|Apt solutions sought for local solar power|
Prime Minister Nguyen Xuan Phuc last week asked the Ministry of Industry and Trade (MoIT) and Electricity of Vietnam (EVN) to review issues related to Vietnam’s solar power development as well as avoid massive solar development without a proper plan, which could cause power grid overload.
According to the updated data, as of December 25, 2020, there were 83,000 rooftop solar power projects connected to the power system with a total installed capacity of nearly 4,700 megawatts-peak. The total power generation output to the grid from rooftop solar power has reached more than 1.13 billion kWh, contributing to ensuring power supply for the national power system.
Meanwhile, there is no new decision or guidance for implementation of the policy after Decision No.13/2020/QD-TTg issued last April on encouraging mechanisms for solar power development in Vietnam, which had its deadline set for December 31 last year for solar systems of any scale to attain a certificate of delivery and enjoy the feed-in tariff 2 (FiT2) rate, in which the price of each kilowatt-hour generated from ground-mounted, floating, and rooftop solar initiatives were 7.09, 7.69, and 8.38 US cents, respectively.
As a result, it remains uncertain which pricing mechanism will apply to grid-connected solar power projects reaching commercial operation date in 2021.
EVN announced its power companies had ceased buying rooftop solar power after December 31 to wait for further guidance from the government. It will also handle requirements for connection and signing power purchase and sales contracts from solar power systems started before the deadline.
Deputy general director of locally-invested Son Ha Group Hoang Manh Tan said the fact that there is no policy available will make it difficult for businesses to formulate strategies and implement them. Enterprises need continuous and consistent policies, and the gap issue creates difficulties for EVN, other enterprises, and their partners, Tan said.
Thus, ministries and authorities in the coming time must find the right supporting mechanism that enables an organic development of rooftop solar, and minimises loopholes and speculative projects, such as solar farms disguised as rooftop systems.
The prime minister also asked the MoIT to carry out the work of inspecting solar power development in localities and power companies, ensuring compliance with regulations.
It must promptly correct and handle any mistakes, especially operating policies that benefit outdoor voltage deployment over time as well as take measures to minimise the shutdown of renewable energy sources in operation, and minimise the economic losses of investors and waste of renewable energy sources.
At the same time, the boom in solar development also poses a question for the grid operator about how to optimise renewable electricity feeds into the grid, while considering the best interests of electricity producers.
Solar energy expert Mai Van Trung told VIR that in order to keep the average selling price there are several options, including increasing the curtailment or adding more solar power plants and rooftop solar systems with a very low FiT3 rate to compensate the subsidisation of EVN.
The former option over a wide scale could however hurt financial indicators of many projects because of leverage from bankers.
Meanwhile, the latter option could distract potential investors to put the money down. Moreover, the capacity absorption of the national grid is limited due to the intermittency of solar power, Trung said.
There is a declining trend of engineering, procurement, and construction costs of rooftop solar systems over time that can be utilised if the absorption capacity of the grid is available even with the storage added.
Vietnam has plans for solar power auctions but the qualified projects are small and located in lower solar irradiance. Green and cheap credits from international institutions are ready to enter, but the room left for additional capacity is currently being narrowed.
According to the MoIT, there are currently 16 national standards promulgated by the Ministry of Science and Technology related to solar power in the country. However, there is a lack of specific standards for the two main components of rooftop solar power projects – panels and inverters.
In late 2020, the National Assembly passed the new Law on Environmental Protection, which stipulates extended producer responsibility (EPR) for businesses in Vietnam. This means that businesses and producers now bear the responsibility for the waste of their products, including solar panels.
EPR is intended to reduce the cost of managing end-of-life products by reducing waste volume and increasing recycling, thereby contributing to the prime minister’s new target of reducing the amount of waste that goes to landfills by 80 per cent by 2025.
EPR has the potential to create new economic opportunities and share the financial burden of solid waste management more fairly.
According to the new law, businesses can implement EPR in one of three ways including doing the recycle themselves, conducting recycling through a third-party product recycling organisation, and making a financial contribution to the Vietnam Environmental Fund.
According to the draft EPR decree, businesses that recycle themselves or do so via a third party will have to report through a national EPR data portal managed by the Ministry of Natural Resources and Environment.
If a business that does the recycling itself fails to reach the target over 3-5 years in a row, it will be forced to participate in one of the other two mechanisms.
A business that refuses to choose any mechanism will be fined; and if it exceeds its recycling target, it can sell credits to other businesses through a tradable credit system.
Bui Viet Phuong – Marketing manager, DAT Technology
The hot development of solar power poses unexpected problems. Some local provinces have only been concentrating on increasing generation capacity without adjusting or finishing transmission lines, which has directly affected these projects.
Besides this, there are several provinces with industrial parks and large corporations with high electricity demand that have only been making modest investments in solar rooftop development. Meanwhile, other localities with lower electricity demand have been luring in more solar rooftop projects.
There needs to be more long-term and transparent policies for renewable development, including in solar projects.
The government should set annual quotas for newly-installed capacity in line with the needs of the economy and society.
Vietnam’s solar energy development planning should be aligned with plans for industrial development because the sector makes up about half of the nation’s energy demand.
In addition, there should be mechanisms and incentives for investment in energy storage.
Nguyen Lien – Vietnam project development manager, Trina Solar Co., Ltd.
According to Electricity of Vietnam, as of January 8 installed rooftop solar generation units had 9,683 megawatts-peak of capacity, yielding the national grid more than 1.3 million MWh, which helps reduce CO2 emissions by over 1.2 million tonnes a year. This rooftop solar output also helps feed the nation’s strong demand for energy. This is a result of the government’s incentive policies, especially the prime minister’s Decision No.13/2020/QD-TTg dated April 2020 on mechanisms to encourage solar power development in Vietnam.
Nevertheless, as Decision 13 expired at the end of 2020, the industry is currently waiting for new guidelines from the Ministry of Industry and Trade.
As a top-tier photovoltaic (PV) module supplier in Vietnam market, we have also seen booming rooftop solar development since the second feed-in tariff (FiT2) came into effect and would like to see a reasonable roadmap for rooftop solar development with the coming FiT3.
There are several options available. A regional division of FiT3 rates that would encourage northern and central provinces to install more rooftop solar while maintaining the better yield in the south could be beneficial. At the same time, a long-term FiT should be applied to avoid force majeure disruptions.
Additionally, it would be good to see preferential programmes for local households to install more rooftop solar like preferential loans that are easier to approach to support households in difficult living conditions.
There needs to be more encouragement for the commerce and industry sectors which offer plentiful potential roofs for deployment for self-consumption. It is also important to ensure development is reasonable and the government’s equipment standards for PV panels and inverters should be observed.
By Nguyen Thu