Tech status to decide future solar power pricing: officials

As the June 30, 2019 deadline nears for solar power project investors to benefit from an attractive feed-in-tariff (FIT) of 9.35 U.S. cents per kWh, there is considerable discussion and speculation about subsequent pricing schemes.

For now, the official response is that several options are being considered.

“How the feed-in-tariffs are decided after June 30, 2019 will depend on what technology prices will be in a specific period of time,” said Le Minh Duc, director of the Center for Electricity Market Development & Workforce Training, under the Electricity Regulatory Authority of Vietnam (ERAV).

Duc’s statement is contained in a report prepared by the Vietnam Business Forum (VBF), a consortium of private business associations in Vietnam.

FITs are payments made for supplying renewable energy to the national grid in order to encourage independent power production.

Under the Prime Minister’s Decision No.11/2017/QD-TTg, a solar power tariff of 9.35 cents, excluding VAT, is applicable to solar power installations connected to the grid by June 30, 2019.

Major incentive

As Vietnam considers post-June alternatives, the existing payment scheme for solar power remains the major investment motivator, industry insiders and experts say.

Recent innovations in solar power technology that have helped bring down production costs dramatically have made Vietnam’s 9.35 cents tariff more attractive to private investors.

Hundreds of private investors have submitted their investment proposals, but the June 2019 deadline is difficult to meet, energy experts say.

They note that solar power projects can get entangled in land clearance hiccups, a procedural lags, a lack of master zoning for solar power development at national and provincial levels. There are also concerns over infrastructure for connecting to the national grid.

Meanwhile, Vietnam’s power authorities are considering auctions as an alternative option to FITs for some solar power projects after June 30, 2019 on a pilot basis.

Pham Quang Huy, deputy director of ERAV, said they have requested World Bank assistance and retained consultants to study auction mechanisms.

Under auction mechanisms, bidders offering the cheapest selling prices to the Electricity of Vietnam (EVN), the country’s sole power distributor, will be granted a group of investment projects or single projects.

“The Power & Renewable Energy Authority, after watching the trends of technology prices and mechanisms in other countries, realizes that all countries have moved away from the feed-in-tariff approach, to an annual scheme for alternative energy,” the VBF quoted Huy as saying.

Ninh Thuan and Binh Thuan are the two central provinces with the greatest potential for developing renewable energy in the country.

Last month, Vietnamese private construction group Trung Nam began construction of the country’s largest solar power plant in Ninh Thuan Province.

The 204-MW power plant, once operational, will have a maximum annual output of about 450 million kWh.

The $223 million power plant will have over 705,000 solar panels, and is set to come into operation next June - the deadline for being entitled to 9.35 cents in tariff.

In late June, another private firm, Nha Trang Bay Investment and Construction JSC, started constructing a $52.2 million solar power plant, also in Ninh Thuan Province. In the first year of operation, the plant is expected to contribute 104.1 million kWh to the national grid.

Early this year, one of Vietnam’s leading private groups, BIM, and Philippines-based AC Energy started developing the $35 million BIM 1 solar power plant (30 MWp) in Ninh Thuan.

This solar farm is scheduled to be connected to the national grid in the third quarter of this year, which is the premise for accelerating other large-scale solar projects with a total capacity of 300MW to generate electricity in the first quarter of 2019.

By installing 90,000 solar panels and other modern equipment, the plant is expected to generate 50 million kWh per annum.

Vietnam currently relies largely on hydropower and thermal power plants for its electricity demands, but these projects have drawn frequent domestic and international criticism for their social and environmental impacts.

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.

Vietnam aims to produce 10.7 percent of its electricity from renewable energy sources by 2030, mainly through solar and wind power projects.