Due to an increasing number of solar cell and solar energy production projects proposed, the failure of the First Solar Group (U.S) worth at US$1 billion in Vietnam a few years ago no longer worries domestic and foreign investors.
According to the People's Committee of Quang Ngai province, British Kimin Power has proposed building a solar project with a coverage of 250 hectares in Duc Pho district. This project has a total capacity of 150 MW, with an investment of up more than VND5 trillion.
An age of solar energy
Earlier, Thien Tan Group has submitted a solar project with total investment capital of nearly VND1 trillion to the Provincial People's Committee of Quang Ngai. These two projects are among dozen projects in the field of solar energy that have been submitted to the local authorities throughout the country during the past two years. Right next to Quang Ngai, Quang Nam province also received project from a joint venture between Toyale Star Holdings Pte (Singapore) and Arman Holding Worldwide (Russia), with an investment of about US$140 million. Also last year, the two companies from British GT& Associates and Marshall & Street Ltd proposed building a solar power plant in Quang Nam with a total investment of about US$225 million.
The projects in the field of solar energy that have been published in Vietnam in the past two years are opposed to the quiet picture of the three previous years. In the past, investing in solar energy was considered a major failure that many investors were shaking their heads at the thought. Notably, the failure of the group First Solar, one of the prestigious American corporations in the field of solar energy, discouraged many investors in this field. The failure of the First Solar led to a withdrawal of many projects of Global Spheres in Thua Thien Hue and of Energy Industry Company Indochina (IC Energy) in Quang Nam.
Favourable conditions
Regarding the potential of solar power, due to the geographical advantages of being located near the equatorial regions, Vietnam has potential to develop solar power, especially in the South. This explains why many new investors are flocking into this field.
The main reason is that the price of solar cells was previously too high, increasing the costs of the project. High battery prices also caused lower demand for solar power in the world, forcing the First Solar to stop investing in Vietnam.
But now it is different. According to the International Renewable Energy Agency (IRENA), the cost of solar panels has dropped by 80 per cent since 2010. And it is predicted that the price of solar cells can be reduced by 59 per cent in 10 years.
A recent report by IRENA said that the industry of solar energy is ready to explode in the next 15 years because the cost of purchasing and installation of solar panels has dropped significantly. The proportion of electricity produced from solar energy, according to IRENA, could rise from 2 per cent today to 13 per cent in 2030.
But according to a recent report by SolarPower Europe, the total capacity of solar power installed worldwide by the end of 2015 was 229 GW, more than 45 times that of 10 years ago.
When investment costs have decreased, one factor that makes investors more excited is that the Government would enact mechanisms to encourage investment in solar energy, including the provisions on price electricity.
It is not clear exactly when the incentives will be issued. But on August 18, the Government Office said that the Prime Minister agreed with the proposal of the Ministry of Industry and Trade on reviewing mechanism to support solar power development projects. Thus, it is likely this decision will be issued in the short term.
Unlikely to implement in short term
Mr Tran Viet Ngai, President of Vietnam Energy Association
In my opinion, solar power is still a potential for Vietnam but it is unlikely to implement it in short term. Meanwhile, due to its more reasonable investment costs and more effectiveness in application, combined with the use of the grid or diesel, small KW solar battery has been invested by many investors.
Even in some countries such as France, Germany, the US, and the UK, solar power plants which have limited capacity have not yet replaced the traditional energy. According to scientists, solar power is only loaded by maximum 5 hours per day while it is only 4 hours in Vietnam, which makes many investors still hesitate. In addition, the imbalance in supply and demand of the solar battery on global markets also makes the solar power project be under development.
Businesses are waiting for a more favourable mechanism
Mr Huynh Kim Lap, Chairman of Thien Tan Group
The biggest challenge of solar projects is that competent agencies have not approved the solar power price draft. Because of this, we have not decided to accelerate our investment in the solar power projects. We hope that the Government will speed it up to help Vietnam soon produce renewable energy, contributing more energy sources for daily use and for production.
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