Solar power investment rush poses an overload risk

By Anh Minh   December 4, 2018 | 10:24 pm PT
Solar power investment rush poses an overload risk
Workers check solar panels of a project in Vietnam. Photo by VnExpress/Annie Le
The investment rush in solar energy could end up testing Vietnam’s weak power infrastructure, experts say. 

They say that both transmission capacity and the ability of grids to absorb the energy produced by new projects are suspect, as of now.

The 9.35 U.S. cents per kWh Feed in Tariff (FIT) for solar power in Vietnam has sparked an investment rush.

The latest project to be completed is the 49MW Krong Pa plant in the Central Highlands province of Gia Lai. It began operations last week.

The investor, TTC Group, a corporation that invests in real estate, energy and education projects, has 19 other solar power projects underway. 

Other corporations have also been rolling out ambitious plans. The Xuan Cau Group plans to invest in a 2,000MW solar power project in southern Tay Ninh Province, while the Xuan Thien Corporation plans a 3,000MW project in the Central Highlands province of Dak Lak. 

September statistics from the Ministry of Industry and Trade show that 121 solar power projects been approved, which are expected to add 6,100 MW of output by 2020 and another 7,200 MW by 2030.

Of these, 25 have signed power purchase agreements with Vietnam’s biggest power producer and sole distributor, Vietnam Electricity (EVN). 

In addition, another 221 projects await authorization, with a combined 13,000 MW of potential output. 

At this rate, the combined solar power output would accounts for 60 percent of Vietnam’s total output from all power sources kinds of power. It also far exceeds the country’s plan for solar energy output of 850MW by 2020, and 4,000 MW in the 4 following years. 

"There is an investment boom in solar power projects, but this is not good," said Toby Couture, an expert of the German Corporation for International Cooperation (GIZ).

He said authorities should come up with a balanced forecasting framework, rather than letting the market overheat.

On top of the race to get projects completed before June 30, 2019 to enjoy the preferential FIT, the explosion of investment in solar power is also raising concerns over overloading of the power grid once the projects become operational.

According to Vu Ngoc Duc of the Energy Institute under the Ministry of Industry and Trade, the fact that most projects are concentrated in central provinces of Ninh Thuan and Binh Thuan, and Dak Lak carries the risk of overloading the current power grid. 

Power plants cannot be plugged in without considering the capacity of each power transmission line, he said. 

Dinh Quang Tri, acting general director of EVN, admitted that 9.5 cents a kWh was still cheaper than electricity from oil, but the main problems the utility faces are infrastructural. 

Central Vietnam has relatively weak electricity infrastructure because of low consumption, but it is where the new renewable energy projects will be concentrated, he said. 

"The lines cannot take thousands of megawatts at the same time," said Tri, adding that EVN had petitioned the government to plan and approve additional transmission lines. 

However, the procedures for planning, land clearance and construction will take a long time, so the existing grid will not be able to keep up with capacity of new solar plants.

"This is a huge challenge. If we don’t purchase electricity from these solar plants, there will be a shortage. But if these projects are completed too quickly, the grid will not be able to load it all," Tri said. 

He said that to avoid overloading the transmission grid, the Government should promote household solar panels, suitable for the low voltage grid, so that no additional investment into the transmission grid is required.

Deputy Minister of Industry and Trade Dang Hoang An told the press recently that the ministry was directing the re-planning of local and national power development. It is assigning grid development units the task of resolving infrastructural bottlenecks to support approved solar power projects, he added. 

Solar power currently accounts for just 0.01 percent of the country’s total power output, but the government plans to increase the ratio to 3.3 percent by 2030 and 20 percent by 2050.

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