Electricity prices are not attractive enough for private investors while huge capital is needed.

The forum was organized by the Vietnam Petroleum Association in collaboration with the Vietnam National Oil and Gas Group ( Petrovietnam ).

Huge capital of 135 billion USD needed for energy investment

From the perspective of restructuring and capital mobilization, Associate Professor Dr. Ngo Tri Long - an economic expert - pointed out the challenge in implementing the energy transition, which is the huge financial pressure, when Vietnam needs to mobilize up to 368 billion USD to achieve the Net Zero target.

In the 2021-2030 period alone, capital demand for energy transition - including investment in renewable energy, power transmission systems, energy storage and upgrading digital infrastructure - is expected to exceed 135 billion USD.

Comparing this scale with Vietnam's average annual public investment (about 700-800 trillion VND, equivalent to 28-32 billion USD, according to the Ministry of Finance ), Mr. Long said that the requirement to mobilize finance for energy transition far exceeds the ability of traditional public capital sources to meet.

Meanwhile, the institutional challenges in mobilizing energy finance are that the electricity price mechanism is not attractive enough for private investors.

For example, the ceiling price for onshore wind power is VND1,587.12/kWh (excluding VAT), equivalent to about 6.7 cents/kWh, while according to IRENA (International Renewable Energy Agency) assessment, the competitive price should be about 7-9 cents/kWh.

This creates an “imbalance” between profit expectations and investment risks, especially in the context of rising global interest rates and the VND under pressure to depreciate against the USD. Meanwhile, the power purchase agreement (PPA) lacks long-term binding and risk guarantees.

The legal framework for green finance is still lacking and fragmented, which is a barrier to accessing capital for energy transition. The role of the State is not strong enough in leading capital: institutional gaps in the formation of green financial institutions.

Proposal to pilot the national energy bank model

Mr. Nguyen Trung Khuong - representative of Petrovietnam Strategy Board - said that there are many opportunities opening up for the group when implementing the energy transition. That is, the domestic energy demand continues to increase strongly, especially when setting high growth targets in the coming period. The trend of switching to low-carbon energy, along with promoting the role of natural gas and LNG, the 4.0 industrial revolution...

However, the challenge for this group is the decline in the traditional role of crude oil and natural gas, forcing the group to find new growth drivers. The risk of “stranded assets” for oil and gas projects, the pressure to reduce emissions, arranging huge investment capital while the legal framework is slow to adapt...

Therefore, Mr. Khuong believes that it is necessary to perfect institutions and policies to clearly define the state management function for oil and gas activities. Institutionalize Conclusion 76 and Resolution 41 of the Politburo on the oil and gas industry development strategy, create a clear legal corridor, and clearly and specifically decentralize and delegate power.

Issue a legal framework for new energy such as offshore wind power, hydrogen, nuclear power and green transition activities; accelerate specific testing mechanisms for the new energy sector, as well as have a mechanism for Petrovietnam to act as the focal point of the national energy industry center.

Associate Professor Dr. Ngo Tri Long believes that it is necessary to reposition Petrovietnam as a comprehensive energy investor, with a long-term financial strategy as a tool to lead the market capital. Moving towards establishing the Petrovietnam Energy Transition Investment Fund to create a long-term financial foundation for a green future; piloting the national energy bank model. Moving towards perfecting the policy institutions in energy transition.