Energy Efficiency Financing in Viet Nam: Current Status and Solutions Toward Market-Based Mechanism Adoption

In Viet Nam, energy efficiency and conservation are playing an increasingly important role in serving sustainable economic development goals through tackling the threat of energy supply insecurity while enhancing resource efficiency and effectiveness. In the national energy efficiency program, the government set the target of saving 7.0% of the energy consumption in the period of 2019–2030 (Government of Viet Nam (2020)). Although there are a number of fiscal measures with major government-led financing facilities dedicated for energy efficiency (EE) technologies with preferential term loans coupled with technical assistance, EE investment in Viet Nam is still at a nascent stage and leaves room for development in the coming time. The impediments preventing EE investment come from lacking the motivation to adopt EE technologies as a result of low energy (electricity) costs; the reluctance of the domestic financial market in financing EE projects when professional expertise is unqualified and inexperienced to confidently implement credit appraisals and lending decisions to the EE that is perceived as a niche, and a new segment with the high level of credit risk. Besides, the underdevelopment of energy saving companies’ operation in offering EE solutions and financing options is also an issue resulting in an immature EE investment environment in the country. To achieve the national target of EE and scaling-up EE investment with the outlook of market-based solutions for EE in Viet Nam in the future, major recommendations include focusing on dedicated EE facilities to energy-intensive industry, promulgating necessary regulations and policies to facilitate energy saving companies, and amending and revising the electricity pricing policy to increase users’ motivation to EE technologies. Besides, building a comprehensive energy efficiency database system for should be more focused.