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Last updated: Thursday, January 24, 2019


Solar Energy Market: Long-term and Consistent Policy Required

Posted: Tuesday, November 28, 2017

Will Decision 11 on mechanisms for encouraging the development of solar power in Vietnam and newly released Circular 16/2017/TT-BCT on the development of solar power projects and the power purchase agreement form applicable to solar power projects create momentum for robust development of the solar power market?

Target to provide 12,000 MW of electricity by 2030
In the Potential Solar Energy Map supported by the World Bank, the solar energy resource of Vietnam is quite abundant, with the thermal radiation of about 2,056 kWh/m2/year from the Central Coast to the Mekong Delta region.

According to the Renewable Energy Development Strategy to 2030, vision to 2050 dated 25 November 2015 by the Government, the respective percentage of solar electricity will be 0.5 per cent by 2020, around 6 per cent by 2030 and approximately 20 per cent by 2050 out of the total electricity production. 

According to the amended power plan, by 2020, electricity production from renewable energy will account for 9.9 per cent of the total capacity, increasing by 4.3 per cent compared to that of Plan 7, which will reach 12,000 MW. It is considered both target and great challenge for the power sector.

“Despite the fact that it is great potential for solar energy development which is strongly supported by the Government, it will encounter such difficulties as the complication of technical connection to the national grid, huge investment capital, the requirement for a large area for solar energy projects,” said Mr Nguyen Manh Hien, Chairman of Scientific Council of Vietnam Clean Energy Association.

In the past, the electricity overproduction which caused power to have been sold at 0 VND led to the fact that many businesses and household were hesitant to invest in solar energy. Decision 11/2017/QD-TTg dated April 2017 publicising and offering the fixed electricity price at US cents 9,35/kWh has shown that the Government is encouraging solar energy development, which initially attracts investors.

Price policy is not enough
In the context of completion of the development strategy and lack of national development plan on solar energy, the policy on the electricity price under Decision 11 is not enough to create momentum for the solar energy market. At a seminar organised by ABB Vietnam and Solar Electric Vietnam (SEV), the policy recommendations focused on: proposal to establishing a support fund for renewable energy for clean energy resource, options on effective solar energy production technology. A significant proposed solution was to develop solar energy projects on the ground and on the rooftops to take advantage of excess energy from solar energy projects of businesses and households installed in office building, on the surface of lakes and waters.

Beside those solutions, “Vietnam should propose longer incentive mechanisms for the business,” said Mr Do Duc Tuong, representative from Energy Programme, USAID.

He also said that the solar energy price building was still in short term, around three years. The price after 2019 was still unclear for investors. Therefore, the investors still hoped that the Government could produce long-vision policy and mechanisms, and cut down on unnecessary licensing procedures so that the development of Solar Energy in Vietnam could be strongly promoted.

Nguyen Thanh

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