thuan Nuclear power plants28 (total takes over in renewable power generation.
capacity of 4,600 MW) and the investment of the The EOR19 least-cost analysis shows that the main
“Third 500kV transmission line” from Quang Trach – long-term power system building block is solar PV
Doc Soi – Pleiku 2. In order to offset the missing combined with short-cycle (few hours) battery
capacity of the nuclear plant, the LNG plants Nhon storage. When comparing across scenarios for a
Trach 3 and 4 have been supplemented into the specific year, it becomes evident that a higher wind
planning29 (along with many other plants which are and solar share requires more battery and
being considered to include: Ca Na, Long Son, Bac transmission capacity to balance the system (Figure
Lieu, etc.); RE is growing strongly because of the 25). As an example, going from a wind and solar share
governmental incentive mechanism for wind and of 33% in 2050 in the C1 RE target scenario to 40% in
solar30 and the intensification of power imports from the C2 No new coal scenario results in an additional
Laos and China. According to the official agreement, capacity expansion of batteries of 19 GW and
which runs until 2030, the allowed import capacity is transmission expansion of 6 GW. The following
5GW from Laos31. sections will elaborate on this development.
In addition, the potential of wind and solar power in
the South Central and Highland regions, where the
demand is low, results in adding new transmission
lines and substations to release power of those
plants, such as 500kV substation Thuan Nam in Ninh
Thuan and the 500kV transmission line Thuan Nam –
Chon Thanh32.
Regarding power system balancing, Vietnam has a
quite high potential of pumped hydro storage with 8
investigated sites of total 8900 MW (EVN & JICA,
2004). The potential amounts to 4100 MW, 2400 MW,
and 2400 MW in the North, Central and the South
respectively, where 2400 MW is included in the
revised PDP7.
28
Resolution No. 31/2016/QH14 of the National Assembly dated November 22, 2016.
29
Decision No. 212/TTg-CN dated February 13, 2017 of the Prime Minister.
30
Decision No.11/2017/QD-TTg dated April 11, 2017 and Decision No.39/2018/QD-TTg dated September 10, 2018 of the Prime Minister.
31
MOIT of Vietnam and the Ministry of Energy and Mining of Laos signed a memorandum of understanding on September 16, 2016 about the possibility of
cooperation in electricity exchange and trading between Vietnam and Laos.
32
Decision No.1891/TTg-CN dated December 27, 2018 of the Prime Minister.
61
100 45%
42%
90 40% 40%
80 35%
70 33%
30%
60 26% 27%
24% 25% 25%
GW
50 22% 22%
20% 20%
40
15% 15%
30 14% 14%
13% 13%
10%
20
10 5% 5% 5% 5% 5% 5%
0 0%
C0 Unrestricted
C1 RE target
C2 No new coal
C3 EE
C4 Combination
C0 Unrestricted
C1 RE target
C2 No new coal
C3 EE
C4 Combination
C0 Unrestricted
C1 RE target
C2 No new coal
C3 EE
C4 Combination
C0 Unrestricted
C1 RE target
C2 No new coal
C3 EE
C4 Combination
2020 2030 2040 2050
Battery capacity Transmission capacity Wind and solar share
Figure 25: Battery and transmission capacity across analysed scenarios. The wind and solar share in the power mix is
indicated.
Variability and power system dynamics

With a significant amount of generation from wind and differ much from that of the total demand, and the
solar (i.e. share of 20% of generation and above), the impact of wind and solar variability is low (Table 6). In
challenge with power balancing can be illustrated by the later years (2040 and 2050), wind and solar
the residual demand, calculated as the total demand constitute more than 20% of the total generation, thus
minus what is delivered by wind and solar. A simplified increasing the dynamics of the system significantly.
way to describe the power system dynamics at This is in line with other studies, e.g. (IEA, 2017). As
increasing shares of wind and solar generation is to illustrated above in Figure 25, increasing the wind and
compare the hourly variation in the total demand and solar share and thereby the dynamics of the system
in the residual demand. The EOR19 shows that, as also leads to an expansion of battery and
long as the shares of wind and solar are less than transmission capacity and thereby increased
20%, the dynamics of the residual demand does not balancing needs.
Table 6: Key values for the dynamics of the system – C1 RE target scenario
2020 2030 2040 2050
Average hourly demand per year (GW) 30 61 92 113

Yearly generation from VRE* compared to demand 33 5% 12% 23% 31%
Average absolute change in demand (GW/h) 34 1.2 2.4 3.6 4.3
Average absolute change in residual demand (GW/h) 1.2 2.6 5.4 8.6
*Wind and solar power
33
Please notice that this share is different from other VRE shares mentioned in this report. Other VRE shares are calculated compared to domestic genera-
tion of power and not demand.
34
Computed by calculating the hour-to-hour change for each hour of the year for each region. In the EOR19, detailed information about the hourly demand
in each of the six transmission regions is used. However, the same profile is used for all years. The average absolute change in demand is therefore
proportional to the demand (4% of the average demand).
62
Figure 26 illustrates the system balance hour-by-hour gradual shift occurs in the balancing role from
for a week in 2020 and 2050 for the C1 RE target hydropower installations to battery storage
scenario. While hydropower balances the variation in technology in the long term. Coal-based power plants
demand in 2020, the variation in solar power will still mainly function as base load capacity, while
generation is larger than the variation in demand in also absorbing some of the variation in the residual
2050. As balancing by hydropower is not sufficient, a demand.
40
35
30
25
GW
20
15
10
0
T001
T007
T013
T019
T025
T031
T037
T043
T049
T055
T061
T067
T073
T079
T085
T091
T097
T103
T109
T115
T121
T127
T133
T139
T145
T151
T157
T163
2020
El. import Solar Wind Hydro Other RE
Biomass Dom. NG Imp. coal Dom. coal Demand
250
200
150
100
GW
50
0
T091
T001
T007
T013
T019
T025
T031
T037
T043
T049
T055
T061
T067
T073
T079
T085
T097
T103
T109
T115
T121
T127
T133
T139
T145
T151
T157
T163
-50
2050
El. import Solar Wind offshore Wind Hydro Other RE Battery

-100 Biomass Imp. LNG Dom. NG Imp. coal Dom. coal Demand
Figure 26: Hourly dispatch in the C1 RE target scenario in week 39 (high demand). Figure above is 2020 and below
2050.
63
Balancing needs for wind and solar

Both wind power and solar power need balancing Due to these differences, solar generation has a need
capacity to integrate the variable nature of their for short-term storage capacity (e.g. batteries), which
generation, though their balancing needs are diverse enables moving generation from mid-day to hours
due to differences in generation profiles. Figure 27 with high residual demand. The EOR19 shows that
shows the duration curves for wind and solar batteries are charged during mid-day when
generation. Both curves have a sharp peak around generation from solar power is peaking and
the maximum generation. However, where solar is not de-charged in the evening with high demand. While
producing for around half of the hours of the year, the also integrated with the help from short-term
wind generation is decreasing linearly to zero storages, wind power benefits also from transmission
generation in only a few hours. Furthermore, line expansions for smoothening the generation
generation from solar power is very concentrated across a larger region with geographical differences
during mid-day, while wind generation is not heavily in wind speed profiles.
correlated to any specific timeframe during the day.
Wind generation profiles are also more
geographically dependent than solar profiles.
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Hours
Solar Wind
Figure 27: Duration curve for the total generation of wind and solar power for the C1 RE target scenario (2030). X-axis
represents all the hours of the year.
The need for storage

Storage solutions will increasingly contribute to long term– with around 0.5 MW battery capacity for
system balancing in the future. In the analysed each MW of wind and solar in 2050. Batteries are
scenarios, two storage technologies have been expected to continue the current trend of rapid
tested: Lithium-Ion battery and hydro pumped decrease in costs35, which makes them the least-cost
storage. Across all scenarios (see key values for the investment solution for balancing the very large solar
C1 RE target scenario in Table 7), increased peaks while moving the generation to hours with high
generation from solar power goes hand in hand with residual demand.
large investments in batteries. As such, power storage
is key to balancing of wind and especially solar on the
35
A price drop in investment costs of 69% from 2020 to 2050 is expected (EREA & DEA, 2019f).
64
Table 7: Key values for solar and battery technologies in the C1 RE target scenario
2020 2030 2040 2050
Solar (GW) 4 14 59 117

