Vietnam Solar Energy Market Outlook 2030

Vietnam Solar Energy Market Overview

• The Vietnam solar energy market is valued at USD 18.34 billion, driven by a combination of government incentives, increasing energy demand, and a robust investment in renewable energy sources. The country has witnessed a surge in solar energy installations, bolstered by favorable policies like feed-in tariffs (FiTs) and tax exemptions. Additionally, rising concerns over energy security and environmental sustainability have accelerated solar projects, positioning Vietnam as one of the leading solar markets in Southeast Asia.

• Vietnam's southern and central regions dominate the solar energy landscape, owing to their higher solar irradiance levels and extensive land availability for large-scale solar farms. Cities such as Ho Chi Minh and Binh Thuan have become key solar energy hubs, attracting both domestic and international investments. The rapid industrialization and urbanization in these areas, coupled with government-backed renewable projects, have further driven the concentration of solar installations.
• Vietnams government, through collaboration with local banks and international financial institutions, has initiated green credit programs to provide low-interest loans for renewable energy projects. The State Bank of Vietnam (SBV) has encouraged commercial banks to offer preferential lending rates for solar energy developers. In 2022, the Asian Development Bank (ADB) and the World Bank also extended financial support to Vietnams solar sector through green financing schemes. These programs help solar developers secure funding with more favorable terms, accelerating the development of solar projects across the country.

Vietnam Solar Energy Market Segmentation

By Technology: The Vietnam solar energy market is segmented by technology into Solar Photovoltaic (PV) and Concentrated Solar Power (CSP). Among these, Solar Photovoltaic holds a dominant market share due to its cost efficiency, ease of installation, and scalability. The increasing deployment of rooftop solar PV systems, driven by government incentives and declining panel costs, makes it the preferred choice across residential, commercial, and industrial sectors. CSP, on the other hand, is less popular due to its higher initial investment costs and limited suitability in Vietnam's geographic conditions.

By Application: The market is further segmented by application into Residential, Commercial, and Industrial segments. The Industrial segment dominates the market, accounting for a significant share, primarily due to high energy demand in manufacturing zones and industrial parks across Vietnam. These areas require large-scale solar installations to meet electricity needs, and the governments push towards cleaner energy in industrial sectors has further propelled the growth of solar energy in this segment.

Vietnam Solar Energy Market Competitive Landscape

The Vietnam solar energy market is dominated by a mix of domestic and international players. Leading companies have invested significantly in expanding their solar portfolios, focusing on both utility-scale solar farms and rooftop installations. Key players include Song Giang Solar Power JSC and Sharp Energy Solutions, which have capitalized on government incentives and partnerships with local developers.

Vietnam Solar Energy Market Analysis

Market Growth Drivers

• National Energy Strategy (PDP8): Vietnam's National Power Development Plan 8 (PDP8), approved in 2023, aims to achieve a balanced energy mix, with solar energy playing a pivotal role. According to the Ministry of Industry and Trade (MOIT), PDP8 targets an additional 13 GW of solar power capacity by 2025, focusing heavily on the development of rooftop solar systems and large-scale solar farms. The plan aligns with Vietnams goal to achieve carbon neutrality by 2050 and meet its burgeoning electricity demand, which is expected to exceed 400 TWh by 2025. These initiatives mark a significant push toward renewable energy adoption in the country.
• Increasing Electricity Demand in Urban and Industrial Zones: Vietnams urbanization and rapid industrial growth have led to a sharp increase in electricity consumption, particularly in urban and industrial zones. According to the General Statistics Office of Vietnam, the total electricity consumption in urban areas exceeded 200 TWh in 2023, driven by the expansion of industrial sectors like manufacturing and services. The rise in industrial zones, especially in southern provinces, has heightened the need for reliable energy sources, making solar energy a strategic option for decentralization and energy security.
• Rise in Rooftop Solar Projects: Rooftop solar installations have grown exponentially in Vietnam since 2020, with over 9.3 GW installed by 2023, according to the Electricity Vietnam (EVN). This surge has been propelled by favorable government policies, including incentives for residential and commercial rooftop solar installations. The government's Feed-in-Tariff (FiT) program, alongside initiatives to reduce grid congestion, has significantly boosted rooftop solar capacity. By the end of 2024, the installation base is expected to further grow due to a more streamlined regulatory environment and incentives targeting commercial properties.

Market Challenges

• Grid Infrastructure Limitations: Vietnams rapid expansion of solar energy has exposed significant limitations in its grid infrastructure, which is struggling to accommodate intermittent energy flows from renewable sources. The national grid has experienced multiple bottlenecks, particularly during peak solar production periods. The lack of robust grid infrastructure has led to significant energy losses, affecting the profitability of solar projects. To address this, the government has begun investing in grid modernization projects, but challenges persist in aligning infrastructure development with renewable energy growth, necessitating further reforms and investments in the near future.
• Solar Curtailment and Regulatory Hurdles: Solar curtailment, where excess generated electricity is not utilized due to grid limitations, has become a major issue. According to EVN, curtailment rates for solar power reached nearly 500 GWh in 2023, particularly in provinces like Ninh Thuan and Binh Thuan. Regulatory hurdles, including delays in approving power purchase agreements (PPAs) and inconsistent tariff policies, further exacerbate the challenge. The government's efforts to update regulations have been slow, causing uncertainty for investors in the solar market, delaying the development of new projects.

Vietnam Solar Energy Market Future Outlook

Over the next few years, the Vietnam solar energy market is expected to witness significant growth, driven by continuous government support, advancements in solar technology, and increasing industrial energy demand. The Vietnamese governments commitment to reducing greenhouse gas emissions and achieving its renewable energy targets will further boost investments in both utility-scale and distributed solar energy projects. Innovations in energy storage solutions, alongside the expansion of smart grids, will also enhance the countrys solar power infrastructure.

Market Opportunities:

• Foreign Direct Investment in Solar Projects: Vietnam continues to attract substantial Foreign Direct Investment (FDI) into its renewable energy sector, with FDI inflows totaling USD 15.8 billion in the first half of 2023, according to the Ministry of Planning and Investment (MPI). Solar energy remains a key area for foreign investors due to Vietnams favorable investment policies, such as tax exemptions and land use incentives for renewable projects. Japan, South Korea, and the EU are among the largest foreign investors in Vietnam's solar industry, contributing to the development of large-scale solar farms and innovative energy storage solutions.
• Expanding Solar Manufacturing Capabilities: Vietnam has rapidly expanded its manufacturing capabilities for solar equipment, with exports of solar panels reaching USD 4.9 billion in 2023, as reported by the General Department of Vietnam Customs. The country is now one of the largest exporters of photovoltaic (PV) panels in Southeast Asia. Investments in solar manufacturing plants, particularly in northern provinces, are expected to create over 20,000 jobs by the end of 2024. This expansion not only supports the domestic solar market but also strengthens Vietnam's position in the global supply chain for renewable energy technologies.