Decentralized renewable energy broke Vietnam’s power planning logic

In February 2021, Vietnam’s Ministry of Industry and Trade released the draft Power Development Plan VIII (draft PDP8), which outlines how the country will produce its electricity for the next ten years.

The draft focuses on developing gas-fired power. It reuses a renewable energy development strategy elaborated six years ago, ambitious then but now outdated by the solar and wind boom. Over the next ten years, it would more than double the sector’s CO2 and PM2.5 emissions.

The bias towards gas-fired power generation is more the symptom of a problem in the planning process than the outcome of well-informed political choices. In recent years, Vietnam’s Power Development Plan 7 turned into a record-keeping list of authorized energy projects. That broke the logic of planning.

The function of a masterplan is to think forward five to ten years. The future may be unpredictable; there will always be surprises like the COVID crisis. This is why a plan should identify no-regret investments, which remain relevant for a wide range of scenarios.

Policymakers need a coherent strategy about rooftop PV, floating PV, offshore wind, electricity storage, grid expansion financing, production capacity procurement with auctions, transport electrification, and long-term climate policy options. The current draft PDP8 study is short on these questions. Beyond the socio-economic plan, the PDP should coordinate with the marine and transportation plans.

There is an opportunity to address these topics by revising the draft to finalize the PDP8. Furthermore, the planning process must become more agile to keep up with the accelerated changes in the energy landscape. The draft PDP8 proposes a Law on Renewable Energy, and new regulatory institutions working on a shorter than quinquenal cycle. These changes are necessary to restore the planning process function as an useful decision support mechanism in the de-centralized energy systems era.

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