Battery (GW) 0 4 20 74
Battery/Solar capacity (GW/GW) 0.00 0.31 0.34 0.63
Share of wind and solar generation in power mix 5% 13% 24% 33%
In the EOR19, the batteries are optimized individually Transmission capacity

for capacity (MW) and storage volume (GWh). In most
cases, the optimum is between 1.5 and 2.5 MWh/MW. Reinforcement of the transmission capacity helps
In contrast, pumped storage projects typically have a balance the system. A larger transmission capacity
relatively larger storage/capacity ratio (9 MWh/MW), can bring several advantages:
based on 8 concrete cases of pumped hydro. More power plants can be used for balancing. With
Compared to the latter, batteries have a higher more active power plants, the balancing can be
investment cost per MWh, but the cost per MW is achieved by adjusting output (part load) instead of
lower and the round-trip efficiency (i.e. charging and starting/stopping power plants, to a higher degree.
generating) is higher. Therefore, the need for Adjusting can be performed more quickly and at
short-term (few hours) storage favours batteries in a lower costs;
least-cost storage solution.
Balancing over a larger geographic area has the
The EOR19 results with high levels of investments in benefit of significant smoothing, as variation in both
large Lithium-Ion batteries are quite robust to solar (to a lesser extent) and wind power is reduced
variations in investment costs, with some changes in for a large area, with particular effect on wind power
the long term: if battery prices do not decrease as smoothing;
expected, wind and pumped hydro will have a higher
share in the future, but PV and batteries will still be the In relation to the smoothing, it is easier to predict
main RE building blocks. This has been shown by the generation from wind and solar for a large area;
fixing the investment costs for batteries to the 2020
value until 2050 (no development after 2020), Avoiding expensive curtailment of variable RE
resulting in three changes (C1 RE target scenario): sources. A larger transmission capacity will reduce
congestion issues and make RE investments more
1/3 less battery capacity in 2050 (-20 GW); feasible.
Investment in pumped storage in 2050 (+6 MW); With larger solar and wind capacities, investments in
transmission become more attractive, though not at
The RE target is fulfilled with more wind (+7GW) and the same rate (the Trans/Wind and solar capacity ratio
less solar power (-10 GW). Solar power requires is decreasing, see Table 8).
more storage than wind power because solar
resources present a synchronized generation
(peak mid-day, and no generation at night).
Other technologies than batteries and pumped hydro
can deliver the needed flexibility to the system.
Concentrated solar power (CSP) technology has not
yet been studied but could be included in future work.
With CSP, solar energy is captured as heat, and high
temperature storage may extend the power
generation beyond day time, thereby reducing the
need for electricity storage. Moreover, demand
response (e.g. electricity demand that can be
controlled by dynamic pricing schemes) can function
as virtual storage, thereby providing part of the
needed flexibility. This can include e.g. industrial
demand or charging of electric vehicles.
65
Table 8: Key values for wind, solar technologies and transmission in the C1 RE target scenario
2020 2030 2040 2050
Transmission capacity (GW) 26 40 48 53

Solar capacity (GW) 4.1 14 59 117
Wind capacity (GW) 1.4 10 19 25
Trans/Wind and solar capacity (GW/GW) 4.80 1.65 0.61 0.37

Trans/Wind capacity (GW/GW) 18.73 3.92 2.49 2.13
To test how the regional transmission expansion link between Highland and Centre Central, North
depends on the RE share, Figure 28 illustrates the Central and North, and North Central and Centre
results of increasing the RE share in 2050 beyond the Central. This is due to the large RE expansion
REDS target of 43% (incl. large hydro). The results happening in the Central and South areas which will
show that grid expansion will mainly take place in need more transmission capacity to distribute
three out of seven sections considered; there is the electricity to the North.
40
35
30
25
GW
20
15
10
0
North Central Centre Central Highland South Central South Central South South
North North Central Centre Central Highland South Central
C1 RE target RE3 50% RE4 60% RE5 70% RE6 80%
Figure 28: Transmission capacity under increasing penetration rates of RE (C1 RE target (43%), 50%, 60%, 70% and
80%) for 2050
In some cases, it could be relevant to curtail In the EOR19, curtailment issues are marginal; the
generation from wind and solar instead of investing in curtailment rate in 2050 is less than 1% in the normal
additional transmission and storage capacity – C1 RE target scenario and below 3% if the RE share is
especially if curtailment is only needed in a limited increased up to 80% (Figure 29). This shows that with
number of hours. From a socio-economic perspective, the right investments in transmission and storage,
the cost of lost generation should be compared to the curtailment of wind and solar will not be a concern.
investment cost of batteries and transmission lines.
However - depending on the PPA - curtailment issues
might hinder private investments in solar and wind,
even though being feasible for society.
66
4.0%
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
2020 2030 2040 2050
C1 RE target RE3 50% RE4 60% RE5 70% RE6 80%
Figure 29. Curtailment of wind and solar at increasing shares of RE generation (C1 RE target (43%), 50%, 60%, 70% and
80%)
Figure 30 shows the generation per fuel and the moving generation from locations with high wind and
annual demand for each of the transmission regions. solar resources to the demand centers in the North
Here it can be seen that the transmission grid enables and the South.
600
500
400
300
TWh
200
100
0
2050
2050
2050
2050
2050
2050
2020
2020
2020
2020
2020
2020
2040
2040
2040
2040
2040
2040
2030
2030
2030
2030
2030
2030
-100 North North Central Centre Central Highland South Central South
El. import Solar Wind offshore Wind Hydro Other RE Biomass

Oil Imp. LNG Dom. NG Imp. coal Dom. coal Battery Demand
Figure 30: Electricity generation, electricity import from neighbouring countries, and annual demand per region for the
C1 RE target scenario
67
Detailed grid evaluation using the PSS/E model corridors will also have to be in focus. The
assessment of the whole transmission grid indicates
The above analysis of transmission expansion does that in 2030, necessary grid investments amount to
only include a rough estimation of the needed 30% of the total system investments.
transmission grid to link the 6 regions, leading to an
underestimation of the true transmission expansion In the long term, the large capacity increase in solar
costs. Additional simulations using the PSS/E model in PV in the EOR19 results drives investments in
the EOR19 provides a more detailed and more short-cycle (few hours) battery storage to balance the
realistic analysis, both taking into account load levels daily variation. Nonetheless, balancing the power
and voltage requirements (see Annex 4 and the system is technically and economically feasible, even
report Detailed grid modelling of the Vietnamese with high shares of VRE.
power system (EREA & DEA, 2019d). Results from the
EOR19 show that the total power system cost will Removal of market barriers to ensure timely
increase by 5% in the C1 RE target scenario, when introduction of electricity storage should be
including the needed grid reinforcements, as investigated and addressed, thus laying out
computed in the PSS/E model. In total, the necessary the favorable market conditions.
investment in grid capacity in 2030 amounts to
approximately 30% of the total system investment36.
Battery storage represents a robust solution for
power system balancing of variable renewable
7.3 Policy Outlook and Recommendations energy in the long term, considering both the
Increasing power demand and increasing share of projected trend in cost reduction for battery
wind and solar point out a central challenge for technology and the expected increase in solar power
Vietnam, i.e. ensuring a stable energy supply while installations, with around 0.5 MW battery capacity for
integrating fluctuating solar and wind power. The each installed MW of wind and solar in 2050. If battery
planning of the future power system in Vietnam prices do not decrease as expected, wind and
should ensure that the required technology and pumped hydro will have a higher share in the future,
market components are in place to secure a timely but PV and batteries are still the main RE building
balancing of the system. In particular, in addition to the blocks.
classic daily variations in the power demand, future
In this perspective, any market barriers to ensure
systems will have to cope with increased levels of
timely introduction of batteries as well as electricity
generation from variable RE sources.
storage technology in general should be investigated
and addressed, thus laying out the favorable market
A stepwise approach to integration of wind and conditions. For instance, the size and localization of
solar power is recommended: In the short term, batteries are important aspects to consider,
focus should be on expansion of transmission particularly in the context of reducing the pressure on
capacity. In the long term, storage is needed. the transmission grid. In this sense, package
technology solutions (PV + battery) could possibly
The development of the transmission grid will be become relevant. Furthermore, some considerations
required to integrate the increasing shares of VRE, as are due: lifecycle assessment of batteries should be
e.g. balancing over a larger geographic area brings undertaken to provide a more comprehensive picture
the benefit of achieving greater smoothing of the of their impact on the environment and resources,
variable power generation. Investments in grid especially in the production phase and at the end of
reinforcement and additional transmission lines their lifetime. Before investing in large scale storage
between regions should therefore be considered as facilities, important technical experience can be
part of the power planning, thereby allocating the gained by encouraging R&D activities.
required financial resources both at the national and
regional level. Moreover, timelines for grid
development projects are not to be underestimated,
as timely grid expansion would be needed for
ensuring cost-effective energy. Furthermore, the
issue of allocating land for new transmission line
36
Only approximate numbers since calculations only include endogenous investments.
68
Increasing the power plant flexibility through e.g. plant

Other means for balancing the system and upgrade, could also reduce the need for storage.
reducing the need for storage not analysed in Moreover, the potential effectiveness of demand
the EOR19, such as market-based trade with response can help system balancing, especially in the
neighboring countries and flexibility of thermal short term (i.e. in the scale of hours).
power plants, should be addressed.
In general, the development of adequate forecasting
Market-based trade with neighboring countries can systems is the key for integration of increasing shares
reduce the need for local storage. Market integration of VRE generation in the system. The implementation
options and the ensuing underlying conditions should of state-of-the-art, centralised forecasting systems
therefore be explored for Vietnam (e.g. the North gathering real-time data from VRE power plants, can
European NordPool or other regional power markets). support the effective scheduling of power plants and
Market integration also could bring about other other operational decisions.
benefits, including improved competition, security of
supply, sharing of reserves, reduced need for storage,
improved balancing in relation to hydro (wet/dry
years), wind and solar.
69
8
Climate Impact and Pollution
8. Climate Impact and Pollution

In 2014, the total GHG emissions in Vietnam GHG emissions, respectively. Table 9 reports the
amounted to 283.9 Mt CO2eq, with 60% contribution evolution for GHG emissions in Vietnam during the
from the energy sector. Agricultural and industrial period 1994-2014.
processes accounted for 31.6% and 13.6% of the total
Table 9: GHG emission inventories in Vietnam in the period 1994-2014 (Mt CO2e). Source: (MONRE, 2014).
Sector 1994 2000 2010 2014
Energy 25.6 52.8 141.2 171.6

