Building on Viet Nam’s Power Development Plan 8 (PDP8), this Achieving a Net Zero Electricity Sector in Viet Nam report aims to provide stakeholders in Viet Nam and internationally with an assessment of different pathways for achieving its emissions reduction targets and reaching net zero emissions in the power sector by 2050. The pathways were developed in the IEA Global Energy and Climate Model framework, benchmarked against the PDP8 and considering the emissions reduction targets set out in the 2022 Just Energy Transition Partnership.

Successfully scaling up the power sector in Viet Nam in recent years has underpinned rapid economic development and approaching universal access to electricity. Electricity demand in Viet Nam surged eightfold from 2002 to over 240 TWh in 2022. Industry is the largest consumer of electricity, with recent growth particularly in manufacturing. Electricity use in the residential and commercial sectors has also been growing rapidly. To meet growing electricity demand, natural gas increased the most from 2000 to 2010, then coal and hydro expanded rapidly from 2010 to 2020 with new capacity coming online, followed by strong growth for solar PV in the last few years. In 2022, coal was the largest source of electricity supply at 41% of the total, followed by hydro (35%), natural gas (11%) and solar PV (10%).

PDP8 provides a blueprint for the comprehensive transformation of Viet Nam’s electricity sector, with a clearly defined pathway to 2030 and vision to 2050. Alongside strong economic growth, PDP8 foresees electricity demand doubling by 2030 and rising about fivefold to nearly 1 200 TWh in 2050. In our PDP8 Scenario, unabated coal-fired power peaks in the mid-2020s, made possible by strong growth for natural gas and wind power, and modest growth for hydro and solar PV. In the vision to 2050, wind and solar PV become the dominant sources of electricity, complemented by hydro, bioenergy, natural gas, and significant amounts of low-emissions hydrogen and ammonia. As a result, investment needs increase rapidly to nearly USD 30 billion in 2030 and peak at USD 60 billion in the 2040s, though falling fuel expenditures as the share of renewables increases mean that average costs per unit of electricity for consumers remains below USD 100/MWh throughout. CO₂ emissions in the electricity sector peak in 2030 at 250 Mt and decline to around 30 Mt by 2050.

The pace of electricity demand growth is a critical building block in considering the pathways to net zero emissions in the power sector. While the PDP8 Scenario reflects the foreseen growth in the PDP8 directly, we identified efficiency opportunities to reduce electricity demand growth by nearly 20% to 2030 and 30% to 2050. The main efficiency opportunities are in industry, through faster uptake of high-efficiency motors, and in buildings, through more efficient air conditioning, lighting and electric cooking. These opportunities are incorporated into a lower demand trajectory in the Power Development Plan 8 + Energy Efficiency (PDP8+EE) Scenario, Power Development Plan 8 + Energy Efficiency and Low Hydrogen (PDP8+EE+LH) Scenario and Net Zero Emissions by 2050 (NZE) Scenario.

Expanding renewable energy is the primary means of decarbonising Viet Nam’s power sector in all scenarios. Our analysis shows that building a secure, reliable and affordable electricity supply with very high shares of variable renewables is feasible. To 2030, PDP8 plans are represented directly in both the PDP8 and PDP8+EE Scenarios, while delayed delivery of some onshore and offshore wind projects, an emerging risk, is represented in the PDP8+EE+LH Scenario and the NZE Scenario. There is also potential for renewables to grow faster than this, in particular rooftop solar PV, which can be rapidly deployed. To 2050, PDP8 envisions record-breaking development of offshore wind to over 220 GW to produce low-emissions electricity and low-emissions hydrogen, some of which is then used in the power sector. Our analysis indicates that there are cost advantages in using less hydrogen or ammonia (derived from hydrogen), cutting the need for offshore wind by about half. Solar PV returns to strong growth after 2030 in all scenarios, reaching 170 GW to 200 GW in 2050, compared with 19 GW in 2022. Onshore wind expansion is similar across scenarios, rising from 4 GW today to a range of 60 GW to 80 GW in 2050.

