Vietnam’s electric vehicle boom outpaces energy planning

Vietnam’s electric vehicle (EV) market has been growing rapidly, driven by environmental benefits, lower fuel costs, and government incentives.

According to the roadmap outlined in Decision No. 876/QD-TTg, at least 50% of vehicles in major cities must be electric or use green energy by 2030. By 2040, the production and distribution of internal combustion engine vehicles will cease, with full electrification expected by 2050.

Despite these ambitious targets, Vietnam’s current energy planning does not fully account for the rising electricity demand from EVs.

A World Bank report titled Vietnam’s Journey to EV Transformation highlights that Power Development Plan VIII (PDP8), approved in May 2023, significantly underestimates the impact of EV adoption on electricity consumption.

Chiara Rogate, Senior Energy Specialist at the World Bank, pointed out that PDP8 has not factored in the additional load from transportation electrification.

Current projections estimate peak power demand at 90.5 TW in 2030 and 209 TW in 2050 under a high-demand scenario, excluding the impact of EVs.

Although EV charging is not expected to put immediate pressure on Vietnam’s electricity supply before 2030, demand will rise sharply thereafter.

Even in the most ambitious transition scenario, EV charging is projected to increase electricity demand by only 2.1% in 2030- manageable with the country’s surplus power capacity.

Mounting pressure on Vietnam’s electricity grid

After 2030, and particularly from 2035 onward, the rapid increase in EVs, including both personal and commercial vehicles, will lead to a surge in electricity demand.

By 2045, EV-related power consumption is expected to exceed PDP8’s high-demand scenario by 13.5-16%, rising to 22-28% by 2050. This will require a power supply growth rate of 4.9%, significantly higher than PDP8’s current projection of 3.7%.

To address this challenge, the World Bank recommends increasing grid capacity beyond PDP8 forecasts. The power transmission network must expand by an additional 3-5% between 2030 and 2045, and by 12-20% from 2045 to 2050.

By 2050, transmission capacity will need to increase by 15% to fully support the electrification of road transport.

Chiara Rogate emphasized that additional investment must focus on expanding power generation and transmission capacity, particularly between 2045 and 2050.

To support the EV transition, Vietnam must allocate an estimated $6-9 billion to the power sector between 2024 and 2030.

Massive investment required for full electrification

Under the accelerated decarbonization strategy (ADS), Vietnam will need a cumulative investment of approximately $280 billion from 2031 to 2050. Of this, up to $9 billion will be dedicated to enhancing grid capacity to support EV infrastructure.

This investment will be critical in developing a widespread charging station network to accommodate the growing number of electric vehicles, projected to reach 800,000 by 2030, 2.7 million by 2040, and 6.3 million by 2050.

Beyond grid expansion, Vietnam must also develop a smart electricity network capable of optimizing power distribution and integrating advanced bi-directional energy transmission between EVs and the grid.

According to PDP8, Vietnam’s total power capacity is expected to reach 146,000 MW by 2030, excluding rooftop solar and cogeneration sources. The energy mix will include 37,467 MW of coal-fired power, 23,900 MW of LNG-based power, 16,121 MW of onshore wind, 7,000 MW of offshore wind, and 8,736 MW of large-scale solar.

These plans should meet the forecasted peak demand of 93,300 MW by 2030 while maintaining a reasonable reserve margin for national and regional electricity distribution. By 2035, total installed capacity is projected to increase to 217,596 MW, reaching approximately 401,556 MW by 2045.

Hoang Hiep