Mobilising Investment for NDC Implementation (MI), supported by the German Government’s International Climate Initiative (IKI), was launched by CDKN, SouthSouthNorth and LEDS-GP in 2017. The project works with seven partner countries around the world, namely Bangladesh, Ethiopia, Kenya, Peru, Dominican Republic, Philippines and Vietnam, to accelerate public and private investment in priority NDC sectors and markets.
Context – NDC goals and regulatory environment
The Government of Vietnam has established a NDC goal to reduce greenhouse gas emissions by 8% by 2030 compared to business as usual levels, utilizing domestic resources. Emissions intensity is also addressed, with the target to reduce per unit of GDP by 20% compared with 2010 levels. With additional international support, Vietnam’s contribution could be increased by up to 25%. The mitigation efforts center on the energy sector.
Despite the low level of installed renewable energy (RE) to date, the Government of Vietnam has begun to spur investment through a range of policies, targets and incentives. The government has put in place several supporting sectoral policies, including a Renewable Energy Development Strategy that seeks to “increase the electricity output produced by renewable sources from approximately 58 billion kWh in 2015 to 101 billion kWh by 2020, and 186 billion kWh by 2030.”
This new policy (April 2020) allows businesses in Vietnam to procure electricity directly from private firms producing renewable energy and enable them to power their operations with 100 percent renewable energy.” – the Direct Power Purchase Agreement (DPPA) regulation.
Programme scoping commenced in January 2017. A “bottom-up” approach was taken to identify opportunities for NDC financing in Vietnam. Such an approach starts with an interrogation of a specific sector or entry point technology that could contribute to the achievement of a country’s NDC objectives. This approach resulted in the selection of the commercial and industrial sector in Vietnam, and the potential for this sector’s uptake of renewable energy, specifically solar energy.
The local country implementation partners, CEIA convened with a variety of public and private sector stakeholders to identify the key barriers to clean energy investment in the commercial and industrial sectors as well as to understand ongoing efforts by development partners in this space.
Key stakeholders included:
The private sector, in most markets, can often provide an excellent overview of the key regulatory, policy, and market barriers to deploying a particular technology or business model, and this was true in Vietnam. Scoping analysis concluded that the private sector’s investment in Vietnam’s rooftop solar sector could expand if a core set of key issues are addressed and resolved, including:
Project activities – Strategy and Execution to address investment mobilisation
The IKI MI team identified an approach that centred on enabling a quick ramp-up of corporate and municipal renewable energy procurement, respectively. This approach was chosen based on the strong interest by the public and private sectors. The team elected to leverage existing partnership with the USAID Vietnam Low Emission Energy Program (VLEEP), who provide technical assistance and capacity building to the Vietnam public and private sectors on direct power purchase agreements and other related clean energy policies.
In Vietnam, the execution strategy includes engaging with “purchasers”, in other words the private sector entities that are interested in acquiring rooftop solar or entering into long-term power purchase agreements (PPAs) for solar or wind energy. Government was also engaged on resolving key policies and regulatory changes that are needed to enable corporate procurement of clean energy.
Private sector activities
Led by the Clean Energy Investment Accelerator (CEIA) – a public-private partnership initiative co-led by Allotrope Partners, the World Resources Institute, and the U.S. National Renewable Energy Laboratory – the following project activities were undertaken:
The scoping assessments identified the fact that there were no formal mechanisms for direct business-to-business renewable energy sales in Vietnam. To this end, IKI MI provided direct technical assistance on the design of the Direct Power Purchase Agreement (DPPA) regulation. This new policy (April 2020) allows businesses in Vietnam to procure electricity directly from private firms producing renewable energy and enable them to power their operations with 100 percent renewable energy.
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