Industrial processes 3.8 10 21.2 38.6
Agricultural production activities 52.5 65.1 88.4 89.8
LULUCF 19.4 15.1 -19.2 -37.5

Waste 2.6 7.9 15.4 21.5
Total 104 151 247 284
Energy consumption in recent years has increased 2014), with one third associated to electricity
quickly to meet socio-economic developments. generation in 2014 (Figure 31). High energy demand
Consequently, GHG emissions from energy uses, growth and increased reliance on imported coal
processes and extraction have increased from 141.2 creates challenges for the GHG emission abatement
Mt CO2eq in 2010 to 171.6 Mt CO2eq in 2014 (MONRE, in Vietnam in the years to come.
Oil and gas

Coal extraction extraction
1% 11%
Non energy
0%
Energy industry
Other sectors 32%
9%
Transport
18%
Industry and
construction
29%
Figure 31: GHG emission by energy sector in 2014
72
Climate impact and pollution
Air pollution in the larger cities of Vietnam today In 2015, Vietnam successfully submitted its Intended
poses significant health risks. Data from the WHO Nationally Determined Contribution (INDC or NDC1) to
state that more than 60,000 deaths in Vietnam are the Secretariat of UNFCCC. The Vietnam’s NDC1 is
linked to air pollution (WHO, 2018). In 2016, the mean implemented at the national level in relevant sectors,
values of fine particle concentration PM2.5, which is including energy, agriculture, Land Use, Land Use
considered one of the most dangerous forms of Change and Forestry (LULUCF) and waste sector.
pollution, were almost five times higher in Hanoi than Currently, the NDC target is being reviewed and
the values recommended by WHO. The close link updated in Vietnam by line ministries (MONRE, MOIT,
between energy consumption and air pollution makes MOT, etc.) for the next round of submission to
this an area of high relevance for energy system UNFCCC in 2020.
planning.
The following contains some important policies on
Climate and pollution policy and targets pollution:
As projected by MONRE, GHG emissions from the Strategy for using clean technology in the period up
energy sector will increase to 320 Mt CO2eq in 2020 to 2020, with a vision to 203037.
and 643 Mt CO2eq in 2030 (GIZ, 2018b). Vietnam has
National Strategy for environmental protection up
issued several targets for reducing GHG emissions,
to 2020, with a vision to 203038: The 2020
as follows:
objective is to limit the increase in environmental
Vietnam Green Growth Strategy (VGGS): 10-20% by pollution and to reverse the increasing trend in
2020 and 20-30% by 2030 as compared to 2030.
business-as-usual development;
8.2 Climate Impact and Pollution Outlook
Intended Nationally Determined Contributions
(INDCs): Submitted to the Secretariat of the United What is the impact of the future energy system on
Nations Framework Convention on Climate Change GHG emissions?
(UNFCCC), and Vietnam's statement at the COP21
conference in Paris: Vietnam will reduce 8% of In the C1 RE target scenario, CO2 emissions from the
greenhouse gas emissions compared to the energy sector are increasing quickly at 7.4% p.a. in
baseline development scenario in 2030. Vietnam 2020-2030 and 4.4% p.a. in the whole period of
can reduce its GHG emissions further by 25%, 2020-2050. Power generation is the main contributor
pending international support; for the increased CO2 emissions followed by industrial
and transport sectors. Figure 32 reports the trends for
Renewable Energy Development Strategy (REDS): CO2 emissions from the energy sector across the
25% (for the energy sector) by 2030, and 45% by analysed scenarios.
2050 as compared to business-as-usual
development.
37
Decision No. 2612/QD-TTg dated December 30, 2013, approved by the Prime Minister.
38
Decision No. 1216/QD-TTg dated September 5, 2012, approved by the Prime Minister.
73
1,200
282 300
300
1,000 285 255 259
Billion USD (2015)

250
800 196 199 205

181 184 200
Mt CO2
600
150
118 119 121 116 116
400 100
200 50
46 46 46 47 47
0 0
C0-Unrestricted
C1-RE target
C2-No new coal
C3-EE
C4-Combination
C0-Unrestricted
C1-RE target
C2-No new coal
C3-EE
C4-Combination
C0-Unrestricted
C1-RE target
C2-No new coal
C3-EE
C4-Combination
C0-Unrestricted
C1-RE target
C2-No new coal
C3-EE
C4-Combination
2020 2030 2040 2050
Agriculture Industry Residential Transport

Commercial Power Sector Supply Total system cost
Figure 32: Trends for CO2 emissions (left axis) by sector and total system cost (right axis) in all five scenarios
In the EOR19, coal use contributes to 65%-75% of total In the C3 Energy efficiency scenario, EE measures
CO2 emissions from the whole energy system in can reduce the CO2 emission growth rate in
different scenarios. CO2 emissions in the C0 2020-2050 from 4.4% p.a. in C1 RE target scenario to
Unrestricted scenario are similar to the C1 RE targets 3.6% p.a. CO2 emission reductions are mainly
scenario in 2020 and 2030, while they are 8% higher obtained in the power sector (switching from coal to
in 2040 and 2050. This shows that the REDS has no RE and natural gas), industry and transport sector
impact on the least-cost CO2 emissions in the short (when EE measures are successfully implemented).
and medium term, because RE affordability would The combined effect of EE, RE and LNG (C4
have improved beyond the targets of the strategy. Combination scenario) to reduce coal and oil
After 2030 the strategy targets do result in a consumption can in turn reduce the total CO2
moderate CO2 emission reduction. emissions by 19% in 2030 and 39% in 2050. The
reduction takes place primarily in the power sector
Going away from new coal investments (from C1 RE
(Figure 33).
target scenario to C2 No new coal scenario) leads to
an increased consumption of LNG. Along with
increased RE share, this reduces CO2 emissions by
10% in 2030, especially caused by a large reduction
(53 MtCO2) in the power sector. At the same time, the
total system cost increases by approximately 1 billion
USD, caused by the substitution of coal to LNG. In
2050, CO2 emissions are reduced by 23% at an
increased system cost of 5 billion USD.
74
50 C2 vs. C1 C3 vs. C1 C4 vs. C1

2030 2040 2050 2030 2040 2050 2030 2040 2050
0
-50
-10%
-100
-19%
-16%
-150 -17%
Mt CO2
-20%
-200 -23%
-25%
-250
-31%
-300
-350
-39%
-400
Agriculture Commercial Industry Power Sector

Residential Supply Transport Percentage change
Figure 33: CO2 emission reduction by sector in C2, C3 and C4 scenarios with respect to the C1 RE target scenario. C2
vs. C1 (left) - C3 vs. C1 (mid) - C4 vs. C1 (right)
When comparing the change in the total system cost simultaneous cost and CO2 savings. In 2030, the
across scenarios, the C2 No new coal scenario is the system costs in C3 and C4 are the same, while the
only scenario that results in a cost increase, CO2 savings in C4 are 17% higher than in C3. In 2050,
compared to the C1 RE target scenario. Both the C3 the cost savings in C3 are higher than C4, while the
Energy efficiency scenario and the C4 Combination CO2 savings in C4 exceed those in C3 by 133 Mt. This
scenario have lower system costs compared to C1, demonstrates that the most cost-effective reduction
because of the economic benefits from EE. At the of CO2 emissions requires a combination of supply
same time, these scenarios also achieve CO2 side and demand side interventions.
reductions, which indicates the possibility of
ΔCosts (Billion USD)
0
-40.0 -30.0 -20.0 -10.0 0.0 10.0 20.0
-50
2030 C2 Total
-100
Δ Emissions (Mt CO2)
2030 C3 Total
-150 2030 C4 Total
-200 2050 C2 Total
-250 2050 C3 Total
-300 2050 C4 Total
-350
-400
Figure 34: Change in total system costs (horizontal axis) and total CO2 emissions (vertical axis) compared to C1 RE
Target scenario.
75
In the draft updated NDC-BAU scenario by MONRE NDC-BAU scenario (the national unconditional NDC
(GIZ, 2018b), the total GHG emission from the energy target is 8% reduction in 2030), see Table 10. The
sector equals 643 MtCO2eq in 2030. The NDC-BAU is remaining scenarios (C2, C3 and C4) all have well
the baseline to which the unconditional and higher reduction than 25% (the national conditional
conditional NDC’s are compared. The CO2 emission NDC-target is of 25%), with the reduction of 27%, 32%
reduction in the energy sector in C1 RE target and 34%, respectively.
scenario reaches 19% in 2030, compared39 to the
Table 10: CO2 emissions across the scenarios in comparison with NDC-BAU and mitigation scenarios
Scenario Emissions in 2030 (Mt) Reduction compared Percentage reduction

to NDC-BAU (Mt) compared to NDC-BAU (%)
C1-RE target 520 123 19%
C2-No new coal 468 175 27%
C3-EE 438 205 32%
C4-Combination 424 219 34%

