Vietnam and Germany are boosting their energy development co-operation, with the latter committing to support the former in improving energy-related policies which can help lure more investors.
Yiannis Neophytou, counsellor for Development Co-operation at the German Embassy to Vietnam, told VIR that energy co-operation would continue to be a key area of the German-Vietnamese co-operation in the future.
“Germany is fuelling Vietnam’s efforts to implement green growth, focused on effective usage of natural resources, development of renewable energy, and the development and application of environmentally-friendly technology, via a series of projects,” he said.
According to the Delegation of the European Union to Vietnam, though Vietnam has significant domestic energy sources, including crude oil, coal, and hydropower, and is presently a significant energy exporter, it will become, as of 2015, a net energy importer and will import half of its energy resources by 2030. This is due to the country’s rapid economic growth, industrialisation, and export market expansion, which have spurred domestic commercial energy consumption that is unlikely to subside in the near future.
The German government has provided more than US$120 million in official development assistance for Vietnam to implement the 500 kilovolt power transmission line between the northern mountainous provinces of Son La and Lai Chau, and expand another power transmission line in Son La.
Vietnam and Germany have also concluded the final round of negotiations on development co-operation, with the German Ministry for Economic Cooperation and Development deciding to use 219 million euros (US$245.3 million) to support Vietnam over the next two years in the environmental, energy, and vocational training sectors, via programmes and projects.
In another case, the Vietnamese General Department of Energy and the German Federal Government’s GIZ also signed a EUR6.9 million (US$7.73 million) deal to boost Vietnam’s wind power development, in a project that will be implemented until 2018.
This project is focused on three major areas, including compiling the legal framework for wind power development, improving the capacity of local authorities and power plants, and transferring high technology to Vietnamese partners.
According to GIZ, with its dynamic economic growth, Vietnam’s energy demand will triple by the year 2020. Some 64% of the country’s power needs are currently provided by fossil energy sources. As a result, experts expect a fourfold increase in carbon dioxide emissions from electricity generation in the coming years.
GIZ is now also supporting a Vietnamese-German cooperation project for further developing renewable energy in Vietnam. The project is part of the International Climate Initiative of the German Federal Ministry for the Environment, Nature Conservation, Building, and Nuclear Safety.
The main focus of the project is the development of grid-connected bio-energy in Vietnam. It advises Vietnam’s Ministry of Industry and Trade on the design of incentive mechanisms to encourage grid-connected power generated with biomass, biogas and solid waste. The aim is to stimulate interest among investors, project developers, and governmental and non-governmental bodies in the construction of bio-energy power plants.
The project also supports capacity development for relevant stakeholders in the field of bio-energy. With regional and international training events, exchange formats, and consultation missions, it aims to consolidate knowledge while creating a platform for international dialogue.
However, Neophytou stressed that ineffectual measures and a lack of incentives were impeding the expansion of renewable energies in Vietnam. “Any policy must help attract private investors. Currently, the government offers a feed-in tariff for renewable projects that is too low, which discourages private investors,” he said.
