Russia’s Renewable Energy Investment in Vietnam: New Projects Underway
The renewable energy sector in Vietnam is one of the most vibrant in Southeast Asia with high demand and significant potential thanks to the country’s abundant offshore wind sources as well as abundant solar sources. Vietnam Briefing sheds light on the recent cooperation between Russia and Vietnam’s energy corporations on the development of a new wind energy project.
Russia was one of the first countries to establish diplomatic relations with Vietnam, laying the groundwork for strong bilateral and economic relations between the countries. As of early 2022, Russia ranked 24th among foreign investors pouring funds into Vietnam with the energy sector being the main focus of the major investment.
New renewable energy projects underway
Recently, Russia’s state-owned corporation Rosatom and Vietnam’s An Xuan Energy signed an agreement on cooperation in wind energy. The agreement aims to organize cooperation on the construction of a 128 MW wind farm in the Vietnamese province of Son La, located in the northwest of the country.
With Rosatom’s long-built experience as a developer of wind power projects in Russia, the involvement of the Russian corporation in the project is how it looks to export renewable energy technology to Vietnam. In addition, the corporation’s representative also cited Southeast Asia and Vietnam in particular as their priority areas.
In fact, Rosatom is already implementing several projects in Vietnam in the field of energy and science. This includes the MoU on a US$350 million project to construct a nuclear research and tech center in Vietnam that Russia’s Rosatom Group and Vietnam’s Ministry of Science and Technology signed in 2019.
The center is expected to be equipped with Russian-designed research reactors, a multi-purpose cyclotron, as well as research laboratories, an engineering complex, equipment, and infrastructure to ensure the safe operation of the center.
Now as both countries further work on renewable energy and energy in general, these areas of cooperation will not only contribute to ensuring energy security and industrialization of the region but also help transition to an energy model that meets the goals of sustainable development.
Russian energy projects in Vietnam
Russian trade trends with Vietnam are also on an upwards trajectory. According to Russian customs, bilateral trade for last year reached US$6.87 billion in 2021, up 21.7 percent from the previous year.
Vietnam and Russia are seeking out ways to accelerate their trade and investment ties which are on the rise and have aimed to take advantage of the Vietnam-Eurasian Economic Union Free Trade Agreement (VEEUFTA), which took effect in 2016. The union includes Armenia, Belarus, Kazakhstan, Russia, and Kyrgyzstan.
According to a priority list for jointly-implemented Vietnam-Russia projects, 17 projects have been adopted by both countries covering oil and gas, transport, agriculture, electricity, construction, industry, and high technology.
As both nations agree to continue further boosting their energy cooperation as one of the key pillars, Vietnam and Russia earlier inked a series of deals, focusing on facilitating energy cooperation, for example:
- Russia’s NOVATEK PLC and Vietnam’s south-central province of Ninh Thuan signed an MoU to expand an integrated power project using liquefied natural gas (LNG) in the province’s Ca Na area.
- Russia’s Zarubezhneft and Vietnam’s T&T Group also inked a cooperation agreement on expanding renewable energy sources.
Russian companies have been operating in Vietnam’s energy sector effectively for a long time. Up to 30 percent of crude oil and about 25 percent of the gas in Vietnam are exploited by enterprises involving Russian investment, such as companies of Zarubezhneft, Rosneft, and Gazprom.
Vietnam’s renewable energy also has seen considerable progress in the past few years. Particularly, solar energy production in Vietnam expanded to nearly 11 percent from about 0 percent in just four years, turning the country into the 10th solar power generator in the world in 2021 and placing Vietnam among the countries with the fastest clean-energy transition rates worldwide.
However, renewable energy contributes over 3 billion kWh per month, which only accounts for 10 percent of the capacity and 6 percent of the national commercial output, according to a 2021 report produced by the British Chamber of Commerce in Vietnam.
In that context, the government has issued many mechanisms and policies to encourage the development of renewable energy sources, especially solar and wind energy in Vietnam which have in turn succeeded to appeal many domestic and foreign investors and enterprises to engage in the market.
According to figures from the Vietnamese Ministry of Planning and Investment (MPI), as of late 2021, Russia had 149 valid investment projects in Vietnam, registered at US$953.7 million. Russian projects are implemented in oil and gas, manufacturing, mineral exploitation, transport, telecommunications, fishery, and noticeably energy.
Even though some Russian-backed energy projects in Vietnam have been put on hold due to ongoing geopolitical concerns, key investments continue in energy especially in the renewable energy sector, facilitating the country’s objective toward a more sustainable economy.
Vietnam Briefing is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in Hanoi, Ho Chi Minh City, and Da Nang. Readers may write to firstname.lastname@example.org for more support on doing business in Vietnam.
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