NDC-BAU 643 0 0%
NDC-Unconditional 8% 592 51 8%
NDC-Conditional 25% 482 161 25%
What is the impact of the future energy system on

air pollution and health?
In addition to the climate impacts of GHG emissions, Figure 35 illustrates the cost of air pollution across all
the combustion of fossil fuels also causes local air scenarios for the power sector only, excluding fuel
pollution and damage to human health. The consumption in industry, residential and commercial
combustion of coal, gas and oil releases SO2, NOX sectors. In 2030, all scenarios result in an estimated
and PM2.5 particles, which can cause illness and socio-economic cost of pollution in the range 7-9
premature deaths. These negative health effects billion USD/year, corresponding to approximately 2%
impose an economic loss to society and can be of GDP. In the scenarios without coal limitations, the
regarded as economic externalities. In the EOR19, the pollution costs increase towards 2050 due to an
externalities are not part of the least-cost optimization expansion of coal power and because the economic
but have been post-calculated40, using fuel loss to society per unit emission increases when GDP
consumption values from the model output. The per capita is growing. In the scenarios with coal
methodology for calculating externalities rests on limitations (C2 No new coal and C4 Combination
simplifications, and values should only be interpreted scenarios), the pollution costs are low compared to C1
as indicative numbers. RE target scenario, especially after 2030 because
less coal is being consumed.
39
The EOR19 compares CO2eq reduction targets with pure CO2 emissions reductions, which is a simplification. Since the contribution from non-CO2 GHG
is considered small relative to CO2, it is assumed not to have any important influence on the final conclusions.
40
The methodology for estimating the externalities is based on the IMF publication Getting Energy Prices Right: From Principle to Practice (IMF, 2014).
Here, the Vietnamese externality costs are estimated as follows: for natural gas 2027 USD/t (NOX), 3274 USD/t (SO2) and 3988 USD/t (PM2.5) and for coal
4060 USD/t (NOX), 5823 USD/t (SO2) and 7243 USD/t (PM2.5) (all prices are 2010 values). These costs are based on the value of statistical life/mortality risk
(denoted V) which is assumed to vary across economies following the relationship V1 = V2.(I1/I2)0.8, where I denotes the GDP pr. capita at PPP in two different
economies 1 and 2. The formula is also used to extrapolate externality cost from 2010 to 2020, 2030, 2040 and 2050 by using future GDP (PPP) growth
from The Long View: How will the global economic order change by 2050? (PWC, 2017) and population forecast towards 2050 according to the GSO’s
population projections and GDP according to the revised PDP7. Specific geographical population density variations for Vietnam have not been taken into
account.
76
Assuming no increase in the level of flue gas cleaning, In the medium term (2030), the limitation on coal
in the C1 RE target scenario, the cost of air pollution power and increased EE implementation has the
from the power sector reaches 23 billion USD/year in largest impact on reducing pollution costs. In the
2050 (2.2% of GDP). Coal is by far the most polluting longer term (2040 and 2050), the limitation on coal
fuel and releases a considerably larger amount of power is the single most important measure to reduce
polluting particles than natural gas. Even though pollution. In the C2 No new coal scenario, the
natural gas constitutes 15% of total energy consumption of LNG, which is less polluting,
consumption from thermal power plants in 2050 (C1 substitutes coal to some extent. This reduces the cost
RE target scenario), gas only accounts for 0.4% of total of pollution from the power sector by 15 billion
externality costs of the power sector. USD/year in 2050, compared to the C1 RE target
scenario. If full EE implementation is added, cost
savings increase to 16 billion USD/year.
30 3.2% 3.5%
25 2.8% 3.0%
2.7%
Billion USD (2015)
2.2% 2.5%
20 2.1%2.2% 2.1%
1.8% 2.0%
15 1.7% 1.7%
1.5% 1.5%
1.4% 1.5%
1.1% 1.1% 1.1% 1.1% 1.1%
10
0.8% 1.0%
0.7%
5 0.5%
0 0.0%
C0-Unrestricted
C1-RE target
C2-No new coal
C3-EE
C4-Combination
C0-Unrestricted
C1-RE target
C2-No new coal
C3-EE
C4-Combination
C0-Unrestricted
C1-RE target
C2-No new coal
C3-EE
C4-Combination
C0-Unrestricted
C1-RE target
C2-No new coal
C3-EE
C4-Combination
2020 2030 2040 2050
SO2 NOX PM % of GDP
Figure 35: Cost of pollution by type in all five scenarios for power sector only
Externality costs are often not considered in indicates that the improved health effects from limiting
economic evaluations of future energy planning. The coal consumption largely outweigh the increased cost
above numbers show that the society could save 15 from alternative power production, pointing to the fact
billion USD/year in 2050 in pollution costs if no new that coal power is not the cheapest technology if
coal power plants are built after 2025. This number health effects are taken into account. As mentioned,
should be compared to the increased power system externality costs are not part of the least-cost
costs related to substitution of coal towards natural modelling, and inclusion of externality cost would
gas and other power sources, which is estimated to have made coal power less attractive across all
be app. 5 billion USD/year (Table 3). In summary, this scenarios.
77

To date, 185 countries - including Vietnam - have RE targets, energy system efficiency, and emission
ratified the Paris Agreement, which seeks to limit the targets. Specifically, this would entail that the
global temperature increase to 1.5 degrees compared upcoming PDP8 and Energy Master Plan should be
to pre-industrial levels. On a global scale, the aligned with government targets on GHG emissions,
successful implementation of the Paris Agreement e.g. in the NDC or in line with the Paris agreement.
depends crucially on large CO2 emission reductions
in emerging economies like Vietnam. Locally, air It is recommended to tighten air pollution
pollution especially from coal is growing, which both control measures in power generation and
imposes large costs on the society and spurs public industry and to include health costs of
resistance towards coal power plants. Both CO2 pollution in energy system modelling and
emissions and other pollutants are expected to grow planning, including PDP8.
quickly in the future, but the combined effect of EE, RE
and limitation of coal use could reduce both climate Coal use is on the rise and contributes from 65% to
impact and local air pollution. 75% of total CO2 emissions from the whole energy
system in different scenarios and across years in the
It is recommended to introduce incentives to EOR19. At the same time, awareness of the negative
reduce CO2 emissions and other air pollutants health effects from local pollution has led to public
including taxes, emission trading schemes, or resistance41 towards further expansion of coal power
other forms of market systems. plants. It is important that energy planners take such
signals into account.
CO2 emissions from the energy sector are increasing
The health costs associated with local air pollution
quickly at 7% p.a. in the period 2020-2030 and 4%
from fossil fuels are large, and negative health effects
p.a. in the whole period 2020-2050 in the C1 RE
need to be addressed. This can be done by
target scenario. To counteract this development, the
tightening air pollution control measures in both
combined effect of EE, RE and limitation on coal use
central and decentral installations (power generation
could reduce CO2 emissions by 39% in 2050.
and industry) and by an early stop for construction of
This would require a system-wide transformation of new coal power plants, which would greatly reduce
the energy system with changes across the power the use of fossil fuels.
and demand sectors. Possible policy measures Further, it is recommended to use a wider approach to
targeting specific sectors have been highlighted in economic evaluation of energy planning, where not
the preceding chapters, but general economic only capital and operational costs are included, but
incentives to reduce CO2 emissions should also be also health cost caused by air pollution. Inclusion of
considered. As a measure across all sectors of the such measures, e.g. in the PDP8, would highlight the
economy, the gradual introduction of incentives to real cost of energy, which is especially relevant for
reduce CO2 emissions including e.g. taxes, emission coal power.
trading schemes (ETS) targeting CO2 or other forms of
markets systems, would support RE investments and
It is recommended to adjust the 2030 CO2
promote a phase-out of carbon-intensive fossil
target to be more aligned with restrictions on
generation plants.
coal, realization of cost-efficient EE measures
and expansion of RE technologies.
Harmonization of all government RE targets
and emission targets for future planning.
Solely by meeting the power sector RE targets of the
REDS, CO2 emissions in the energy sector will be
Energy sector regulation is complex and implies a reduced by 19% in 2030 compared to the NDC-BAU
large array of system interdependencies ranging over scenario (the national unconditional NDC target is
several ministries. It is important to consider the 8%). When no further adding of new coal fired power
harmonization and alignment of policies across plants after 2025 and a 50% penetration of
sectors to ensure an efficient effort in emission cost-effective EE technologies (C4 Combination
reduction. This includes a continuous comparison of scenario), total CO2 emission reductions will be more
41
E.g. see (MekongEye, 2019).
78
than 30% in 2030 (the national conditional NDC target In a global perspective and in order to pursue the
is 25%). This shows the large potential for enhancing 1.5-degree target set out in the Paris Agreement,
the CO2 targets, which can also bring direct global emissions must reach net zero around 2050.
advantages on reduced fuel import dependence, less This requires a huge effort form all countries,
air pollution, and even lower total energy system including emerging economies like Vietnam. The
costs. development pathways outlined in the EOR19, all
show a trend of increasing CO2 emissions towards
Furthermore, pursuing ambitious CO2 mitigation
2050. A first step to reverse this trend is to strengthen
policies could also have wide cross-sectoral
the CO2 target in the next round of NDC submission,
co-benefits. A report from the UNDP summing up the
which is due in 2020. Further studies and continued
projected macro-economic effects of different GHG
updates of energy models, technology and
mitigation policies in Vietnam shows that both GDP
consumption data should guide Vietnam in this
growth and employment growth are positively
process of continuing its sustainable transition and
correlated with enhanced mitigation (UNDP, 2018).
delivering its contribution in achieving the long-term
global climate targets.
79
Annex: Modelling framework and key

