Fast-growing Vietnam to invest $40 billion in electricity projects by 2020

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That is equivalent to 20 percent of the country's gross domestic product last year.

According to the report, about 75 percent of the investment will go to generation and the remaining 25 percent to upgrade, repair and expand the national transmission and distribution system.

Workers are seting up a tower of wind turbines. (Photo: Internet)

The government said a majority of the investment would be funded by loans and the state budget would cover only 0.5 percent.

The average electricity consumption steadily grew at 13 percent between 2000 and 2010, and about 11 percent between 2011 and 2015, said Le Tuan Phong, deputy head of the General Directorate of Energy, under the Ministry of Industry and Trade.

The country’s electricity demand is expected to continue to grow 13 percent annually in the next four years to feed the economy, which has grown above 5 percent a year on average since 1999 and is forecast to reach 6.5-7 percent in the next four years.

It is estimated that Vietnam will need about 47 billion kilowatt-hours by 2030 for the annual economic growth rate of 7 percent.

Vietnam is trying to generate enough energy for growth and for millions of people who still lack access to electricity while gradually shifting towards clean and low-carbon energy, said Tran Dinh Thien, who heads the Vietnam Economic Institute.

The government has recently revised down the target for electricity generation by coal-fired thermal power plants from 56.4 percent of the total electricity generation to 53.2 percent by 2030.

Vietnam is more focused on renewable energy, particularly solar and wind energy, targeting a renewable energy ratio of 10.7 percent by 2030.

But that will require a lot of investment in the coming years. Wind and solar power capacity is estimated to account for only 0.8 percent and 0.5 percent of total electricity generation respectively by 2020.