World Bank offers to resolve Vietnam’s solar power dilemma

By Dat Nguyen   February 13, 2020 | 04:00 am PT
World Bank offers to resolve Vietnam’s solar power dilemma
Dau Tieng Solar Power Complex in southern Tay Ninh Province. Photo acquired by VnExpress.
The World Bank has offered solutions for Vietnam to prevent a recurrence of its grid capacity shortage caused by indiscriminate licensing of solar plants. 

Last year 91 solar farms with a total capacity of 4,550 MW began operations. Most were built before June 30 to take advantage of a price incentive.

But the surge in output overloaded the national grid, underlining the need for an upgrade to the transmission infrastructure.

So far solar plants with a total capacity of 25,000 MW have been licensed, far exceeding the government’s target of 4,000 MW by 2025.

To prevent a similar bottleneck in future, the World Bank suggested two options in a report it released on Wednesday.

One is for the government to identify substations with available grid capacity and invite bids for new solar plants to optimize the use of existing capacity.

One admitted downside of this proposal is that if the number of substations is not large enough there could be major competition for land around existing ones, which would drive prices up.

The scheme has been successfully deployed in Mexico, and a variation is used in Germany.

The second proposal is to set up a dedicated site for solar projects and acquire land and build basic infrastructure such as roads before inviting bids, though this means the government needs to spend upfront.

This method has been adopted in India and Morocco.

The World Bank will offer technical and financial support to deploy these schemes this year, with pilot tenders of 500 MW planned for each.

It said they could increase Vietnam’s solar capacity from 4.5 GW to dozens of GW in 10 years while generating up to 25,000 new jobs.

Hoang Tien Dung, general director of the Electricity and Renewable Energy Authority, voiced support for the proposals.

"The World Bank’s support to the government’s effort in shifting from a feed-in tariff (FIT) policy to a competitive bidding mechanism for solar power could be applied to other types of renewable energy in future."

Vietnam is considering moving from an incentive FIT policy to competitive bidding for solar plants.

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