assumptions
A.1. Energy modelling framework and key
assumptions
This Annex provides further background on the C2 No new coal: Additional to the C1 RE target
modelling framework adopted for the EOR19, with an scenario, this scenario implements a restriction
overview of the model characteristics, scope and limiting investments in new coal power plants
interlinkages. Moreover, the key assumptions for the starting from 2025, albeit domestic coal capacities
modelling are herein described, while the reader is are allowed to be maintained.
invited to refer to the EOR background reports42 for
C3 Energy efficiency: Additional to the C1 RE target
more comprehensive information on data inputs,
scenario, this scenario allows for investments in
methodology and detailed results on the complete
energy efficient technologies, with a 50%
set of analysed scenarios. Collection, harmonization
penetration rate of energy efficient demand
and documentation of input data to Balmorel and
technologies being a part of the least-cost solution
TIMES models has been a key focus in the
in 2030 and 100% in 205043.
development of the EOR19. A Vietnamese technology
catalogue was developed (EREA & DEA, 2019f) as C4 Combination: This scenario combines the three
well as a Vietnamese fuel price projection report previous scenarios, i.e. the REDS target, the coal
(EREA & DEA, 2019e). A detailed overview of input restriction from 2025 and the high uptake of energy
data can be found in the data reports (EREA & DEA, efficient technologies.
2019b) and (EREA & DEA, 2019c) for Balmorel and
TIMES respectively. The scenarios presented in this report have been
computed in the interlinked set-up comprising three
Energy system modelling constitutes the basis for the energy models (Figure 36), in order of aggregation
conclusions and recommendations detailed in this and coverage of the system:
report. Five alternative core scenarios are designed
to explore different futures for the Vietnamese energy The TIMES model (Section A.2), covering the whole
system. As such, the scenarios are not intended as energy system of Vietnam, including both supply
the “recommended” energy system pathways, but and demand side;
rather meant as indicative “what-if” scenarios from The Balmorel model (Section A.3), covering a
which insights have been drawn on the relevant detailed representation of the power sector of
themes for the Vietnamese context. The five Vietnam;
scenarios illustrate different development pathways
for the Vietnamese energy system: The PSS/E model (Section A.4), representing the
detailed power transmission grid of Vietnam.
C0 Unrestricted: This theoretical scenario
simulates a future with no achievement of RE
targets, or restrictions on coal-fired generation and
without penetration of energy efficient demand
technologies.
C1 RE target: This scenario includes the RE target
for the power sector, as set out in the current REDS
and without penetration of energy efficient demand
technologies.
42
These include the Technical Report (EREA & DEA, 2019a), the Balmorel Data Report (EREA & DEA, 2019b), the TIMES Data Report (EREA & DEA, 2019c),
the Fuel Price Projection Report (EREA & DEA, 2019e), the Technology Catalogue (EREA & DEA, 2019f), and PSS/E report: Detailed grid modelling of the
Vietnamese power system (EREA & DEA, 2019d).
43
For the transport sector, the mentioned penetration rates are not implemented; instead, the measures included in the C3 Energy Efficiency scenario are
based on input from Ministry of Transport (more information in the Annex).
80
Annex: Modelling framework and key assumptions
Electricity demand Gen. and Trans. cap

Biomass allocation Dispatch snapshots
TIMES Balmorel PSS/E
Transmission losses
Transmission flows
Trans. capacity
Figure 36. Energy modelling framework for the EOR19
Both TIMES and Balmorel perform a least-cost TIMES is a multi-sectoral optimization model
optimization under defined assumptions and generator, herein applied to study long-term energy
constraints. Interlinking these two models improves planning for Vietnam. The TIMES-Vietnam model has
the quality and reliability of model results, by been developed under the World Bank funded
harnessing the different model strengths, sectoral project “Getting Vietnam on a Low-Carbon Energy
coverage, and temporal and geographical resolution. Path to Achieve NDC Target” (DWG, 2018), and it has
Moreover, the interaction between Balmorel and been further adapted to support the scenario analysis
PSS/E ensures improved quality of the representation of the EOR19.
of the transmission grid in Balmorel, thus providing
The TIMES-Vietnam model covers all parts of the
quality assurance of the scenario results.
energy system, from primary energy resources to
The results reported in the EOR19 (i.e. plant capacity, power plants and other fuel processing plants,
energy consumption, RE shares, system costs and ultimately to various demand devices in all five
CO2 emissions) are computed from the TIMES and demand sectors.
Balmorel models: results for the demand sectors are Primary energy, in the form of domestic and imported
derived from TIMES, while power-specific results are fossil fuels, and a variety of domestic renewable
computed from Balmorel. Therefore, the results energy sources are available to meet the energy
referring to the whole energy system are extracted demands of the country. Power plants and fuel
and harmonized across the two models. processing plants convert the primary energy sources
into final energy carriers, such as electricity, oil
A.2. TIMES – Energy system model products, and natural gas, which are used in the
The TIMES (The Integrated MARKAL-EFOM System) demand sectors. There are both existing and
framework is a widely used least-cost optimization potential future plants grouped by fuel and type,
methodology employed to inform energy policy and which are characterized by their existing capacity or
strategic planning. It was developed and is investment cost, operating costs, efficiency, and other
maintained, advanced and promoted by the performance parameters. The final energy carriers
IEA-ETSAP consortium, the longest running are consumed in demand-specific end-use devices
Implementing Agreement of the IEA (International that are used to satisfy the demands for energy
Energy Agency). Currently, 19 countries, the EU, and services in that sector.
two private sector sponsors are participating to
ensure the continual advancement of the
methodology. TIMES documentation can be found at
iea-etsap.org.
81
The model contains five demand sectors: Agriculture, Technical and economic data for the power
Commercial, Industry, Residential and Transportation. generation technologies are based on (EREA & DEA,
Each demand sector is characterized by a specific set 2019f) as well as some other Vietnamese and
of end-use devices that deliver end-use services international sources. The technology assumptions
(such as lighting, cooling, cooking, industrial process develop from 2020 to 2050, which means that the
heat, motor drive, passenger and freight travel). costs and efficiencies are assumed to develop
These existing and potential new end-use devices depending on the learning curves of the specific
are characterized by their existing capacity or technologies.
investment cost, operating costs, efficiency and other
performance parameters. Transport demands include Demand sectors
road passenger, road freight, railway passenger, Agriculture
railway freight, airway passenger, airway freight and
waterway freight. Transport demands are provided by The Agriculture and Fishing sector accounts for 3.3%
different transport devices; their capacities and of the base year final energy demand and consists of
activities are exogenous in the current TIMES- four end-use services. Diesel, gasoline and electricity
Vietnam model and derived from the Ministry of are the key energy carriers supplied to the sector, and
Transport for different scenarios. These devices are both biodiesel and bio gasoline can be made
characterized with investment and operating costs available to the sector as blended fuels with diesel
which allow the model calculate costs for the and gasoline for possible use in the future. Data for
transport sector. The demands for energy services the determination of the service demand shares and
are determined by projecting the base year energy existing technology characteristics were primarily
demands, which are derived from the energy balance derived from Calculator 2050 Vietnam44. Agricultural
2014 (IE, 2017) as part of the calibration process, in demand devices are classified into existing (base
accordance with sector-specific drivers, such as GDP year), standard and improved types, each
growth, GDP per capita growth, industrial production characterized by different costs and efficiencies.
projections, and space cooling growth expectations. Industrial
The industrial sector accounts for 49% of the base
Power sector
year final energy demand, and is comprised of twelve
In the power sector, primary energy sources are industrial subsectors. The industrial sector cannot be
consumed by various power generation technology modelled at the process level, due to the wide
types to produce grid electricity, which primarily goes variations and detail in the industrial process lines and
to the demand sectors. Imports and exports to/from the lack of data resulting from concerns over
neighbouring countries are also modelled. The power proprietary information. Instead, each subsector is
sector is organized into existing power plants, as served by four main energy services: process heat,
specified in the Energy Balance and EVN data, and machine drive, facilities/other, and feedstocks
new power plant options that are available to meet needed to produce the output products.
future needs.
The industrial sector is characterized by a wide range
Several types of power plant technologies are of fuel and energy types that can provide the four
modelled, including four types of hydro plants – component energy services. Biomass fuels include
extra-large, large, medium and small; several types of bagasse, coffee husk, firewood, straw, and other
coal, natural gas, diesel and biomass-fired power organic residues. Biogas is also available from several
plants, along with central PV and distributed rooftop sources. Auto-generation and co-generation are both
PV systems for both residential and commercial an existing and future option for different subsectors.
buildings, and six types of wind power plants based As with the other demand sectors, biodiesel and bio
on wind class and distance from transmission grid. gasoline are available through mixing these fuels with
The three modelled regions (i.e. North, Central and conventional diesel and gasoline in the future.
South) are interlinked by transmission lines in Industrial demand devices are classified into existing
TIMES-Vietnam. There are two bi-directional links for (base year), standard and improved types, each
electricity transmission between regions: (i) North to characterized by different costs and efficiencies.
Central, (ii) Central to North, (iii) Central to South and
(iv) South to Central.
44
http://vietnamcalculator2050.atmt.gov.vn
82
Commercial Transport
The commercial sector accounts for 2.8% of the base As the Ministry of Transport is already assessing
year final energy demand, and consists of eight mitigation measures for transport (GIZ, 2018a), mode
service demands. TIMES-Vietnam contains a large and fuel shares are exogenous inputs to
suite of new technology options for each service TIMES-Vietnam, based on the scenarios developed
demand that represent standard, improved, better, through the EFFECT model at MOT. As a result, the
and advanced options, based on authors’ desktop transport sector in the TIMES-Vietnam model
study of local appliances. There is a variety of energy replicates the results from the EFFECT model, which
carriers used in the sector, but electricity is by far the includes several mitigation measures. This enables
most dominant one. Biodiesel and bio gasoline are TIMES-Vietnam to reflect the integrated impacts of the
also available through mixing these fuels with transport sector’s measures on the other portions of
conventional diesel and gasoline. Distributed PV the overall energy system – specifically, their impacts
systems provide electricity directly to the sector (for on upstream supply requirements, electricity
internal consumption) as well as feeding any excess generation, and fuel competition between various
electricity to the grid. Finally, building efficiency retrofit sectors, as a simulation within the overall optimization.
options are available to reduce building energy
demands, primarily for cooling, lighting and water Major demand drivers
heating.
The primary demand drivers include GDP growth,
Residential population growth, GDP per capita growth, and the
The residential sector accounts for 21% of the base number of persons per household. There are
year final energy demand and consists of seven secondary drivers for each demand sector, such as
end-use service demands. Although there is a variety the elasticity of energy use to GDP growth, industrial
of energy carriers used in this sector, electricity is by production projections, and market penetration rates
far most dominant, followed by important for space cooling, refrigeration and electric
contributions from firewood and LPG. Owing to the appliances. Table 11 reports the main drivers used to
inherent difference between urban and rural energy project the future demand for energy services that
use patterns, as well as fuel and technology options, must be met by TIMES-Vietnam in each period.
the residential sector is split into urban and rural
subsectors. As for the commercial sector, distributed
PV systems provide electricity directly to the sector
(for internal consumption) as well as feeding any
excess electricity to the grid. Finally, building
efficiency retrofit options are available to reduce
building energy demands, primarily for cooling and
water heating. As for the other sectors, residential
demand devices are classified into existing (base
year), standard, improved and better types, each
characterized by different costs and efficiencies.
Table 11: Primary Demand Drivers
Demand Drivers 2014 2016 2020 2025 2030 2035 2040 2045 2050
GDP (US$ billion) 126.6 145.0 190.1 266.6 373.9 524.4 662.9 798.8 917.0
Population (million persons) 90.7 92.8 96.6 100.9 104.4 107.3 109.7 111.5 112.7
Number of persons per Household 3.80 3.76 3.69 3.60 3.51 3.42 3.34 3.25 3.17
GDP growth 7.00% 7.00% 7.00% 7.00% 7.00% 4.80% 3.80% 2.80%
Population growth 1.11% 1.03% 0.87% 0.69% 0.55% 0.44% 0.33% 0.22%
Source: GDP in revised PDP7 (IE, 2015) and population variables from GSO’s population projections (GSO, 2016).
83
Resources
Resource potentials are modelled for each of the fuel prices are reported in the EOR background report
three regions with supply capability for every year. (EREA & DEA, 2019e). Electricity import prices and
Supply potentials are based on several approved amounts are referred from (EA, 2019).
sectoral development plans. Supply capabilities are
then extrapolated for the future years until 2050. Hydropower is present in all three regions. Large
hydropower (>30MW) almost reaches the maximum
Domestic coal deposits are located in the North, potential by 2020. Maximum capacity potential for
crude oil fields are mainly located in the South with small hydro is 4.088 GW in the North, 2.316 GW in the
some fields abroad, and natural gas fields are mainly Central, and 0.35 GW in the South. Biomass types
located in the South with one major future field in the modelled in TIMES-Vietnam include wood, bagasse,
Central region. Vietnam is also importing coal, oil rice husk, straw and others (IE, 2016). Biomass
products, and electricity from abroad. In future, LNG potentials by type and per region are taken from (IE,
could be imported for power generation and other 2016), while biomass prices are referred from (EREA &
uses. In addition, Vietnam is exporting coal, crude oil, DEA, 2019e).
oil products, and electricity to other countries. Import
Table 12: Import and export fuel prices
Supply source Fuel Fuel prices (USD 2015/GJ)

