Installed solar power capacity exceeds plan: government inspectors

The Ministry of Industry and Trade has by itself approved 114 projects and asked the Prime Minister’s Office to greenlight another 54 projects to be added to the Power Development Plan VIII (PDP).

But of these 168 projects, none has any legal ground to be added to the plan, the Government Inspectorate said in a report Monday after investigating the industry ministry in its management of solar power plants.

These violations have resulted in 8,600 MW of solar power being connected to the grid by the end of 2020, 10 times the approved plan.

Similar violations were discovered in rooftop solar power. The total capacity of solar rooftop surpassed 16,500 MW by the end of 2020, 19 times the approved plan.

Some regulations that the Ministry of Industry and Trade has issued or consulted on with the government had "led to issues and carried risks of policy abuse" as it allowed rooftop solar projects to be installed on agriculture and forest land.

These projects, although approved on false legal ground, were still eligible for the incentive feed-in tariff (FiT) of 8.38 U.S. cents per kilowatt-hour for 20 years.

The surge in solar power capacity in the central and central highlands was not matched by an improvement in transmission capacity, which led to an overload of power in some localities such as Ninh Thuan, Binh Thuan, Phu Yen, Gia Lai and Dak Lak, where solar power plants were forced to run below capacity.

"The imbalance between installed capacity and transmission capacity has caused inefficiency in the grid and broke the PDP," the inspectors said.

This is a waste of resources and created a bad reputation to power investment in Vietnam, they added.

Another violation of the Ministry of Industry and Trade is delaying the completion of a national solar power development plan for 2025.

The Prime Minister’s Office in 2017 issued a policy to encourage solar power investment and tasked the ministry with making a national plan for it, but the ministry waited almost two years to complete the plan.

This means there was no official plan for solar power development until six months before the incentive mechanism expired. It resulted in hundreds of projects being approved without any legal grounds, and it was possible that some investors had to ask the ministry for permission covertly for its approval.

The industry ministry also made violations in giving 14 projects an incentive FiT of 9.35 cents per kilowatt-hour in 20 years, even when the incentive mechanism had expired.

This means the national power monopoly Vietnam Electricity had to pay an extra VND1.48 trillion to buy electricity from these projects from 2020 to June 2022.

The ministry also gave unreasonable consultation in proposing a timeframe of 20 years for the incentive price period, which is "too long" and not suitable for establishing a competitive market, inspectors said.

It proposed the government to buy the electricity in U.S. dollars, causing difficulties in implementation due to exchange rate fluctuations.

"The industry ministry has shown lax management and irresponsibility that caused severe consequences," inspectors said.

Inspectors have proposed that the case be investigated further by the police. Individuals and units responsible should be punished, they added.