VIETNAM - Power Development Planning VIII (“PDP8”) - Vietnam Government’s plan to De-carbonize the Country - what you must know:

1. VIETNAM - Power Development Planning VIII (“PDP8”) - Vietnam
Government’s plan to De-carbonize the Country - what you must know:
Question#1. What impact is PDP8 likely to have on the country’s efforts to decarbonize the
economy?
Answer#1:
The draft Power Development Planning VIII (“PDP8”) reinforces the Vietnam Government’s current
view on prioritizing renewable energy sources to minimize negative impacts caused by electricity
production on the environment. Importation of fuels (coal, LNG) are encouraged as a way to diversify
the country’s primary energy sources, and the same goes for the establishment of transmission and
distribution grid links with China, Laos and Cambodia in order to maximize each country’s energy
potential. Imported electricity sources from neighboring countries are to be considered as prioritized
projects because imported electricity will reduce environmental impact compared to domestic
production.
As of 2020, the country’s total generation capacity is about 69.3 gigawatt (GW), including 16.5 GW of
solar power (approx. 24% of the total capacity) and 0.6 GW of wind power. More than 50% Vietnam’s
electricity generation came from coal in 2020. Vietnam’s reliance on coal-fired power remains heavily
to meet rapidly increasing electricity demand. Hydroelectric generation is also significant as the country
is home to a number of large rivers. Non-hydro renewable sources such as wind and solar made up 5%
of Vietnam’s electricity generation in 2020. Under the draft PDP 8, Vietnam plans to increase solar
capacity to 18.6 GW and wind capacity to 18 GW by 2030.
Question#2. Does PDP8 target specific regions of the country? Are these regions that are more
likely to be impacted by the transition to a low carbon economy?
Answer#2:
Yes, one of the most notable differences between the Draft PDP 8 and Revised PDP 7 (the latest official
national power development planning) is the level of power demand between the North and the South.
According to PDP8, the proportion of commercial electricity in the North will gradually increase from
42.4% in 2020 to 45.8% in 2045, while the South will decrease its proportion from 47.4% in 2020 to
43.6% by 2045. By 2040, the North’s commercial electricity demand will start to exceed that of the
South. As a result, this will significantly affect the strategy in PDP8 to develop the transmission grid
and generation sources (including RE sources) to meet the demand.
The draft PDP 8 is oriented to focus on the development of transmission grid of at least 220KV to solve
overcapacity issues that has been occurring in recent years. As to grid development, in the period of
2021-2030, MOIT sees the need to build 86 GVA with a capacity of 500kV per station and nearly
13,000 km of DLZ. From 2031-2045, an additional construction of 103 GVA with capacity of 500kV
and nearly 6000 stations is required. The 220kV power grid needs construction of 95 GVA, nearly
21,000 km DMZ and 108 GVA, more than 4000 km NE. Total investment capital for electricity

2. development in the period 2021-2030 is roughly USD 128.3 billion USD, of which: USD 95.4 billion
for the power sources, USD 32.9 billion for the grids. The average structure of capital investment shall
be 74% / 26%.
The draft PDP8 appears to concern a surging oversupply of solar power in 2030 in many regions, such
as the Central Highlands (estimated 1,500 MW but registered 5,500 MW), the South Central (estimated
5,200 MW but registered 11,600 MW), or the Southern (estimated 9,200 MW but registered 14,800
MW). The wind power shares the same situation as the registered capacity exceeds normal estimated
capacity in Central Highlands (estimated 4,000 MW but registered 10,000 MW) and Southern
(estimated 6800 MW but registered 17,000 MW). Accordingly, the draft PDP8 must solve this
unbalance to ensure the sustainable development of the renewable energy sources in Vietnam. It is
expected that future policy on renewable energy will base on auction rather than FIT.
For example, below is the draft policy for solar power projects. In late January 2021, the Ministry of
Industry and Trade (“MOIT”) issued the draft Decision of the Prime Minister guiding the selection of
investors implementing solar power projects under the bidding mechanism (“the Draft”). According to
the Draft, the Decision would be applicable to projects with grids connected directly to the national
power network. The Ministry of Industry and Trade shall coordinate with the Electricity of Vietnam
and the People’s Committees of localities to organize the formulation and approval of the renewable
energy power source development plan for a period of 5 years and every 2 years to serve as a basis for
the bidding system. In addition, every 02 years, the Ministry of Industry and Trade shall issue a Price
Framework for electricity generation in order to determine the ceiling price for bidding to select
investors of solar power projects with COD in the next 02 years. The plan for development of renewable
energy power sources for a period of 5 years shall include the total capacity scale for each renewable
energy power source in the 5-year period, the total capacity scale for each renewable energy power
source for each load region (8 regions) and a list of transmission lines and substations (220 kV at least)
to be put into operation for a period of 5 years. The 02-year plan shall have similar content but for a 2-
year period only and shall be more provincial specific.
Question#3. Were issues of economic, racial, and gender equity considered in the development
of PDP8?
Answer#3:
Yes, any policy of the Government must consider these issues but it is very challenging to identify
whether they are well reflected into the policy including PDP8. This is a very broad and difficult
question.
Question#4. Was there a debate amongst political leaders about the costs and benefits of
PDP8?
Answer#4: Yes, of course. It appears that the new Government now has different views and priorities
than the former and as a result the PDP8 must be revised to reflect such priorities.

