Illustrative image (Photo: VNA)Hanoi (VNS/VNA) – Renewable energy could become Vietnam’s lowest-costoption to meet its energy needs, according to a whitepaper released by globalmanagement consulting firm McKinsey & Company on January 23.
‘Exploring an alternative pathway for Vietnam’senergy future’ evaluates how Vietnam could meet its growing energy demand atthe lowest cost, with the least impact on public budgets and the least risk.
“As one of the 18 outperforming emergingeconomies we identified globally, Vietnam needs more capacity to meet therapidly growing energy demand it requires for sustainable growth. The path Vietnamchooses to build this capacity will have far-reaching implications on GDPgrowth potential, trade, environmental performance and energy security,” saidMarco Breu, managing partner, Vietnam, McKinsey & Company.
The research found Vietnam’s significant naturalendowments of solar and wind power combined with a drop in the capital costs ofsolar and wind over the past five years – 75 percent decrease in solar costsand 30 percent decrease in the costs of wind – strongly positions renewableenergy to be a more affordable source of electricity than thermal generation.
Vietnam’s current power plan requires aninvestment of roughly 150 billion USD by 2030 in additional generation assetsand grid infrastructure. The power-generation investments focus largely on coal(about 45 additional gigawatts by 2030) and to a lesser extent renewable energy(18 gigawatts by 2030).
The research suggests that a renewable energy-ledpathway could help Vietnam’s power sector perform better than the currenttrajectory because overall power costs between 2017 and 2030 would be reducedby 10 percent, primarily driven by savings in fuel costs resulting from a moveaway from high levels of fuel-intensive thermal generation.
Greenhouse gas and particulate emissions wouldbe reduced by 32 percent and 33 percent respectively between 2017 and 2030.This would also boost health and economic productivity.
In addition, the renewable energy-led pathwayrelies on 28 percent less total fuel and 60 per cent fewer imports. This wouldreduce Vietnam’s reliance on fuel imports and fossil fuels.
“There is no silver bullet that will solve Vietnam’senergy challenges. The ability to meet rapidly growing demand while keepingcosts low will depend on the creation of financial and regulatoryinfrastructure that make the market attractive to capable renewable energydevelopers,” said Antonio Castellano, partner and co-lead, electricity andnatural gas practice, Southeast Asia, McKinsey & Company.
The whitepaper also discusses the keys thatcould unlock a renewable energy-led pathway. These include creating suitable marketconditions for renewable energy development, building the country’scapabilities to deliver large scale renewable energy projects and expandingnatural-gas generation’s role in the country’s power plan.
“This is a watershed moment for Vietnam.Renewable energy is potentially the lowest-cost option for Vietnam to meet itsenergy needs. Actions taken today to help lay the groundwork for renewableenergy development would offer the country the prospect of a less expensive,cleaner and more secure future,” he added.-VNS/VNA
VNA
