Vietnam beats renewables goal a year early

Sorry about the missed post on Friday, I have been busy working on the website. Hopefully things will be finished shortly.

Big news out from Vietnam - the country has already beat its target for energy from renewables. The government had set a target of 7% from renewables by 2020, and it is already at 9%, according to this story.

SOURCE: MOIT BY WAY OF IEFFA

As of July the country's solar energy capacity was 4,543 megawatts (MW) and wind power capacity was 626.8 MW, Le Hai Dang, a strategy board member at Vietnam Electricity (EVN), said at the opening of the 2019 Vietnam Renewable Energy Week held in Hanoi on Tuesday.

Looking at a few different sources, it looks like right now the government would like to have 21% of energy coming from renewables by 2030. Those renewables include biomass, small-scale hydro, solar and wind. Of that 11% of the total energy mix should be wind and solar.

Part of the big success is due to this new solar farm in the south, about 100 km from HCMC, and which will power 320,000 households. There are 10 projects in this one province, Tay Ninh, with 9 of them already in production. Another province, Dong Nai, also in the south, is proposing 8 projects with 5,400 MW capacity on the Tri An lake. The big rush to approve these projects by the end of June was due to the expiry of its feed-in-tariff (FiT) agreement:

Vietnam saw rapid construction of new renewable power plants in the first half of this year as investors sought to beat a June 30 deadline to enjoy price incentives of 9.35 U.S. cents per kWh feed-in tariff for the next 20 years.

This is despite somewhat weak PPA terms that have kept some investors away (as I have heard personally and as the IEFFA reports). The big concern, and we have talked about this before, is that the utility EVN can terminate the agreement or curtail buying electricity if the grid doesn’t hold up. Also, “international investors have lacked confidence in the credit standing of…EVN.” But even with these, the companies have been able to get these plants built. I would assume it is because the pricing is good and they have reassurances that the grid will be able to take any electricity produced. EVN is starting to work on upgrading its grid, so that probably helps.

As I said, the FiT ended June 30, and there is not yet a new feed-in-tariff (FiT) agreement from the government, so we will see a slow down in new capacity builds in the near future. There is a draft FiT right now, but it hasn’t been approved.

Long term, fossil fuels (coal and natural gas) are tough competitors for renewables in Vietnam. First, the country has a fair amount of coal plants, and they are somewhat cheap. Because of that and their need for lots of energy, Vietnam doubled coal imports in the first four months of the year. Tied to that, expectations are for natural gas prices in the US to continue to be extremely low (less than $2 per mmbtu). This has already lead to the gas-powered electricity plant we talked about in the last post.

I really hope that the government continues to prioritize renewables through their new solar FiT, for the sake of health, climate change, but also the current account balance. Ultimately, renewables are going to be cheaper than the alternatives. But it might take some time before everyone realizes that.