Vietnam Solar Market Outlook to 2030

Vietnam Solar Market Overview

• The Vietnam Solar Market is experiencing robust growth, currently valued at 18.50 gigawatt, based on a five-year historical analysis. This growth is primarily driven by increasing government initiatives to promote renewable energy, favorable policies, and rising awareness about the environmental benefits of solar energy. Vietnam’s rapid economic expansion, along with its ambitious solar capacity targets, has fueled investments in the solar sector, positioning it as one of Southeast Asia’s leading solar energy markets.
• Major metropolitan areas like Ho Chi Minh City, Hanoi, and Da Nang are witnessing significant solar energy installations due to high energy consumption, increasing urbanization, and proactive policies by local governments. Additionally, Vietnam's commitment to reducing its carbon emissions and dependence on coal-fired power plants is pushing the demand for solar energy solutions in both commercial and residential sectors.
• Vietnam's government has introduced tariffs and incentives to encourage solar energy development. In 2023, the government offered attractive feed-in tariffs (FiTs) to solar power projects, which have led to a surge in private sector investments. However, challenges such as grid integration and project financing remain, though ongoing improvements in infrastructure are expected to mitigate these issues.

Vietnam Solar Market Segmentation

• By Technology: The market is segmented by technology type into photovoltaic (PV) systems, concentrated solar power (CSP), and hybrid systems. Currently, photovoltaic systems dominate the market share, primarily due to their cost-effectiveness and widespread adoption. These systems have become the preferred choice for both utility-scale and rooftop solar installations, as technological advancements in PV cells have led to greater efficiency and lower costs. The country’s policy incentives and relatively short payback period for PV systems have accelerated their growth, making this segment the largest in the market.

• By Application: The market is also segmented by application into residential, commercial, industrial, and utility-scale installations. Utility-scale projects hold the dominant share of the market, as the government and private investors focus on large-scale solar farms to meet the country’s growing energy demand. These projects are particularly popular in the southern and central regions of Vietnam, where land availability and solar irradiance are optimal for large-scale energy production. Meanwhile, the residential segment is growing rapidly due to declining system costs and increasing consumer interest in reducing electricity expenses.

Vietnam Solar Market Competitive Landscape

The Vietnam Solar Market is highly competitive, with both local and international players focusing on expanding their project portfolios and enhancing technological capabilities. Key international players include First Solar, Trina Solar, and JinkoSolar, which dominate the market with their large-scale solar projects. Local companies such as TTC Group and SolarBK are also prominent in the market, particularly in rooftop installations and smaller-scale projects.

Several companies are investing in research and development to enhance solar efficiency and storage capabilities. Partnerships with local firms and government contracts are common strategies for international players to gain a foothold in the market. Competitive pricing, technological advancements, and after-sales services are key factors for success in this growing market.

Vietnam Solar Market Analysis

Growth Drivers

• Government Renewable Energy Targets: Vietnam's government has been actively pushing towards renewable energy through the "Vietnam Power Development Plan VIII," aiming to increase solar energy capacity. By 2030, the government targets 18,640 MW of installed solar capacity. The plan also sets a goal for renewables to account for 30.9% of the country's total electricity generation by 2030. Vietnam's National Energy Development Strategy is key to attracting investment, supported by legislation offering favorable terms for renewable projects. This proactive policy support aims to reduce dependency on coal, further accelerating solar market growth.
• Rising Electricity Demand: With Vietnam's rapid industrial growth, electricity consumption per capita reached over 2,400 kWh in 2022. As urbanization continues to drive electricity demand, the Ministry of Industry and Trade projects this to rise above 3,500 kWh by 2025. The Vietnamese economy, growing at 5.05% annually, is significantly energy-intensive, making solar energy a crucial source to meet this expanding electricity demand. Increased consumption is encouraging private and public investments in solar infrastructure to maintain a stable supply of electricity across the country.
• Declining Solar PV Costs: Solar photovoltaic (PV) systems have seen a reduction in cost due to technological advancements and increased production capacity. In Vietnam, the average cost per watt of solar PV systems has declined from USD 0.50 in 2019 to around USD 0.30 in 2023. This drop in costs has been a driving force behind the rapid adoption of solar projects, especially in commercial and industrial sectors. The reduced cost of solar installations encourages businesses to switch to renewable energy sources, creating more investment opportunities in the market.

Market Challenges

• Grid Integration and Capacity Issues: Vietnam's rapid growth in solar energy generation has put significant pressure on its national grid infrastructure. The intermittent nature of solar power, characterized by fluctuating energy output based on sunlight availability, has created challenges in ensuring a stable and reliable energy supply. Grid congestion and transmission bottlenecks have emerged as critical issues, leading to curtailments where excess solar energy cannot be efficiently utilized. To address these concerns, the government is prioritizing efforts to expand and upgrade the grid, aiming to enhance its capacity to better integrate solar energy and maintain overall grid stability.
• Land Acquisition and Regulatory Hurdles: The process of land acquisition for solar projects in Vietnam presents considerable challenges, especially in areas with high population density and agricultural importance. Developers often face prolonged delays due to the complexity of obtaining necessary permits and adhering to environmental regulations. These regulatory hurdles can slow down the pace of project development, as various approvals and assessments are required before construction can begin. Additionally, balancing land use between energy infrastructure and agricultural needs creates further constraints, particularly in rural regions, where concerns about environmental impact can delay or complicate solar farm installations.

Vietnam Solar Market Future Outlook

The Vietnam Solar Market is expected to continue its growth trajectory, with total installed capacity projected to grow remalably. This growth will be driven by increasing investments in utility-scale projects, rising residential solar installations, and continued government support. Technological advancements in energy storage and grid management will also play a pivotal role in addressing existing challenges and unlocking the full potential of solar energy in Vietnam.

Future Market Opportunities

• Technological Advancements: Advancements in solar technology, such as bifacial solar panels and energy storage integration, are set to boost the efficiency of solar systems in Vietnam. Bifacial panels, which can generate energy from both sides, have been found to improve energy output by 10-15% compared to traditional panels. Additionally, energy storage solutions are becoming more viable, with battery costs dropping remarkably since 2021. This technology allows excess solar energy to be stored and used during non-peak sunlight hours, enhancing the overall reliability of solar power generation.
   
• Solar Energy Export Potential: Vietnam’s growing solar capacity has opened doors for cross-border electricity trading, particularly with neighboring countries like Laos and Cambodia. In 2023, Vietnam exported electricity to these nations, with solar energy accounting for a significant share. With expanding solar projects, the government is exploring more opportunities for regional energy trade. Leveraging Vietnam's strategic position in Southeast Asia, the country aims to become a net exporter of solar energy, contributing to regional energy security.