Updated draft on solar FiTs
/I wrote about the new draft solar feed-in tariffs (FiTs) in Vietnam (Sept. 23, 2019), and that draft was updated with a few new details, some of which aren’t great:
Rooftop solar – the new FiT of 8.38 US cents is now only good for projects finished by end 2020 (rather that end 2021). In good news, there is a lot of solar already installed: “By the end of November 2019, nearly 19,400 rooftop panels were installed across Việt Nam with total production of 318MW. Seventy-three per cent of which is located in the South.”
Floating solar farms - VND 1,758 per kWh (equivalent to 7.69 US cent per kWh).
Ground-mounted solar - VND 1,620 per kWh (equivalent to 7.09 US cent per kWh).
And for these last two, it is only if they have signed a power purchase agreement (PPA) as of Nov 23, 2019 and “achieve their commercial operation date” between July 1, 2019 and the end of 2020.
Source; Vietecon.com
As a reminder the old PPA ended in June, and a number of projects were left hanging. This new PPA cleans up some of that, but doesn’t really give any forward assurances around pricing. And because only things done by Nov. 23 are covered, we know exactly how many this is: 7 farms with combined capacity of 320MW. This is a tiny portion of the number of projects that are in the works. The chart on the right shows the capacity of plants in three categories: 1) those that are explicitly covered, 2) those that have a PPA but didn’t “commence construction” in time and 3) those that do not have a PPA and haven’t started construction. These are 52 projects in total, and there are another 7 that have been sent to the prime minister for approval (have already gone through the Ministry of Industry & Trade in Vietnam).
Bottom line: The vast majority of projects in the works, including ones approved by the Ministry and the PM, are not part of these FiTs. And future projects have little certainty.
My view is that the government really needs to lay out sensible rates for projects for the next few years. The rates should be compelling enough to incentivize developers. And there should be different rates for different parts of the country. Remember that the country had 48.6 gigawatts (GWs) of total power generation capacity in mid-2019 but needs 60GWs in 2020 and 129.5GW by 2030. This is from the Ministry of Industry and Trade. It needs to get people to build, and my view is that they should build renewables.
The reason why rates should differ by geography is to attract developers to the north. This article points out that much of the solar added in the first half of 2019 was very concentrated: “nearly half of those 4.5 GW have been installed in just two provinces: Ninh Thuan and Binh Thuan, on the sun-baked south-central coast.” One of the main reasons for this is simple: the sun. Everyone wants to be south, because solar irradiation is much higher there. The north has much less sun. So it makes sense to adapt tariffs to the province.
Also, the government needs to look into upgrading the power grid. That same Saigoneer article mentioned: “At one point in June, Ninh Thuan's high-voltage central power line was reportedly operating at up to 360% over its safe capacity.”