Vietnam Photovoltaics Market Outlook to 2030

Vietnam Photovoltaics Market Overview

• The Vietnam photovoltaics market is valued at USD 1.6 billion, driven by the country's strong push for renewable energy adoption. Vietnams solar market has seen exponential growth over recent years, fueled by declining costs of solar technology, government incentives like feed-in tariffs (FiTs), and a growing need for energy security amidst rising electricity demand. The market has benefitted from policies aiming to diversify energy sources and reduce dependency on traditional fossil fuels, which has led to widespread adoption of solar energy systems in both urban and rural regions.
• Ho Chi Minh City and Binh Thuan province dominate the solar market due to their favorable geographic locations with high solar irradiance and large tracts of land available for utility-scale solar farms. These regions also benefit from strong government backing for infrastructure development, making them ideal for large-scale photovoltaic installations. Additionally, areas in Southern Vietnam, where sunlight is more abundant, are emerging as key hubs for photovoltaic projects.
• Power Purchase Agreements (PPAs) are a critical component of Vietnams solar energy regulation framework. In 2023, Vietnam Electricity (EVN) began implementing direct PPAs, allowing corporate buyers to purchase power directly from solar developers at negotiated prices, independent of government tariffs. This move is expected to drive private sector investment in solar energy projects. The Ministry of Industry and Trade projects that direct PPAs will contribute over 5 GW of solar power by 2025, improving financial flexibility for solar developers.

Vietnam Photovoltaics Market Segmentation

The Vietnam photovoltaics market is segmented by product type and by application.

• By Product Type: The market is segmented by product type into solar photovoltaic (PV) modules, inverters, mounting systems, and storage systems. Recently, solar photovoltaic (PV) modules hold the dominant market share under this segmentation. This is due to the continuous decline in the cost of solar PV modules, making them more accessible to both residential and commercial consumers. Additionally, technological advancements in module efficiency, such as bifacial and monocrystalline panels, have contributed to their dominance. In contrast, storage systems are gaining traction, but their high cost has limited widespread adoption so far.
• By Application: The market is further segmented by application into residential, commercial, utility-scale, and industrial. The utility-scale segment dominates the market, driven by large solar farms developed to meet the country's increasing energy demands. The Vietnamese governments FiT program has attracted numerous investors to build large solar farms, leading to rapid growth in this segment. Furthermore, utility-scale installations benefit from economies of scale, which reduce costs compared to smaller residential or commercial projects, making them more financially viable.

Vietnam Photovoltaics Market Competitive Landscape

The Vietnam photovoltaics market is dominated by key local and international players. Major companies include First Solar, JA Solar Technology, and Trina Solar, which have strong market positions due to their technological innovation and cost-efficient solutions. These companies dominate the market with high-efficiency solar modules and have established long-term partnerships with project developers across Vietnam. This market consolidation highlights the significant influence of these firms, although local companies like SolarBK are starting to make notable contributions by focusing on rooftop installations and smaller-scale projects.

Vietnam Photovoltaics Industry Analysis

Growth Drivers

• Renewable Energy Policies (Governmental Support, PPA mechanisms): Vietnam's renewable energy policies have been pivotal in driving the photovoltaic (PV) market growth. The government's commitment to achieving 21% renewable energy in total energy consumption by 2030 has translated into robust support mechanisms, such as the feed-in-tariff (FiT) for solar projects and Power Purchase Agreements (PPAs). The FiT for solar power in Vietnam was set at VND 2,086/kWh ($0.09/kWh) for ground-mounted projects until the end of 2020, and extensions for new projects continue to encourage investment. Additionally, the Ministry of Industry and Trade (MoIT) forecasts that solar capacity will increase to 20 GW by 2030.
• Declining Costs of Solar Technology (Cost-competitiveness, Module Prices): The declining costs of solar technology have accelerated the adoption of photovoltaics in Vietnam. In 2022, the cost of photovoltaic modules dropped globally by over 85% since 2010, making solar energy more cost-competitive than conventional power sources. Vietnam benefits from lower import tariffs on solar modules, making large-scale adoption economically feasible. According to the International Renewable Energy Agency (IRENA), the levelized cost of electricity (LCOE) for solar PV in Vietnam has reached $0.066/kWh, significantly lower than coal-fired generation.
• Rising Demand for Energy Independence (Energy Security): Energy independence is a critical priority for Vietnam, as it seeks to reduce reliance on fossil fuel imports and ensure energy security amid growing electricity demand. In 2022, Vietnam's electricity consumption reached 234 TWh, with demand expected to grow annually by 10%. The national energy security plan aims to diversify energy sources, including increasing solar capacity to mitigate risks associated with import dependency. Vietnams coal imports, for example, rose to 56 million tons in 2022, underscoring the need for energy diversification through renewables like solar.

Market Challenges

• Regulatory Hurdles (Permitting Delays, Grid Capacity Constraints): Regulatory hurdles, including prolonged permitting processes and grid capacity limitations, continue to challenge the PV market. Vietnams National Load Dispatch Center (NLDC) reported that by the end of 2022, nearly 20% of installed solar capacity faced curtailment due to grid congestion. The delays in project approvals from the Ministry of Planning and Investment (MPI) further exacerbate project timelines. Additionally, Vietnam's grid infrastructure requires an estimated $15 billion investment by 2030 to handle new renewable capacities, including solar.
• High Initial Investment (Capital Costs, ROI Period): While solar technology costs have decreased, the high initial capital outlay remains a challenge, especially for utility-scale projects. The average cost to develop 1 MW of solar capacity in Vietnam is approximately $700,000, according to MoIT. Furthermore, the return on investment (ROI) period for photovoltaic systems, though reduced, still spans over 10 years for many projects, depending on FiT rates and other incentives. These financial burdens are particularly significant for smaller developers and individual investors.

Vietnam Photovoltaics Market Future Outlook

Over the next five years, the Vietnam photovoltaics market is expected to witness continued robust growth. This growth will be driven by ongoing government support through incentives like power purchase agreements (PPAs) and updated feed-in tariffs, alongside declining solar technology costs. Moreover, increasing corporate demand for renewable energy, advancements in storage technologies, and integration with grid modernization projects are expected to enhance market performance. The focus will likely shift towards rooftop solar and hybrid systems, with emerging trends pointing to higher adoption of energy storage solutions and AI-based solar management systems.

Future Market Opportunities

• Technological Innovations (High-Efficiency Solar Panels, Bifacial Technology): Technological advancements, particularly in high-efficiency solar panels and bifacial technology, present significant growth opportunities for Vietnams PV market. The International Energy Agency (IEA) reported in 2023 that bifacial solar modules, which generate power from both sides, offer up to 30% more efficiency compared to traditional modules. In Vietnam, the adoption of such technologies is projected to increase by 15% annually as developers seek to maximize power output in limited spaces, particularly in regions like Ninh Thuan and Binh Thuan provinces.
• Cross-border Power Trade (Energy Export Opportunities): Vietnam is exploring cross-border power trade opportunities, particularly with neighboring countries like Laos and Cambodia, where energy demand is growing rapidly. In 2022, Vietnam signed agreements to export 3,000 MW of electricity to Laos by 2030. Solar energy will play a pivotal role in these export strategies, given its abundance and cost-competitiveness. Expanding solar capacity in border regions can allow Vietnam to meet domestic needs while tapping into the lucrative cross-border energy markets.