Vietnam’s solar market appeals to foreign investors

Home / Greentech / Vietnam’s solar market appeals to foreign investors

Vietnam’s solar market appeals to foreign investors

Vietnam is becoming a magnet for foreign investors interested in solar PV power projects, and the potential for developing massive solar markets in Vietnam is not to be ignored.

Vietnam is indeed capable of building a solid foundation for renewable energy as solar resources are expansive. The average solar irradiation per day in most regions of southern and central Vietnam is of 4-5 kilowatt hours (kWh) per square metre, with a total of 1,400-3,000 sunshine hours every year.

During the Global Green Growth Week 2016, Deputy Minister of Industry and Trade (MoIT) Hoang Quoc Vuong addressed the potential of solar energy in Vietnam, saying that solar can be utilized for water heaters, generators, and other types of applications such as drying and cooking.

Despite the growing potential, the MoIT admitted that over the past few years, only 7MW of PV capacity has been installed in Vietnam, with around 2MW mounted on rooftop solar arrays. The first solar project in the country was not longer than August of last year when Thien Tan Group co-operated with Indian and Thai partners to begin construction in the central province of Quang Ngai. The USD 37.54 million, 24ha project has a designed capacity of 19.2MW.

One of the biggest drawbacks for Vietnam to attract investors into its solar PV market, according to the United Nation Development Programme, is the currently low feed-in tariffs (FiTs). The average retail price of electricity in Vietnam in 2015 was USD 0.076/kWh. The retail price of power in Vietnam remains artificially low by international comparison due to pricing policies that has led to indirect subsidies to the power sector.

In order to attract foreign investment in the country’s solar energy market, the Vietnamese government aims to significantly increase its renewable energy production. Solar PV power generation capacities are set to rise from the current 7MW to 850MW in 2020, 4,000MW in 2025, and 12,000MW by 2030.

In achieving these ambitious targets, the government is currently preparing solar PV support legislation. The first draft was released in 2015 and is being further developed in the first half of 2016, including a FiT of USD 0.112/kWh for large-scale grid-connected free-field PV power plants, and a net metering credit for excess solar power fed into the grid set at USD 0.15/kWh for rooftop systems.

Furthermore, attractive incentive schemes such as import tax exemptions, land incentives, and corporate income tax reductions are in discussion to further expand the development of the sector. “If Vietnam wants to lure more foreign investors, higher FiTs will need to be pushed by government,” according to GGGI’s director general Yvo de Boer.

“Although the development of renewable energies is likely to be limited in the short-term, the reforms underway in Vietnam’s power sector will create a more conducive environment for renewable energy over the medium- and long-term”, added Michael Sieburg, Associate Partner at Solidiance Vietnam, a management consulting firm, citing a white paper highlighting opportunities in Vietnam’s renewable energy sector.

German firms are already setting foot in Vietnam to explore the potential of the country’s solar photovoltaic (PV) market. Companies including IBC Solar AG, M+W Group GmbH, Droege Energy GmbH, CARERA Solar/Hydro UG, ILF Consulting Engineers GmbH, and Syntegra Solar International AG have set up operations in the country to cater to the domestic energy market.

Not only German firms, companies from the UK, South Korea, the US, and Canada are also eyeing solar power projects in the Southeast Asian country. The UK’s Kimin Power Company is working with the south-central province of Quang Ngai’s authorities on a 150 megawatt (MW) solar power project worth USD 227.3 million. The project is built on a 250 hectare plot in the province’s Pho An commune.

Meanwhile, local company Thien Tan Group is co-operating with the US’ Black & Veatch Group in the south-central province of Ninh Thuan to make a feasibility study for implementing a  1,000MW solar power project by investing as much as USD 2 billion into it. Additionally, Canadian company CMX Renewable Energy planned to construct a 150MW solar power plant worth USD 150 million over an area of 250ha in the same province.

Recommended Posts

Leave a Comment

Start typing and press Enter to search