Year 2020 2030 2050
Coal 3.61 3.74 3.90
Crude Oil 10.20 11.50 10.40
LPG 33.32 34.32 30.74
Gasoline 23.27 28.54 39.03
Import Jet Fuel 17.71 23.72 33.54
Kerosene 17.71 23.72 33.54
Diesel 23.38 29.68 40.07
Fuel Oil 11.22 17.06 19.91
Natural Gas 10.48 11.82 11.91
Coal 3.25 3.63 4.30
Crude Oil 9.69 10.93 9.88
Export Gasoline 22.11 27.11 37.08

Jet Fuel 16.83 22.53 31.86
Diesel 22.21 28.20 38.07
Fuel Oil 10.66 16.21 18.91
Table 13: Electricity import prices and bounds
Region Fuel price (USD 2015/GJ) Supply potential (PJ)

2020 2030 2050 2020 2030 2050
China - North 18.6 19.4 21.1 8.8 37.8 37.8
Laos-Central-North 18.7 19.6 21.3 0.0 16.4 16.4
Laos-Centre-Central 18.9 19.8 21.5 3.8 27.4 27.4
Laos-Central-Highland 19.1 20.0 21.7 7.0 24.6 24.6
84
Table 14: Biomass and waste potentials and prices
Region Supply source/ Fuel Fuel price (USD 2015/GJ) Supply potential (PJ)
2020 2030 2050 2020 2030 2050
Rice Husk 1.9 2.3 2.3 25.3 25.6 30.7
Municipal Waste 0.0 0.0 0.0 21.2 16.0 29.7
Landfill Gas 0.3 0.3 0.3 0.0 0.7 3.9
Primary Solid Biofuels 1.9 2.4 2.4 118.1 144.1 172.9
North Bagasse 0.2 0.2 0.2 5.6 6.1 9.2
Biogasoline 24.6 27.4 35.8 4.5 15.5 52.7
Straw 0.6 0.7 0.7 83.3 84.4 101.3
Biodiesel 24.7 28.5 36.0 13.7 46.7 157.5
Biogas 0.6 0.7 0.7 4.7 23.4
Other Biomass 0.4 0.5 0.5 100.6 100.6 120.8
Rice Husk 1.9 2.3 2.3 19.2 19.4 23.3
Municipal Waste 0.0 0.0 0.0 10.9 8.2 15.3
Landfill Gas 0.3 0.3 0.3 0.0 0.4 2.0
Central Bagasse 0.2 0.2 0.2 21.7 23.6 28.3
Biogasoline 31.2 34.8 45.3 4.5 15.5 52.7
Straw 0.6 0.7 0.7 63.2 64.0 76.8
Biodiesel 31.3 36.2 45.6 13.7 46.7 157.5
Biogas 0.6 0.7 0.7 4.7 23.4
Other Biomass 0.4 0.5 0.5 85.2 101.5 121.8
Rice Husk 1.7 2.0 2.0 55.0 55.7 66.9
Municipal Waste 0.0 0.0 0.0 32.2 24.2 45.0
Landfill Gas 0.3 0.3 0.3 0.0 1.1 5.9
South Bagasse 0.2 0.2 0.2 24.2 26.4 31.6
Biogasoline 31.2 34.8 45.3 4.5 15.5 52.7
Straw 0.6 0.7 0.7 181.3 183.6 220.3
Biodiesel 31.3 36.2 45.6 13.7 46.7 157.5
Biogas 0.6 0.7 0.7 4.7 23.4
Other biomass 0.4 0.5 0.5 62.9 73.9 88.6
A.3. Balmorel – Power system model

Balmorel is a detailed techno-economical partial In the investment mode, Balmorel is able to
equilibrium model suited for analyses of power simultaneously determine the optimal level of
systems. The model can perform both investment and investments, refurbishment and decommissioning of
dispatch optimisation, under a set of constraints. More electricity generation and storage technologies, as
information on Balmorel can be found on the Balmorel well as transmission capacity between predefined
websites (Ea Energy Analyses, 2018) (Hans Ravn, regions.
2016).
85
In dispatch optimisation mode, the model determines others, the development of electricity demand for the
the optimal utilisation of available generation and considered time horizon, technical and economic
transmission capacity. The level of detail for time and characteristics of all production units, fuel prices, grid
geography can be adjusted according to the scope of constraints, spatial and temporal availability of primary
the analysis, spanning from aggregated temporal renewable energy (Figure 37).
resolution to hourly modelling, as well as allowing for
a high level of geographical and technical detail. The model allows the definition of policies in the form
of constraints on the power system, including e.g. a
The mathematical principle behind the Balmorel target for renewable energy share or a reduction goal
model is based on least-cost optimization, i.e. finding for GHG emissions in a milestone year.
a solution for the dispatch and investments in the
electricity system at the lowest total power system
costs. To do so, Balmorel takes into account, among
Least-cost Least-cost
Assumptions
investment dispatch
Demand projections Generation

capacity Generation
Per plant
Generation capacities
Capacity Per time step
Technology Optimal use of water
Transmission capacities Year
Location
Simultaneous
Generation options (e.g.costs)
Transmission
Transmission options (e.g.costs) capacity Transmission
Per line
Capacity Per time step
Year
Policies Location
Figure 37: Concept of operation for the Balmorel model
The regional representation in Balmorel-Vietnam

