A thriving green energy market in Vietnam

‘Vietnam is a large market of more than 100 million people and one of Southeast Asia’s fastest-growing economies. It is a young, dynamic market with a growing middle class – an incredibly forward-looking country that embraces opportunities,’ says Karin Greve-Isdahl, who heads our office in Vietnam.

Beyond the positive macroeconomic outlook, the political backdrop of strong state control through the Communist Party shapes the operating environment for businesses.

‘Politics and economics are closely intertwined and are often two sides of the same coin in Vietnam. For example, the authorities draw up five-year plans setting out how they want business, technology and industry to develop,’ says Greve-Isdahl.

Nevertheless, Vietnam has experienced strong market growth in recent years. The country has deliberately opened up to foreign investment and international trade, while the UN's net-zero target remains a high priority for the authorities.

‘We are seeing a sharp increase in the number of customers, and our office has never been busier. Having previously worked with just a handful of companies, we are now actively supporting 16 Norwegian companies, including Equinor, Tomra and Vard,’ says Greve-Isdahl.

She took up her role as head of the office in August 2023 and leads a small team of five at the Norwegian Embassy in Hanoi.

‘We help Norwegian companies, primarily in renewable energy, the circular economy and aquaculture. While aquaculture is already well established here, with Vietnam ranking as the world’s third-largest exporter of aquaculture products such as prawns, renewable energy and the circular economy are new and growing markets,’ says Greve-Isdahl, adding:

– Renewable energy in particular has developed rapidly in Vietnam in recent years, with a strong focus on onshore wind and solar power. Offshore wind is an entirely new sector in the country – and one where Norway has extensive expertise.

Vietnam's rapidly expanding industry, trade and middle class are driving a sharp rise in energy demand. With the country's extensive coastline and offshore areas, offshore wind is emerging as an important new source of energy. Equinor is rapidly establishing a presence in the country and is one of our largest customers.

‘We help Equinor gain market access for offshore wind. State-owned companies such as Petro Vietnam control the allocation of licences, so we take a long-term approach to government relations and partnerships,’ says Greve-Isdahl.

In 2019, Equinor began exploring whether Vietnam could be an attractive market for renewable energy development, and opened a new office in 2022.

‘There is no doubt that Vietnam has the best wind resources in Southeast Asia, thanks to its long coastline and strong winds. There is also a clear need and willingness to invest in renewable energy, but we are taking a long-term view in Vietnam,’ says Jacques-Etienne Michel, Equinor’s Country Manager in Vietnam.

Although Equinor Vietnam does not currently have any specific projects under way, key agreements are beginning to take shape – despite the Vietnamese regulatory framework for renewable energy being somewhat 'immature'.

‘We have a strong relationship with Petro Vietnam. We have signed two memoranda of understanding (MoUs) with them, agreeing to work together to explore how we can develop renewable energy in Vietnam. This is where Innovation Norway really comes into its own – they help us arrange meetings and navigate the various stakeholders we need to engage with, both in government and the private sector,’ says Michel, adding:

– For example, they have assessed the current state of Vietnam's supply chain and identified what is missing at that level to enable the construction of a wind farm. This is valuable to us.

Vietnam is firmly committed to the international target of net-zero emissions by 2050 and is working to develop a circular economy through improved waste management, sustainable materials and recycling.

‘Vietnam has ambitious plans for the circular economy, and this year it introduced regulations on extended producer responsibility, which are already in place in Europe. This means that producers are legally responsible for the entire life cycle of their products, from production to recycling. This is an entirely new field for Vietnam, where several Norwegian companies, including TOMRA, have relevant technology and expertise,’ says Greve-Isdahl.

To succeed with its green initiatives, Vietnam needs innovative technology. Norwegian company TOMRA sees Vietnam as a key market in Asia for the years ahead.

'Our circular economy technology is based on a reverse vending scheme known as DRS (Deposit Return System). However, this requires the authorities to establish legislation for the deposit return scheme, which involves challenging and time-consuming advocacy work. This is where Innovation Norway plays a key role,' says Nam Cao Hoang, PR Manager at TOMRA, adding:

'Our team has organised workshops and study visits, and conducted analyses to explore the possibility of introducing a deposit return scheme for plastic bottles in Vietnam,' says Hoang.

Vietnamese society is strongly relationship-oriented and hierarchical, so cultural understanding and patience are essential to success.

‘In Vietnam, it is important to take a long-term view. The country is governed very much from the top, and things take time. For example, others have to wait until the person in charge has added something to their calendar before they can act. To enter the Vietnamese market, you need to think long term,’ says Greve-Isdahl, before elaborating:

– You need to use the technology correctly. Technology providers often only have the solution to one part of the problem.

She gives an example.

– 'If you are selling a high-tech pump, but the customer lacks the pipes and other components needed to build the complete system, they will not be willing to pay for the pump. They need to understand the bigger picture. They also have a very different time horizon when it comes to recouping their investment: they expect returns here and now, rather than potential gains five to ten years down the line,' Greve-Isdahl concludes.