Foreign Direct Investment flowing into the renewable energy sector is expected to double in 2024

The year 2024 is forecasted to witness a surge in foreign direct investment (FDI) into Vietnam’s renewable energy sector, with total projected investment exceeding $15 billion USD. Additionally, numerous biomass power plants are slated for construction this year.

 

2024 is anticipated to herald a boom in FDI inflows into Vietnam’s renewable energy sector, driven by several favorable factors, including:

Firstly, the increasing demand for energy: Vietnam’s energy demand is projected to grow by 7-8% annually from 2021 to 2030, spurred by economic development and population growth. Renewable energy plays a crucial role in meeting this escalating demand without harming the environment.

Secondly, the Vietnamese government’s enactment of various incentivizing policies to attract investment in renewable energy, including:

  • Competitive electricity pricing: Electricity prices from wind and solar power sources are privileged over traditional electricity prices, facilitating quicker capital recovery for investors.
  • Corporate income tax exemptions: Renewable energy projects are exempted from corporate income tax in their initial operational years.
  • Value-added tax reductions: Renewable energy projects benefit from reduced value-added taxes on imported equipment and materials.
  • Streamlined licensing processes: The Vietnamese government has simplified licensing procedures for renewable energy projects, enabling investors to expedite project implementation.

Thirdly, Vietnam’s commitment to achieving net-zero emissions by 2050. Renewable energy plays a vital role in realizing this commitment.

Fourthly, the significant reduction in renewable energy production costs, particularly for wind and solar power, over recent years has enhanced the competitiveness of renewable energy compared to traditional energy sources.

Lastly, Vietnam possesses substantial potential in renewable energy, with abundant wind energy along its coastline and ample solar energy resources. According to estimates from the Ministry of Industry and Trade, Vietnam has the potential to develop 38 GW of wind power and 15 GW of solar power.

FDI inflows into Vietnam’s renewable energy sector are expected to concentrate on the following areas:

  • Wind power: Vietnam boasts significant potential for wind power with its extensive coastline and regions of strong winds. Numerous wind power projects are anticipated to be implemented onshore and offshore in 2024. According to the Ministry of Industry and Trade, Vietnam will install an additional 7.5 GW of wind power during the 2024-2025 period.
  • Solar power: Solar power is another popular renewable energy source in Vietnam. It is projected that more households, businesses, and solar power plants will be installed in 2024. According to the Ministry of Industry and Trade, Vietnam will install an additional 7 GW of solar power during the 2024-2025 period.
  • Biomass energy: Biomass energy can be utilized for electricity, heat, and biofuels production. It is anticipated that numerous biomass power plants will be constructed in 2024.

In 2024, several countries and major corporations are expected to heavily invest in renewable energy in Vietnam, including:

  • The United States: American energy corporations such as AES, SunPro, and Orsted are actively implementing wind and solar power projects in Vietnam. For instance, AES Corporation has signed a $2 billion investment contract for a 2,000 MW offshore wind power project in Quang Tri province.
  • Europe: European energy corporations such as Siemens AG, RWE AG, and EDP Renewables are also participating.

These forecasts not only demonstrate the potential for increasing energy demand and the government’s commitment but also highlight the market’s attractiveness, along with significant incentives and potential in wind, solar, and biomass energy. The strong participation of countries and corporations like the USA and Europe underscores Vietnam’s allure in this sector. This not only brings economic benefits but also contributes significantly to environmental protection and emission reduction goals.

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