What other ASEAN members can learn from Vietnam’s renewable boom

With energy demand projected to increase threefold between 2020 and 2050, Southeast Asia’s energy transition is important in reducing global emissions. Yet progress has been slow. The International Energy Agency (IEA) estimates renewable capacity to grow by 63.1 gigawatts by 2028 — a fraction of the 229 gigawatts of new wind and solar capacity needed by 2030 for the region to keep the IEA’s net zero emissions scenario within reach. ASEAN is far from meeting this net zero target and needs stronger policy interventions. Luckily, ASEAN members can look to Vietnam for ideas on solar and wind expansion. In 2023, Vietnam accounted for almost two-thirds of all solar and wind electricity generation in ASEAN. Thailand, in second place, produced just a quarter of Vietnam’s solar and wind output. Vietnam’s rise from laggard to leader in solar and wind offers lessons for other ASEAN members. The starting gun was fired in 2017, when the first set of generous feed-in tariffs (FITs) were introduced for solar and wind projects operational before June 2019. FITs were later gradually decreased, with the last deadline set at November 2021. On paper, FITs are locked in for 20 years and offer a generous premium over the levelized cost of electricity. Other incentives included exemptions from income tax, tariffs on imported equipment and land-lease payments. There were other motivations in this pivot towards renewables. Delays in existing coal projects posed energy security risks given fast-growing electricity demand. At the same time, experts believe that public opinion, due to severe pollution in urban areas, favoured renewable energy. What followed is history. In 2017, the share of solar and wind in Vietnam’s electricity mix was negligible. By 2023, solar and wind accounted for 13 per cent of Vietnam’s electricity mix, an unprecedented growth in the region. Still, it was not all sunshine. Due to supply chain issues, 62 wind projects were not completed before their deadlines, leaving investors in limbo. Projects that did make it faced high curtailment rates because of grid issues. Thuan Nam, a largescale solar project in the province of Ninh Thuan, was forced to slash its utilisation rate by 40 per cent in 2022. Meanwhile, Vietnam’s north experienced blackouts and could not import electricity from sunny central and south Vietnam due to poor transmission infrastructure. Government inspections also found violations in the certification of some projects, resulting in the arrest, on corruption charges, of some officials administering FITs.