3. As you may know, in late March 2021, the very first draft of PDP8 PM Decision (“Draft Decision”)
has been published through unofficial sources (i.e. not through the Ministry of Industry and Trade
(MOIT)’s website). Such PM Draft Decision was planned to be signed off at the end of March during
the last days of Prime Minister Nguyen Xuan Phuc’s administration, but it was delayed as the hand-
over to new administration was already under way. It appeared that the investors and LNG-to-power
projects in this first PM Draft Decision were scaled down comparing to those in the PDP8 proposal
published by Ministry of Industry and Trade (MOIT) earlier.
On 23 April 2021, the Deputy Prime Minister (DPM) Le Van Thanh directed a Government’s meeting
on the PDP8 and concluded that, among others, PDP8 must be (i) updated with qualifications for
prioritized projects, and (ii) revised to reasonably review and allocate development of power sources,
especially LNG-to-power projects in PDP8 in order to ensure the competition, optimization on
development of power system. DPM asked the MOIT to careful review and digest opinion from EVN
in its official letter No. 1645/EVN-KH dated 2 April 2021. Finally, the DPM required the MOIT to
submit the updated PDP8 proposal prior to 15 June 2021.
Unfortunately, due to Covid-19 situation and heavy workload on updating the PDP8 proposal, MOIT
failed to submit a revised proposal to the Government for consideration. On 17 June 2021, the MOIT
Minister arranged a press meeting to update the PDP8 progress and planned to submit the revised PDP8
proposal to the Government within June 2021. So far, based on our intel, the MOIT is still reworking
its draft and PDP8 is expected to be approved COB this year ideally.
Question#5. What role did various stakeholders (e.g., business, not-for-profits) take in
advocating for or against PDP8 or trying to influence its development?
Answer#5:
Yes, there are many stakeholders here, e.g., EVN, local developers, business communities (such as
Chambers and VBF) and state authorities. However, please kindly note that the draft PDP8 is mainly
drafted by the Energy Institution (NB: an institution under EVN until it was taken over by MOIT since
2010). The MOIT was collecting opinion from all stakeholders for the draft PDP8 made by the Energy
Institution. It is worth noting that the opinion from EVN is always critically important as it (including
its affiliates and subsidiaries) still remains the position of a monopoly wholesaler in the market. The
new Government requested the MOIT to revisit EVN’s opinion for revising the current draft PDP8.
Question#6. Which key stakeholders were in favour of PDP8? How did they organize and
influence decision making?
Answer#6:
Yes, it is very challenging to answer black or white on this question. PDP8 is the prioritized policy of
the Government for the energy sector. Thus, there is always a favorable trend for this policy to come
out soon. We however do note that there are different views on the contents of the PDP8, but not an
issue of support or opposition.

4. Question#7. Which key stakeholders were against PDP8? How did they organize and influence
decision making? Were there specific measures to address their concerns?
Answer#7:
Yes, it is very challenging to answer a black or white question. PDP8 is the prioritized policy of the
Government for the energy sector. Thus, there is always a favorable trend for this policy to come out
soon. We however do note that there are different views on the contents of the PDP8, but not an issue
of support or opposition.
Question#8. Has PDP8 been well-received by the public?
Answer#8:
Yes, it has been well received by the public. However, the foreign invested business communities still
have some concerns, among others, over the current PDP8:
• No clear plan for variable renewable energy in the technology mix. PDP8 must ensure
Vietnam planning remains cutting-edge to include full representation of variability and assessing power
system reliability.
• No plan for nuclear power.
• Need to construct a regulatory and permitting environment that attracts private sector
investment in clean energy generation and energy efficiency.
• Need a clear policy to ensure EVN to share the market risks: e.g., a bankable (take or pay)
power purchase agreement with generators.
• Need to halt further development of coal based projects: it is recommended to suspend the
approval of any new coal thermal power plants and conducting a strategic review of those that are
already approved but which do not have financing or power purchase agreements.
• Need to develop a flexible transmission network in view of the market orientation and
increased variable renewable energy.
• Need to build schemes to address the uncertainties: from fuel prices to demand growth and
oversupply and curtailment.
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For more information on the above, please do not hesitate to contact the author Dr. Oliver Massmann
under omassmann@duanemorris.com. Dr. Oliver Massmann is the General Director of Duane Morris
Vietnam LLC, Member to the Supervisory Board of PetroVietnam Insurance JSC and the only foreign
lawyer presenting in Vietnamese language to members of the NATIONAL ASSEMBLY OF
VIETNAM.