Vietnam is facing a critical juncture in its ambitious journey towards decarbonization, with the country’s long-term goal to phase out coal for power generation by the 2040s and achieve net-zero emissions by 2050. A recent report by BloombergNEF (BNEF) highlights the pivotal role of renewables, especially solar energy, in realizing these targets. Vietnam’s rapid economic growth and surging power demand pose significant challenges to its sustainability objectives. However, the report underscores that renewables, particularly solar energy, offer the most cost-effective solution for meeting the nation’s escalating electricity needs.
According to BNEF’s findings, utility-scale solar power has already emerged as the most economical source of electricity in Vietnam. The levelized cost of electricity (LCOE) for a new utility-scale solar project ranges from $53 to $105 per megawatt hour, surpassing the cost of constructing new coal and gas power plants. In comparison, a combined cycle gas turbine (CCGT) costs $84 to $104 per MWh, while a coal power plant is priced at $75 to $94 per MWh.
BNEF predicts that by 2030, solar paired with batteries will deliver a more competitive LCOE than newly developed thermal power plants. Onshore wind power coupled with batteries is expected to follow suit by the early 2030s. Although these hybrid power solutions may lack the dispatchability of coal or gas, they offer greater flexibility compared to standalone renewables, thereby facilitating Vietnam’s transition to cleaner energy sources.
Caroline Chua, co-author of the report, emphasized, “Renewable energy is now both an economic and sustainable choice for Vietnam. Renewables can improve the country’s energy security by lowering its dependence on LNG and coal imports, while also creating new job opportunities. Our sensitivity analysis shows that even if fossil fuel prices decline, renewables will still be more cost-effective than thermal power plants.”
Despite the economic viability of renewables, Vietnam is considering the construction of additional coal and gas power plants throughout this decade, under the assumption that these plants can transition to cleaner fuels like hydrogen or ammonia from the mid-2030s. However, BNEF’s analysis refutes this approach, indicating that retrofitting thermal power plants for these clean fuels will not be as cost-effective as expanding renewable energy sources. Notably, the report underscores that new utility-scale solar installations are already cheaper than the operational costs of existing thermal power plants, and onshore wind power will reach the same cost advantage by the early 2030s.
To achieve complete carbon neutrality, thermal power plants must rely exclusively on green hydrogen or ammonia. Yet, BNEF’s analysis reveals that this strategy would be considerably more expensive. “Building more thermal power plants on the assumption that they can be retrofitted for clean hydrogen or ammonia will saddle Vietnam with significant financial risk,” said Isshu Kikuma, co-author of the report. “Such an approach would mean relying on complex, nascent technologies to deliver Vietnam’s net-zero goal. Vietnam would be better off prioritizing domestic clean hydrogen for decarbonization of hard-to-abate sectors such as steel manufacturing.”