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Be careful not to be "disillusioned" with solar power

06:36 | 23/06/2019

VCN - Within a few months, dozens of solar power plants were connected to the national power grid, contributing significantly to reducing supply pressure, especially in the South. However, because of relatively expensive prices, operating power sources face many challenges, so it is unwise to put too much expectation on solar power.

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By May 31, 50 solar power plants were put into operation with a total installed capacity of 2,481.4 MW. Photo: N.Thanh

Struggling power transmission

According to the National Load Dispatch Center, in three months from April to June, it is expected 88 solar power plants were connected to the grid if they were eligible for operation. This is a record in the history of Vietnam's electricity industry. Previously, during 65 years of construction and development of the electricity industry, in total, only 147 plants with a capacity of 30 MW or more were connected to the grid.

The latest updated data from Electricity of Vietnam (EVN) showed that as of May 31, there were 50 solar power plants coming into operation with a total installed capacity of 2,481.4 MW and the electricity output generated was 185.33 million kWh in May. It is expected that more than 30 solar power plants will be put into operation in June. So far, the National Load Dispatch Center has prepared plans to connect and test solar power plants; prepared separate backup resources for the Central and the South depending on the capacity of renewable energy projects; and had an appropriate operation mode for 500 kV lines and power quality monitoring ensuring safe operation of the electrical system.

Mr. Nguyen Duc Ninh, Deputy Director of the National Load Dispatch Center, said that connecting a series of solar power plants would contribute to supplementing the power source, reducing the energy shortage in the South. In fact, energizing, accepting and recognizing the Commercial Operation Certificates (COD) of solar power plants faced many difficulties because many regulations and legal issues have not been updated, lagging behind the actual speed of solar power projects, which are growing too fast. In addition, solar power projects are mainly concentrated in six provinces in the Central and South regions, which also puts great pressure on the ability to load the electricity generated from solar power to the grid. Many grid connection systems in the area are overloaded.

Another challenge comes from the proportion of renewable energy, which is increasing but is unstable. The statistics from the National Load Dispatch Center for solar power plants showed that the transmission capacity can range from 60-80% within just 5-10 minutes. The fluctuations happen randomly depending on weather conditions. Projects in the same area often fluctuate simultaneously. Meanwhile, operating the electrical system always needs to maintain a balance between source and load. With such capacity variation, the electrical system always needs to maintain a certain amount of standby power to adjust the corresponding frequency, causing difficulties and increasing costs in operation. "This is a big challenge, in the context of Vietnam's electricity system having very few backup sources," said Mr. Nguyen Duc Ninh.

According to Vietnam Electricity (EVN): With electricity demand growing at around 10%/year, Vietnam needs to add about 3,500-4,000 MW of new power capacity each year. However, in the next 2 years, there will be only about 2,000 - 2,500 MW of traditional power and about 4,000 MW of unstable renewable energy added to the system. This fact causes many difficulties in operating the power system to get balance between supply and demand, ensuring national energy security.

Expensive electricity price

In addition to the difficulties mentioned above, the price of solar electricity is also a concern. According to the Prime Minister's Decision 11/2017/QD-TTg on mechanisms for encouragement of the development of solar power in Vietnam, the price of solar electricity is about 2,086 VND/kWh (equivalent to 9.35 cents/kWh, adjusted according to the fluctuation of VND/USD exchange rate) and lasts 20 years. This is a much higher price than other electricity sources. However, that is the price that EVN buys from the investor of the solar power plant. When this price reaches consumers, after calculating correctly and sufficiently, it should include other costs including transmission, distribution and backup sources.

According to EVN's calculations, only in terms of solar power projects, the current transmission and distribution costs are around 410 VND/kWh. In order to transmit solar energy from these projects to final consumers with a power factor of 1/3 of the traditional source, the total transmission cost is estimated at 1,230 VND/kWh, equivalent to 5.2 cents. Besides, when operating solar power, EVN must add system service cost. This cost relates to system backup sources due to the uncontrollable characteristics of solar energy. That means, when solar power capacity "collapses" because of clouds or thunderstorms, there must be backup power on the grid to compensate. If gas power is used for backup, it will cost twice as much as solar power, and if electricity running diesel is used for backup, it will also be quite expensive.

The cost for 1 kWh of diesel fuel is about over 5,000 VND. For Vietnam’s electricity system, ELIA - Belgium consultant has calculated the backup power amount for 2025, which is about 1,250 MW (corresponding to the forecast error of 5% for renewable energy sources), with the cost for backup service at about 1.3 cents/kWh.

"Thus, summing up the above factors, in addition to the price paid to investors (2,086 VND/kWh), the system cost increases at least 5.5 cents/kWh. Taking into account all factors, the price of solar electricity to consumers is about 3,500 VND/kWh (about 14.95 cents/kWh)," EVN calculated.

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Regarding the operation of solar power, EVN’s Deputy General Director Ngo Son Hai said that EVN proposed to the Government to supplement and develop power grid projects, and urged units to accelerate the construction progress of related power grid projects, contributing to the clearance of solar power plants. Besides, EVN also directed the National Load Dispatch Center to study and propose the flexible, optimal operation plan for mobilizing power sources, ensuring safe, continuous and stable electrical system operation. In terms of electricity prices after June 2019, EVN said that it was necessary to implement the bidding mechanism at the ceiling price as prescribed by the competent authorities.

On April 11, 2017, the Prime Minister issued Decision 11/2017/QD-TTg on mechanisms for encouragement of development of solar power in Vietnam. The decision took effect in June 2019.

In order to continuously implement the mechanism for encouragement of the development of solar power, the Ministry of Industry and Trade has "put down in writing" the Draft Decision of the Prime Minister on the mechanisms for encouragement of development of solar power in Vietnam.

Specifically, the draft Decision on proposing the zoning of radiation intensity to calculate the fixed support price mechanism (FIT- Feed in Tariff) is as follows: Zone 1: 3.36-3.98 kWh/m2/day; Zone 2: 3.99-4.61 kWh/m2/day; Zone 3: 4.62-5.23 kWh/m2/day; Zone 4: including 6 provinces of Ninh Thuan, Binh Thuan, Khanh Hoa, Phu Yen, Gia Lai and Dak Lak, where the grid power has been overloaded, so the FIT prices with radiation intensity of about 5.1 kWh/m2/day is proposed. The solar power purchasing price is as follows:

Floating solar power project: Zone 1 (2,281 VND/kWh); zone 2 (1,963 VND/kWh); zone 3 (1,758 VND/kWh); zone 4 (1,655 VND/kWh), equivalent to 9.98 cents/kWh; 8.95 cents/kWh; 7.69 cents/kWh; 7.24 cents/kWh, respectively. Solar ground power project: Zone 1 (2,102 VND/kWh); zone 2 (1,809 VND/kWh); zone 3 (1,620 VND/kWh); zone 4 (1,525 VND/kWh), equivalent to 9.20 cents/kWh; 7.91 cents/kWh; 7.09 cents/kWh; 6.67 cents/kWh, respectively.

Rooftop solar power project: Zone 1 (2,486 VND/kWh); zone 2 (2,139 VND/kWh); zone 3 (1,916 VND/kWh); zone 4 (1,803 VND/kWh), equivalent to 10.87 cents/kWh; 9.36 cents/kWh; 8.38 cents/kWh; 7.89 cents/kWh, respectively.

The electricity purchasing price, which is applied to the rooftop solar power system, has a commercial operation date from July 1, 2019 to December 31, 2021 and it is applied for 20 years from the date of commercial operation.

By Thanh Nguyen/ Ha Thanh