Energy access is essential for economic and human development and is an important driver for the economic development of a country. Access to modern forms of energy, especially electricity, becomes even more important for the socio-economic development of rural areas (which lag behind urban areas in terms of infrastructure development). “Full electrification” to achieve social and economic development goals (and SDGs) in Vietnam requires 24/7 electricity access for every household, family, farming settlement and local enterprise, even in rural communities. To achieve this goal, the government of Vietnam has focused primarily on providing access by extending the centralised grid.
Approximately 98 % of households in both urban and rural areas of the country have been electrified through this means, but electricity access to the remaining 2% of the population, predominantly located in regions with terrain unfavourable to grid expansion, has become a technoeconomic moot point. To this end, discussions have explored whether cost-effective, off-grid renewable energy (RE) alternatives could assist the electrification of these remaining populations and further drive the socioeconomic development of these population groups.
Thus, this study centres on providing answers to two main questions:
- What is the best approach to provide electricity access to the remaining 2 % of Vietnamese households located in rural areas: grid expansion or off-grid renewable energy options?
- Can cheaper off-grid alternatives engender local value creation in rural areas?
Policy message 1: Vietnam has tremendous potential for off-grid renewable energy systems, which are cost competitive against grid extension in rural areas with challenging terrain that hinders navigation and connection. Deploying low-wind-speed wind turbines to electrify clusters in rural areas with a levelised cost of 9087 VND/kWh is the cheapest means of providing low-cost energy access to remote areas of Vietnam.
Policy message 2: The private sector or organised community groups need to be encouraged to invest in the off-grid renewable energy sector and be made exempt from import taxes for supplying electricity to households or businesses in rural communities. If effectively implemented, this can stimulate the localisation of skills for the off-grid solar PV and small wind turbine value chains in Vietnam.
Policy message 3: In order to effectively drive the adoption of low-cost off-grid renewable energy systems in remote areas of Vietnam, there has to be close dialogue between the government, private sector and financial institutions at the national and provincial levels concerning suitable financing mechanisms for farming communities (with low electricity consumption levels) located more than 10km away from the nearest medium voltage line.
Year of publication: 2019
Editors: Ayodeji Okunlola, Laura Nagel, Nguyen Thi Mai Dung, Sebastian Helgenberger, Nguy
Thi Khanh, Nguyen Thi Mai Dung and Sarah Kovac – IASS, GreenID, UfU
Technical implementation: Nguyen Duc Song, Dr. Nguyen Anh Tuan, Nguyen Chi Phuc –
Institute of Energy, Vietnam
Suggested citation: IASS/Green ID. Electricity access and local value creation for the un-electrified population in Vietnam. Assessing the co-benefits of decarbonising the power sector. Potsdam/Hannoi: IASS/Green ID, 2019.
This study is part of a 2019 series of two studies assessing the co-benefits of decarbonising the power sector in Vietnam. Edited by IASS, GreenID and UfU: