Vietnam Can Expand and Manage Solar Energy Effectively

1:38:40 PM | 25/2/2020

Vietnam could increase its solar power capacity from the current 4.5 gigawatts to dozens of gigawatts in the next ten years, and create thousands of new jobs if it adopts a new approach to bidding to select and implement solar power projects.

This approach is outlined in a new report by the World Bank entitled "Strategic and competitive bidding framework for solar power projects in Vietnam". The report is funded by the Global Infrastructure Fund (GIF) and the World Bank's Energy Sector Management Assistance Program (WB-ESMAP).

The report is the result of technical cooperation between the World Bank and the Government of Vietnam in the past two years to effectively expand and effectively manage the abundant solar energy resources in Vietnam. The development of new solar power projects is an important element that helps the Government of Vietnam achieve climate change goals on reducing emissions in the nation-decided contribution (NDC) and reducing the need for developing new coal power projects.

The report comes as Vietnam is considering shifting from a fixed feed-in-tariffs (FIT) of solar power to competitive bidding for solar power projects to reduce electricity production costs. In recent years, FIT has successfully promoted rapid implementation of projects in the context that Vietnam has also become the world's leading country in producing solar modules. However, this success also raises new problems, including the risk of "deflation" - the phenomenon that solar power projects must operate under installed generation capacity.

The World Bank has proposed two new options to implement the project: competitive bidding for solar park and "competitive bidding by substation" - competitive bidding based on available capacity at power substations/Highway line. These approaches will address deflation and improve risk sharing between the state and private investors.

The first phase of a competitive pilot bidding of 500-megawatt substations and 500 megawatts of solar power park - is expected to begin in the second half of 2020 with technical and financial support from the World Bank.

Mr. Ousmane Dione, Country Director of the World Bank in Vietnam, affirmed that the World Bank is committed to supporting Vietnam in achieving its sustainable energy ambition. "We hope this strategy will open a new chapter on solar power development that has been very successful in Vietnam," said Mr. Ousmane Dione.

In addition to the new approaches to competitive bidding, the report also recommends setting annual and medium-term solar power deployment goals, and revising the legal framework related to selection regulations of independent power production units.

Accordingly, the estimated increase in solar power capacity in Vietnam can create about 25,000 new jobs per year in the field of project development, services, operation and maintenance until 2030, and 20,000 other jobs in the manufacturing sector if Vietnam maintains its current market share in the global market of solar power equipment.

According to Mr. Hoang Tien Dung, Director of the Department of Electricity and Renewable Energy, Ministry of Industry and Trade, the World Bank has provided support to the Government of Vietnam in changing from fixed price policy of solar power to the policy of competitive bidding for solar power projects and beyond to apply for the development of other renewable energy projects, helping Vietnam's renewable energy sector to develop in a sustainable, transparent, competitive and ensure harmonization of interests of investors - the state - the people.

It is known that for many years, the World Bank has assisted the Government of Vietnam in making solar power development planning. Since 2017, the World Bank, funded by ESMAP and GIF, has been providing Vietnam with a range of major technical assistance activities from solar mapping to strategic advice on mobilization of private investment in large-scale solar power projects.

By Quynh Chi (Vietnam Business Forum)