The transition away from unabated fossil fuels is a necessary part of any decarbonisation pathway. Unabated coal-fired power generation peaks in the mid-2020s in all scenarios, and in our alternative pathways to PDP8, lower electricity growth leads to steeper declines for coal. It also can lead to lower use of unabated natural gas, as in the PDP+EE Scenario, unless additional coal-to-gas switching opportunities are taken up to further reduce coal-fired power, as incorporated in the PDP8+EE+LH and NZE Scenarios. By 2050, unabated fossil fuels are greatly reduced in the PDP8 and PDP8+EE Scenarios, and fully phased out in the PDP8+EE+LH and NZE Scenarios. Hydrogen and ammonia enter the mix after 2035, but our analysis finds that the primary role of these plants will be to ensure security of supply, through flexibility and operating at peak times, rather than to produce large amounts electricity, and volumes can thus be much smaller than envisioned in PDP8. Nuclear power could play a complementary role in decarbonising electricity in Viet Nam, particularly where innovation and cost reductions materialise for new reactors designs, including small modular reactors.

CO₂ emissions in the power sector peak at 250 Mt in 2030 in the PDP8 Scenario. In the PDP8+EE Scenario, higher energy efficiency leading to lower electricity demand growth alone brings emissions down to about 180 Mt, over 35% below PDP8. In the PDP8+EE+LH and NZE Scenarios, mainly through the combination of lower electricity demand and more coal-to-gas switching, emissions fall to below the JETP limit of 170 Mt by 2030, even though this limit is temporarily exceeded in the late 2020s. Additional renewables that can be deployed rapidly, such as rooftop solar PV, or additional energy efficiency measures, could help limit near-term emissions growth and keep peak emissions under 170 Mt.

Maintaining the security of electricity supply is crucial at all times and in all cases. In light of rebuilding the electricity supply based on solar PV and wind, envisioned in PDP8 and our alternative scenarios, we carried out detailed modelling of the hourly balance of electricity demand and supply in 2050 for the most ambitious case, the NZE Scenario. This analysis, including stress-testing the power system for different observed weather patterns, demonstrates that power system adequacy and flexibility can be ensured at all times. To achieve this, though, it will be critical to expand and modernise electricity grids, unlock demand response, and scale up storage technologies, including batteries, to meet short-term flexibility needs, and carefully manage hydropower to meet seasonal flexibility needs.

Power sector investment rises significantly in all scenarios. Compared with the starting point of less than USD 10 billion spent annually now, investment reaches at least USD 25 billion by 2030 in all scenarios and continues rising. The 2040s see the highest level of investment in each scenario, though the PDP8 Scenario has the highest peak at over USD 60 billion, around 25% above any other scenario due to the high investments into offshore wind dedicated to produce hydrogen and ammonia for use in the power sector. The NZE Scenario shows that with relatively little additional investment, it is possible to accelerate emissions reductions and reach net zero well before 2050.

In terms of affordability, total costs per unit of electricity remain between USD 90/MWh and USD 100/MWh until 2030 in all scenarios. In the long run, a higher reliance on renewables and lower reliance on costly hydrogen-based fuels means that electricity prices in our alternative scenarios are lower than in the PDP8 or PDP8+EE Scenarios. Energy efficiency can lower consumer bills but result in a higher cost per unit of electricity produced as total system costs are spread out over fewer units of electricity. Investments into energy efficiency that lower electricity demand more than pay for themselves, with the potential to yield significant savings for consumers.

Many of our key findings are in agreement with the set of recommendations published in the Viet Nam Energy Outlook Report (2024), including: renewables investment needs to scale up, enabling more affordable electricity for consumers; energy efficiency in all sectors is an important building block of the transition and is cost-effective; solar PV, onshore wind and offshore wind lead the transition but require efforts to integrate them effectively, particularly enhancing power system flexibility and expanding transmission; nuclear power can play a complementary role to renewables.