Vietnam considering private investment in electricity transmission

Vietnam’s government is considering allowing all economic sectors, including the private sector, to build power transmission networks, not including grid projects implemented by the state under national electricity development plans. The change forms part of the amendments to the country’s Electricity Law proposed by the government.

Renewables expert John Yeap of Pinsent Masons said: “With the push for more renewable energy generation from solar and wind, Vietnam will require significant investment in its grid system. With the private sector able to build and own interconnections below 500kV, this will enable developers to connect their power projects to the grid which will not only alleviate the capital cost from the public sector, but also enable the private sector to ensure connectivity to the grid.”  

“However a transparent pricing mechanism will need to be established along with operational use issues such as the ability of third parties access to the privately developed interconnector,” he said.

If the proposal gets approved, foreign investors will be allowed to invest in developing transmission lines, according to Vietnam’s national assembly chairman Vuong Dinh Hue in a committee discussion last week. However, vice chairman Nguyen Khac Dinh said that the private sector should not be allowed to build power lines with 500kV or more.

According to Vietnam’s industry and trade minister Nguyen Hong Dien, the draft law would specify that 500kV and 800kV power lines may only be built by the state. Lines with voltage of below 500kV may be built by all economic sectors, including the private sector. If passed, the change will mean that state-owned enterprises (SOEs) will no longer have to invest VND11 trillion (US$478 million) per year in constructing lower voltage power lines.

The draft amendments to the Electricity Law are planned to be submitted to the National Assembly for approval later this year.

In May 2020, the Vietnam’s Ministry of Industry and Trade first proposed allowing private investment in power transmission. One month before that, the Ninh Thuan province approved what was reported to be the first private investment in a Vietnamese power project: a new solar power plant in the Thuan Nam district, incorporating a 500kV substation and 500kV, 220kV power line to connect with the national power grid.