Vietnam's renewables capacity to jump to just 850MW in almost a decade

This is just less than 1% of total electricity generation.

While renewables project announcements have increased in Vietnam over the past six months, our capacity growth forecasts remain conservative - notably for the country's underdeveloped solar industry, according to BMI Research.

Low subsidies on offer to developers and the government's stronger focus on other power sources all form bottlenecks to growth.

Investor interest in the Vietnamese renewables industry has picked up notably over the last six months, highlighting the strong potential of the sector, and several new projects across the different segments of the industry have been announced.

Here's more from BMI Research:

In December China Everbright International Limited signed an investment agreement with the Can Tho Department of Construction to develop a 7.5MW waste-to-energy project in Can Tho. Construction is anticipated to begin in mid-2017 and the facility is expected to start operations in 2018.

In November, Mainstream Renewable Power signed a cooperation deal to co-develop 938MW of wind capacity in Vietnam with local and international firms, including General Electric. The capacity development is expected to mobilise investments worth USD2.2bn in the country. Construction of the first projects is reportedly expected to begin in 2018.

Natcore Technology signed a memorandum of understanding (MoU) with a European developer of international renewable energy projects and a Vietnamese consortium to carry out a 200MW photovoltaic (PV) project in Vietnam. The scheme, estimated to cost USD300mn, will be executed in phases in selected provinces of the country, starting with a 10MW facility.

While the project development announcements serve to strengthen the project pipeline, our capacity growth forecasts remain conservative.

We expect non-hydro renewables capacity to increase from just under 400MW in 2016 to just over 850MW by 2026. This will result in non-hydro renewables contributing less than 1% to total electricity generation in the country by the end of our forecast period in 2026, amid strong growth in thermal fuels, particularly coal-fired power generation.