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Vietnam's PDP8 should be a catalyst for innovation, not a barrier to change

March 01, 2021
Melissa Brown
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Key Findings

PDP8's usefulness as a roadmap will be limited

Vietnam must take bolder steps to win the confidence of high value foreign investors that are working hard to meet the needs of their global customers

Executive Summary

Vietnamese officials were in a fortunate position when they began work on the country’s power development plan for 2021-2030 (PDP8). After a decade filled with disappointments from the fossil fuel industry, planners successfully tested the dynamism of renewable energy in Vietnam’s fast-growing market. While many conventional coal and gas-power projects failed to progress during the development process, only managing to meet half of the targeted capacity for 2016-2020, solar power developers over-delivered by five times, and they have done so in a fraction of the time. The evidence was clear to inform the next stage of Vietnam’s power development.

But beyond timeline considerations, these contrasting realities carry important implications for the power sector planning process. Traditional power sector planning disciplines were developed during a period when technology was relatively static and generation-led planning was the norm. That is not the right approach for an unprecedented period of innovation and cost reduction we are witnessing now. This calls for a fundamental shift away from the traditional planning approach of assessing technology choices on an “as is” basis to a pathway development process that sees each generation technology more holistically. This approach evaluates technology choices in terms of the potential for innovation and factors in risk to long-term performance with the goal of designing the system in a way that can optimize a complementary portfolio of technologies.

Unfortunately, the planners have so far revealed a conventional thought-process, as demonstrated by the generation-centric decisions that have shaped the recently published draft PDP8. Instead of acknowledging the importance of developing a more flexible system, capable of accommodating a changing technology mix, baseload coal and gas-fired power are the focus and continue to dominate 57% of the pipeline to 2030. This strategy conflicts with the most important trends shaping global power markets as well as with the planners’ objectives to ensure energy security and minimize overall system cost including power costs, and health and environmental externalities.

Vietnamese Version

Read the report in Vietnamese:

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Melissa Brown

Former Director, Energy Finance Studies, Asia, Melissa Brown, a former securities analyst at JP Morgan and Citigroup, has played a leading role in various Asian investment organizations focused on mainstream and sustainable investment strategies for public and private equity investors over the past 25 years.

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