Policy ‘gaps’ hold back renewable energy development

Vietnam’s renewable energy capacity reached 20,600 megawatts by the end of October, or nearly 28 percent of total power capacity.

But renewable energy contributed only 8 percent to distribution.

Two of the reasons behind the difference between design capacity and actual contribution is overload in transmission capacity and lower usage caused by Covid-19, according to Bui Van Thinh, chairman of Binh Thuan Wind Power Association.

Power consumption in the third quarter this year fell 4.14 percent year-on-year, according to national utility Vietnam Electricity (EVN).

One of the issues in Vietnam’s renewable power development is lack of a connection network with neighboring countries, Thinh said.

Vietnam has transmission lines established with Cambodia, China and Laos, but with low capacity, he added.

Another issue is that EVN is selling power capacity at a loss.

Sales prices for 7.5-7.8 U.S. cents per kilowatt-hour is one-quarter that of developed countries, while purchase prices are much higher, including transmission and distribution costs, Thinh said.

"The consequence is the more EVN buys renewable energy, the more it loses money."

To ensure renewable power consumption hits 32 percent by 2030 and 44 percent by 2050, many policy changes are needed to fill existing "gaps", industry insiders said.

Ngo Thi To Nhien, CEO of Vietnam Initiative for Energy Transition (VIETSE), said incentive feed-in tariffs for solar energy ended at the end of last year, and for wind energy, last month.

But there has not been a final decision on feed-in tariffs for the subsequent period, even though there has been talks about a bidding mechanism, she said.

It is now unclear how the bidding mechanism will be conducted, she added.

The country also lacks a nationwide long-term plan in energy development that localizes technology usage, develops human resources and lowers costs, Nhien said.

There needs to be a consistent and continuous development path to ensure industry growth, she added.

One of the key challenges in the next 10 years is simultaneously developing new power sources and transmission networks, it was stressed.

Concurring, Thinh said upgrading and building new transmission lines are needed to stop flailing transmission capacity for renewable power projects.

500-kilovolt lines should be developed instead of 100-kilovolt or 220-kilovolt ones, he said.

Electricity exports should be considered as there could be an oversupply of renewable power sources, he added.