Balmorel-Vietnam covers the power system of the In the EOR19, the regional representation of the
whole country, including generation plants, storage power system accounts for 6 power regions (Figure
technologies and transmission lines between regions. 38), as to ensure a robust analysis of existing and
The power demand is concentrated in the Northern future congestion occurrences in the inter-regional
and Southern ends of the country. The Southern load transmission system. The regional representation of
accounts for nearly 50% of the total load demand, the power system is therefore aimed at determining
while 40% is located in the North and around 10% in the optimal capacity of the transmission lines. The
the Central region. The revised PDP7 divides division of the power system into 6 power regions, i.e.
Vietnam's power system into three regions, i.e. North, North, North Central, Centre Central, Highlands, South
Central and South, linked by a 500kV transmission Central and South, is therefore based on the following
system. This zoning is based on the self-balancing considerations:
capacity between the demand for electricity and the
power supply in each region, as well as considering
the transmission capacity.
86
1. Scale of the power generation in the power region

and length of the transmission interconnectors to
neighbouring regions.
2. Role of the transmission interconnectors for the

reliability of the supply-demand balance in the North
power region.
2.4
3. Occurrence of congestion episodes on the
transmission link to other power regions.
4. Characteristics of the generation plants within the
North Central
power region and the resulting power load curve.
With reference to the points above, the distribution of
the renewable energy potential in Vietnam is uneven 4.9
Transmission capacity (GW)
and concentrated in the Southern part of the country,
mainly in the South Central, Central Highlands and 9 Centre Central
South West regions, where the transmission distance 6
to the main load centre is above 200km. Moreover, as 3
the potential for domestic coal would not be sufficient 0 4.4
to supply the coal-fired generation in the future, the Highland
Central region could constitute a convenient entrance 0.4
point for imported coal, both for coal receiving
terminals and coal-fired power plants based on
imported coal. At the same time, the Central region South Central
has a low power load and a long-distance 0.8
transmission interconnector. Finally, the major natural
gas fields in the South of Vietnam could be soon fully
exploited; thus, the optimal location for future LNG 4.6
terminals should be assessed with consideration of 8.5
the distance from future generation plants to load
centres.
Transmission lines are represented by the total South
capacity available between the six power
transmission regions. The available capacity is set as
the net transfer capacity, based on results from the
PSS/E model. The transmission losses were also Figure 38: Existing and committed interconnectors in
calculated for the seven lines, and calculated at a Vietnam, total capacity (GW) in 2020.
transmission line load of 80% for each line. In addition
to the transmission capacity for 2020 (Figure 38),
Balmorel can further invest in transmission capacity, if The generation investment module
this constitutes a least-cost solution.
The Balmorel-Vietnam model contains a technology
The soft-linking with PSS/E grid model also resulted in catalogue describing the complete set of new power
feedback on the location of power plants seen from a generation technologies available for future
transmission grid perspective rather than a investments, based on the Vietnamese Technology
geographical perspective. Following from the model Catalogue (EREA & DEA, 2019f). The technology
linking with PSS/E for the year 2020, several power assumptions develop from now to 2050, i.e. costs and
plants were re-allocated to the six transmission technical characteristics develop according to
regions based on this feedback. technology-specific learning curves. The investment
module allows to invest in a range of different
technologies including coal power, gas power
(combined cycle plants), biomass-based power
plants, wind power (both onshore and offshore), solar
PV and storage options, such as batteries and
pumped hydro projects.
87
The electricity demand

The electricity demand is the main output from the model’s transmission losses per flow on the
TIMES model and used in Balmorel as input for transmission lines. Starting from the more aggregated
different scenarios, by soft-linking the two tools. The demand from TIMES, the division of the national
power demand determined by TIMES includes demand over the 6 transmission regions is based on
transmission losses (assumed 2.5%), which are projections from PDP7.
subtracted when inputted into Balmorel, as the latter
1200
1000
800
TWh
600
400
200
0
2016
2018
2020
2022
2024
2026
2028
2030
2032
2034
2036
2038
2040
2042
2044
2046
2048
2050
North Centre Central South Central

North Central Highland South
Figure 39: Annual electricity demand per transmission region for the C1 RE Target scenario
Future fuel prices Energy potentials for power generation

The electricity demand is growing quickly, and a few Further details on the data sources and assumptions
years ago Vietnam went from being a net exporter of for energy potentials can be found in the Technical
fuel to a net importer. The country is therefore directly Report (EREA & DEA, 2019a) and Balmorel Data
exposed to international fuel prices, and projections Report (EREA & DEA, 2019b).
of future prices are an important input to the least-cost
analyses of the Vietnamese energy system. A study
on fuel prices and the methodology for projection has
been undertaken as part of the EOR19; the results of
which are detailed in a separate report (EREA & DEA,
2019e).
88
500
450
400
350
300
250
PJ
200
150
100
50
0
2020
2050
2026
2022
2028
2030
2040
2036
2046
2018
2024
2032
2042
2016
2038
2048
2034
2044
Coal grade 4b+5 Coal grade 6 Coal grade 7
Figure 40: Maximum domestic coal use (PJ)
350
300
250
200
PJ
150
100
50
0
2016
2018
2020
2050
2022
2026
2028
2030
2040
2032
2036
2024
2042
2046
2038
2048
2034
2044
South East South West CVX
Figure 41: Maximum domestic natural gas use in the South (East and West NG, PJ)
Restrictions on biomass-fired power generation In addition to the capacity constraints, the energy
capacity have been implemented based on an potential for bagasse, (all other) biomass and MSW
estimate of biomass resources that could be are implemented based on the results from TIMES
realistically used for power generation applications45. (Figure 42).
45
Prime Minister Decision No. 2068/2015/QD-TTg.
89
400
350
300
250
PJ
200
150
100
50
0
2020 2030 2040 2050
Bagasse Other biomass MSW
Figure 42: Resource limits on biomass and MSW fuel use implemented in the Balmorel model (PJ) for the C1 RE target
scenario – based on TIMES results
As Vietnam displays potential for offshore wind profile based on (Van Quang Doan et. Al, 2019). Other
power, the offshore wind areas close to Ninh Thuan areas for offshore wind, in addition to the Ninh Thuan
(South Central region) have been considered in the region, could be further investigated in future studies.
modelling and included as 6 areas, each with a The potential for onshore wind power, by region and
potential of 1000 MW and an individual wind speed wind speed, is reported in Figure 43.
80
70
60
50
GW
40
30
20
10
0
North North Central Centre Central Highland South Central South
Low Medium High
Figure 43: Resource limits for onshore wind generation capacity per region and wind speed class implemented in the
Balmorel model. Low: 4.5-5.5 m/s; Medium: 5.5-6 m/s; High: over 6 m/s. All turbines are at 80m height.
The Southern parts of Vietnam are endowed with the full potential would occupy 1.6% of the total land
attractive solar resources, e.g. with full-load hours area. For the Southern regions, this number is higher
above 1,600 hours. The solar potentials are based on (3.4% for the South and 3.7% for the Highlands and
the draft Vietnam Renewable Energy Development South Central). In the Northern regions, less than 0.5%
Plan (IE, 2018). A total potential of 380 GW divided in of land has potential for solar generation.
the six transmission regions is used (Figure 44). Using
90
160 1,665 1,688 1,800

1,632
140 1,600
1,306 1,400
120 1,233
1,160
1,200
100
1,000
Hours
GW
80
800
60
600
40
400
20 200
0 0
th
th
nd
l
l
u
tra
or
l
tra
ra
So
hl
N
en
nt
en
ig
Ce
_C
_C
H
_
th
th
re
u
or
nt
So
N
Ce
Potential Full load hours
Figure 44: Solar potential and full load hours per region implemented in Balmorel
Vietnam has a quite high potential of pumped hydro each power plant in each region and the loading of
storage with 8 investigated sites of total 8900 MW the transmission lines. The most critical dispatch
(EVN & JICA, 2004). The potential amounts to 4100 hours (e.g. highest residual demand or lowest wind
MW, 2400 MW and 2400 MW in the North, Central and solar generation) are simulated in PSS/E to verify
and the South respectively. Bac Ai PSPP in Ninh the grid operation (i.e. transmission lines capacity and
Thuan province is included in revised PDP7, with the load) modelled in Balmorel for the years 2020 and
capacity of 1200 MW and is expected to start 2030.
operation in 2023 – 2025. This pumped hydro project The critical snapshots considered for the simulation of
is characterized by its combination with the the load flow in PSS/E are the following:
downstream lake, the Tan My irrigation lake. This
combined electricity-irrigation project will have a Highest demand (HD): at 10:00-14:00 or 19:00-21:00 -
significant reduction in investment costs due to to check the capability of transmission lines in the
investment sharing with the agricultural sector. In the heaviest load condition.
Balmorel model, Bac Ai PSPP has been included as an Lowest demand (LD): the lowest load condition
investment option. However, the plant is not found (usually the first days of the lunar year - New Year
feasible in the core scenarios. holidays), with high voltage in the transmission grid.
Highest residual demand (HRD): at 19:00-21:00, with
A.4. PSS/E – Transmission grid model high load and zero output power from solar PV - to
check the possibility of supplying power from
PSS/E Methodology
traditional power plants.
Power System Simulator for Engineering (PSS/E) is a Lowest residual demand (LRD): maximum output
power system simulation software herein used to from wind and solar PV power - to check the grid
analyze the power development and planning in operation when dispatching of traditional sources is
Vietnam. The model includes several modules in lowest.
order to assess the system: (i) power flow of grid in
Highest flow (HF) and Lowest flow (LF): condition
static state; (ii) optimal power flow; (iii) study of
with high generation from one region and
symmetric and asymmetrical incidents; and (iv)
transmission to other regions over a large
simulation of the process of electromechanical
transmission distance / minimum level of transmission
transition and stable analysis of the system.
between regions - to check the responsiveness of
In the EOR19, the output of the optimization model transmission grid in two states, including level of
Balmorel is used as input to the grid modeling in transmission losses.
PSS/E. Balmorel optimizes the hourly output power of
91
Highest wind and solar (HWS) and Lowest wind and The output of PSS/E is therefore valuable for:
solar (LWS): highest and lowest wind and solar power
in the South-Central region – to check the impact of Checking the feasibility of the proposed generation
large shares of wind and solar power on the expansion scenario in Balmorel for grid operation
transmission grid. according to the approved planning.
For each dispatch snapshot provided by Balmorel, Checking the load level of the transmission lines for
PSS/E calculates the load levels and voltage some critical generation operation snapshots; and,
requirements of the main elements of the system, providing recommendations for upgrading and
such as transmission lines and substations. The expanding the interconnected transmission lines.
simulation grid (both demand and supply nodes) is Estimating the investment cost for the transmission
built on the basis of the grid represented in revised grid to meet the proposed generation expansion
PDP7, with updates on the newest and approved plans.
transmission works. First, the check is performed for
normal operation condition (N-0) and afterwards for
the N-1 contingency cases. The results are compared
to the Grid code standard (ERAV, 2016) to check the
responsive level of the grid represented in Balmorel.
For congested elements, especially interconnected
transmission lines, the result can suggest alternatives,
such as upgrades and expansions of the transmission
capacity.
Approved supplementation
planning wind project
Submitting for supplementation
planning wind project
Approved supplementation
planning solar project
Submitting for supplementation

