Vietnam Power Market Forecast
Vietnam remains one of Asia’s fastest-growing economies. Vietnam’s economy has grown 40-fold since its 1990 abandonment of Soviet-style socialism for a market-driven economic system. Real GDP growth averaged over 6.2% between 2000 and 2017, followed by a 7% growth in 2018 and 2019. According to the World Bank, GDP growth is expected to drop to about 2.8% in 2020 due to COVID-19, although rebounding in 2021. As with many Association of Southeast Asian Nations (ASEAN) countries, electricity demand growth is determined by its industrialization rate, electrification level, and population growth trend.
Overall, Vietnam’s energy consumption has significantly increased after the 1986 market reforms that spurred its industrialization and integration into the world economy. Energy consumption, per capita, has grown from 0.1 MWh in 1990 to 1.0 MWh in 2000 to 2.4 MWh in 2018, the last year data is available from the International Energy Agency (IEA). In addition to per capita electricity demand growth, the government’s push for universal electrification was essentially completed in 2013. Finally, the nation’s population is expected to reach 100 million in the early 2020s. For comparison purposes, Vietnam’s electricity sector will likely be greater than Britain’s by the mid-2020s, according to a May 2019 Reuters report.
The Government of Vietnam’s goal is to transition to a competition-based model for retail and wholesale generation by 2023 to attract private and foreign investment in its energy sector. Vietnam’s new Power Development Plan (PDP) VIII covers 2021 – 2030, with a vision to 2040, and is slated for approval by March 2021.
The plan is expected to call for more wind and solar deployment and increased LNG imports to fuel gas-fired power generation. Of note, PDP VIII remains reliant on coal-fired generation for baseload power to support the deployment of renewables and its transition to a low carbon future.
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