Vietnam's proposed new FiT rate to boost solar energy investment

Rates for floating solar power and ground-mounted projects will be reduced to $0.769 and $0.709, respectively.

Vietnam is expected to see a new feed-in-tariff (FiT) rate for solar power projects nationwide, set to be released in September, to set up long-term solar projects in the country, Viet Nam News reports.

In draft decision submitted by the Ministry of Industry and Trade (MoIT) to prime minister Nguyễn Xuân Phúc for consideration, the FiT will change for different types of technology as of 2019. To date, the current FiT of $0.0935 per kWh has been applied for all kinds of solar technologies such as floating solar power projects, ground-mounted projects and rooftop projects under the FiT programme between 1 June 2017 and 30 June 2019.

The ministry proposed to reduce the buying price to $0.0769 per kWh for floating solar power projects and $0.0709 for ground-mounted projects. Meanwhile, it proposed to maintain the rate of $0.0935 for rooftop solar power projects.

According to Đỗ Đức Quân, MoIT’s deputy director for the Renewable Energy Department, the FiT is applied for a certain number of years in order to encourage renewable energy development in each period. Should the prime minister approve the new programme, it will remain effective until 31 December 2021.

According to Nguyễn Anh Tuấn, director of the Renewable Energy Centre under the Institute of Energy, there are many things that must be solved to speed up the development of renewable energy as the country faces exhaustion of natural resources such as coal, oil and gas.

He said Vietnam has significant potential to develop renewable energy, including small hydro, wind power, solar power, biomass, biogas, municipal solid waste and geo-thermal electricity.

“The potential of solar power is high because its price is good for investors. As for wind power, the potential of onshore wind power is relatively moderate because its buying price is low, whilst offshore wind potential has not yet been subject to scientific assessment and accurate figures because the cost of wind measurement is very high,” the report said.

Vietnam witnessed close to 90 solar power plants put into operation with a total capacity of over 4,500MW in May and June 2019, which far exceeded the plan of only 850MW of solar power in 2020 approved in the Power Development Master Plan VII (PDP VII). This has led to overloading on the national grid at certain distribution lines during certain periods of the day.

“The first thing that needs to be done immediately is to find solutions for power transmission projects. If the overloading lasts for too long, all participants, including investors and power purchases, will be impacted,” the report said. “It is necessary for the MoIT, local governments, investors and Vietnam Electricity to work together to solve this problem, especially in terms of site clearance to accelerate the progress of transmission projects.”

Under the Strategy of Renewable Energy Development to 2030, Vietnam is aiming to engage all of its social resources for investment in renewable energy development, encourage the development and use of renewable energy, and raise the share of renewable energy in the national energy sector.

The strategy aims to reduce GHG emissions, as pledged under the Paris COP21 Agreement, by 5% by 2020 and, with international assistance and support, by 25% by 2030.