planning solar project
Figure 45: Location of solar PV and wind power plants (2020)
92
Results from PSS/E

Two power system development scenarios with large In the RE 50% 2030 scenario, the strong development
shares of RE generation are used to evaluate the grid of solar generation in the South region increases the
operation in the Vietnamese power grid in 2030: needs for grid reinforcements. New solar generation
in the Highland region is mostly transmitted to the
C1 RE target scenario: annual RE share of 33% in
demand centre in the North region. The grid analysis
2030
results indicate that it could be worthwhile to invest in
RE 50% 2030 scenario: annual RE share of 50% in a large HVDC transmission line directly from the
2030 Highlands to the North, due to the mountainous area
between the two regions. Additional to the internal
Grid recommendations are made based on grid grid suggestions for the C1 RE target scenario,
simulations in the PSS/E model, where the generation reinforcement of the grid around Hanoi would be
dispatch of four critical hours (HRD, HF, HWS and LWS) needed.
are assessed to test the viability of the generation and
grid configuration found by the Balmorel least-cost Table 15 shows the recommended grid reinforcements
optimization. For each of these snapshots, load levels based on the PSS/E analyses additional to the revised
and voltage requirements are tested and compared PDP7 transmission plan. It can be seen that the RE
to the Vietnamese grid code (ERAV, 2016). Both 50% 2030 scenario needs more reinforcements
normal N-0 operation conditions and N-1 contingency compared to the C1 RE target scenario. The table also
cases are considered. shows the recommended total transmission capacity
on the interfaces between the regions. These are
For the C1 RE target scenario, some of the
higher than the Balmorel transmission capacities
recommendations for safe grid operation include a
simulated, especially for the RE 50% 2030 scenario,
new 500kV substation in the Highlands and 10 GW
where the HVDC line is included in the recommended
transmission capacity investments (three 500kV lines)
expansions.
to be able to transmit renewable power directly to the
South-East region. In the internal grid, some additional
substations are suggested to help with congestions
(such as in Dien Bien, Huong Hoa, Bac Lieu, Hong
Liem and Thuan Bac).
Table 15: Recommended grid reinforcements from PSS/E additional to the revised PDP7 grid expansion plan for
2020-2030 and total transmission capacity on interfaces recommended based on PSS/E compared to Balmorel.
C1 RE target RE 50pct
Transformers - 500 kV (MVA) 36,600 38,400
Transmission lines - 500 kV (km) 3,028 5,989
Transformers - 220 kV (MVA) 17,750 24,000
Transmission lines - 220 kV (km) 7,009 8,340
PSS/E transmission lines - interfaces (MW) 29,373 34,360
Balmorel transmission lines - interfaces (MW) 22,037 21,089
The costs related to the grid reinforcements based on and 6% to the total power system costs, for the C1 RE
the PSS/E analysis are shown in Table 16. The total target scenario and the RE 50% 2030 scenario. It
grid-related costs are 14.5 and 17.6 billion USD in the should be noted that the comparison is not
C1 RE target scenario and RE 50% 2030 scenario, completely consistent, as only model-optimised
respectively. As Balmorel only includes the capital cost for generation is included in the graphs,
model-optimised transmission capacity on the while both committed and model-optimised capital
interfaces, the costs found from the optimization are costs are included for the transmission grid. Figure 46
considerably lower. When including committed illustrates that additional power transmission
expansions to the calculation, about 10.6 to 14.3 billion investments represent around 5% of the total power
USD are not included in the Balmorel model. Table 16 system cost in 2030, according to the transmission
shows the total annualized system costs for the two grid assessment performed with the PSS/E model.
scenarios. The costs not included add between 5%
93
Vietnam Energy Outlook Report 2019 Annex: Modelling framework and key assumptions
Table 16: Costs related to the grid expansion recommendations between 2020-2030 compared to costs included in
the Balmorel model.
C1 RE target RE 50pct
PDP7R internal grid cost (Million USD) 7,843 7,843
PDP7R interfaces cost (Million USD) 1,729 1,729
Additional* internal grid cost (Million USD) 2,875 3,512
Additional* interfaces cost (Million USD) 2,081 4,553
Total internal grid cost (Million USD) 10,718 11,355
Total interfaces cost (Million USD) 3,810 6,282
Total costs (Million USD) 14,528 17,637
Balmorel endogenous** interfaces cost (Million USD) 3,352 3,291
Balmorel all interfaces cost (Million USD) 3,880 3,819
Internal grid cost not in Balmorel (Million USD) 10,718 11,355
Interfaces cost not in Balmorel (Million USD) -70 2,991
Total cost not in Balmorel (Million USD) 10,648 14,346
* Additional to PDP7R
**Model-optimised
30
25
20
GW
15
10
0
C1 RE target RE3 50%
Additional grid costs Start-up costs Fuel cost Variable O&M

Fixed O&M Gen. capital cost Trans. Capacital cost
Figure 46: Total power system costs for the C1 RE target scenario and the RE 50% 2030 scenario, including the
additional grid costs based on the PSS/E analysis.
94
Vietnam Energy Outlook Report 2019 References
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MOIT

Hanoi, November 2019

A scenario where RE power sector targets in the REDS are fulfilled,

C1 scenario with the addition of the constraint of no investments in

C1 scenario with the addition of least-cost EE technology penetration

Figure 1: The five scenarios analysed and compared in the EOR19

Power system balancing

Climate and pollution

FIGURE 1: The five scenarios. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 03

Abbreviations and Acronyms

The revised National Power Development Plan in

Target 2020 2025 2030 2050

RE share in primary energy supply (REDS) 31% 32% 44%

RE share in total electricity 38%* 32%* 43%*

Energy efficiency as compared to business-as-usual

Final energy demand saving (VNEEP3) 5-7% 8-10%

GHG emission reduction as compared to business-as-usual

Green growth strategy (VGGS) 10-20% 20-30%

Intended Nationally Determined 8% (unconditional)

REDS (energy sector) 5% 25% 45%

1.3 Purpose of the report

Table 2: Themes of the EOR19 and related challenges

Energy Efficiency Overcoming the barriers to investment in EE technology

A theoretical scenario not taking policy constraints into account, such as

A scenario where RE power sector targets in the REDS are fulfilled,

C1 scenario with the addition of the constraint of no investments in

C1 scenario with the addition of least-cost EE technology penetration

The most ambitious scenario combining the three

Figure 2: The five scenarios

C3 Energy efficiency: Additional to the C1 RE C4 Combination: This scenario combines the

2020 2030 2040 2050

3. Key modelling results

14,000 25% 22%

2020 2030 2040 2050

2020 2030 2040 2050

Transportation Residential Industrial Commercial Agriculture

3.2 Power system

2020 2030 2040 2050

600 33% 33%

Electricity import Solar Wind offshore Wind Hydro Other RE RE share

3.3 Energy system costs

3.4 Key indicators

System CO2 RE RE share W&S Fuel Fuel Fuel

C2 No new coal 121 468 20% 16% 5% 3,940 44 54%

C4 Combination 116 424 21% 16% 4% 3,380 34 51%

C2 No new coal 25 226 43% 25% 22% 1,360 6 38%

C4 Combination 21 220 40% 20% 15% 1,270 5 39%

C2 No new coal 68 258 50% 41% 40% 2,450 23 45%

Electricity import Hydro Other RE Biomass

Export Import Net energy import Import dependency in TPES

4.2 Energy Resource Outlook

C2-No new coal

C2-No new coal

C2-No new coal

C2-No new coal

Solar Wind Hydro Biomass Crude Oil Gas Coal

2020 2030 2040 2050

Industry Power Residential

Electricity Import Solar Wind Hydro Biomass

How dependent on fuel imports will Vietnam be?