The Green Revolution in Vietnam: Government Initiatives and Campaigns

The Vietnamese government is pushing ahead for the Green Revolution across key areas such as smart cities, smart homes, and energy installations.

May 2020 , by and Dennis Lien

The Green Revolution is happening in Vietnam – in light of climate change and dramatic increases in demand for energy as the population and economy of Vietnam grow, both the public and private sectors have pushed towards more sustainable and environmentally-friendly growth. As one of the world’s nations most vulnerable to climate change, Vietnam is taking steps to both mitigate and adapt to climate change, sea-level rise, and the growing problem of air and water pollution affecting communities across the country of nearly 100 million.

This article is the first of a four-part series to highlight key areas of development in energy in Vietnam. In this part, we analyze various government initiatives, campaigns, regulations, and legal frameworks as Vietnam develops key areas in the Green Revolution: Smart Cities, Smart Homes, and Smart Industry, Green Buildings and Construction, and Energy Installations and Efficiency.

Smart Cities

The Vietnam Sustainable Smart City Development Project for 2018-25 was approved by the Prime Minister in 2017 with Ho Chi Minh City, Hanoi, Da Nang, and Can Tho to develop as the first core smart cities. The progress, however, has been slow because of local and regional regulations.

City-specific regulations and policy were a roadblock for the development of Smart Cities in Ho Chi Minh City and Hanoi, but the advent of CoViD-19 and policies for social distancing and quarantine pushed both local and national government to push for more online services. The Ministry of Information and Communication (MIC) has been pushed by the national government to quickly develop systems to increase online services across the entire government.

The application of Industry 4.0 has been a topic of discussion in talks about planning future infrastructure, but a legal framework still does not exist. However, the future structure of Smart Cities will likely take shape with the heavy hand of state-owned players like Viettel and large industry players like FPT.

Smart Homes and Smart Industry

The smart home industry remains largely unregulated, but with the passage of the national cybersecurity law in 2018 and its implementation in 2019, though largely targeting terrorism and anti-patriotic activities, make it so that data collected by smart home devices across Vietnam will be owned by the State.

Attention to Internet-of-Things (IoT) in the wider public has grown significantly as Vietnam is one of the most connected societies in Asia and has the second-largest internet user base in Southeast Asia with nearly 70 million internet users.

Smart Homes in Vietnam

The Ministry of Information and Communication (MIC) granted licenses to Viettel and MobiFone to test 5G networks in 2019 which will collect information in order to develop regulation and policy. Viettel began testing 5G networks in 2019 making Vietnam only the fifth country in the world to have successfully tested a 5G network. They are expected to deploy commercial service in 2020 with other communications players expected to participate as well. The development of 5G has been touted as a pathway towards not only smart homes and cities, but also smart industry, particularly in manufacturing. The automobile, electronics, and a number of other industries ready for automation are expected to drive the development of the 5G network in order to boost their production efficiency and speed.

Green Buildings and Construction

Green Building in Vietnam

Prompted by rapid urbanization, the Vietnamese Government developed plans and legal frameworks for smart cities and green buildings, following the popular trends to become a more sustainable and environmentally-conscious country. The state began collaborating with USAID, forming the Green Growth Action Plan (GGAP) in 2017 to achieve specific targets set by the National Strategy on Green Growth for 2020-2030. The demand for green installations and green building developments is growing, driven by both the construction and real estate sectors due to long-term cost-savings. Moreover, pollution reduction benefits allow developers to advertise their developments in more premium building categories.

While the classification of green building materials has not been defined by the government, “green” developments, following various green building standards, are aggressively incentivized by the government as part of the current Vietnam Sustainable Smart City Development Project. For example, the GGAP provides free technical support for building energy simulation for both new and retrofitted building projects; or solar panel installations subsidies for residential and commercial buildings within urban areas.

The sharp increase in the number of green buildings is echoed by positive sentiments from developers with proper access to technical know-how and also the awareness that they can save up to 30% of energy costs by utilizing technology from design planning, energy, and water-saving solutions, as well as environmental-friendly building materials.

Energy Installations and Efficiency

Electricity demand in Vietnam exceeded domestic production for the first time in its history as of 2014 when the country had to begin importing electricity from its neighbors. Forecasts from the Ministry of Industry and Trade (MoIT) for the next few years show that demand is expected to exceed the current annual electricity supply of 6.6 billion kWh. In an effort to address this, the government has prioritized renewable energy (e.g. Solar, Wind, Hydro, etc.) into all of its future energy plans, transitioning to natural gas as a baseload to reduce its dependency on coal and forecasting renewable energy to represent about 25-30% of the energy mix by 2030.

Energy Installations and Efficiency

Decision 11 to Decision 13

Decision 11 was issued in April 2017, amended in January 2019, and replaced by Decision 13 in April 2020. Feed-in-Tariff 1 (FiT1) associated with Prime Minister Decision 11 and Ministry of Industry and Trade (MoIT) Circular 16 (September 2017) expired on 30 June 2019 and is expected to be replaced with FiT2 once Decision 13 is finalized and amended.

History of amendments to Decision 11:

Major Highlights from Decision 13

The effect of Decision 13 on existing Rooftop Solar Projects:

Rooftop Solar Projects in Vietnam

Challenges Moving Forward

Renewable energy has attracted a lot of attention from policymakers in Vietnam as a solution to gaining more energy security and independence while foreign investment in renewable energy has grown rapidly over the last several years. However, foreign investment in the energy sector has a number of its own challenges, such as incomplete policy and regulation, especially when differentiating between utility-scale solar projects against small-scale, off-grid, and rooftop solar installations.

Renewable Energy Challenges in Vietnam

Michael Sieburg, Partner at YCP Solidiance Vietnam
Dennis Lien, Director at YCP Solidiance Vietnam

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