Investors worry about not being able to enjoy the new price of solar power

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Infeasibility

The Prime Minister has just issued Decision 13/2020/QD-TTg on the incentive mechanism for solar power development in Vietnam, offering a new electricity tariff (FIT2).

AnalyzingFIT2-entitled projects, Mr. Dao Du Duong, Deputy Chief Representative of Vietnam Clean Energy Association in Ho Chi Minh City, said that FIT2 aims to rescue 36 farm-scale solar power projects that are not timely to enjoy FIT1 while the time limit is only seven months. Given the current volatile Covid-19 epidemic, this deadline is almost impossible.

“For rooftop solar power, from now to December 31, 2020 is too short a time to keep pace with the current construction conditions. The roof voltage is high; ensuring safety also affects the progress and labor costs. In particular, the South is about to enter the rainy season, so the greater the impact on the construction process,”Mr. Duong said.

Vietnam Energy Association analyzed that the new price mechanism only applies to the grid-connected solar power project that has been approved by the competent authorities before November 23, 2019.

By the end of November 2019, Vietnam had a total capacity of 10,300 megawatts of solar power added to electricity planning at all levels. If removingthe solar power plants that were in operation before June 30, 2019, with a total capacity of about 4,400 MW, the remaining less than 6,000 MW will face a race against time to meet the deadline.

Of the total capacity of solar power projects that have submitted additional plans of 25,000 MW (as of the end of June 2019), nearly 15,000 MW will have to wait until the bidding mechanism is issued.

In addition, high-density concentrated solar power projects in the provinces of NinhThuan, BinhThuan, KhanhHoa and the Central Highlands region have caused overloading and congestion of transmission lines. From now to the end of 2020, it is difficult for stations and transmission lines in these areas to catch up to nearly 6,000 MW of solar power.

Looking forward to applying FIT2 extension

In the current situation, Mr. Pham Nam Phong, General Director of Vu Phong Solar Power Joint Stock Company, expressed his desire to extend the minimum time of FIT2 application to the end of 2021 so that people and businesses have a chance to keep up with roof-based solar power.

In addition, Mr. Phong suggested that FIT3 should be developed in the direction of prioritizing the development of scattered rooftop solar power, with a higher price priority in low-radiation areas such as the North; in each region, there should be a better price for small systems.

Also paying much attention in terms of developing rooftop solar power, Mr. Nguyen Duc Toan, Chairman of Saigon Gia Dinh Electricity Joint Stock Company (EHCMC) proposed to be able to extend FIT2 or have to have the right price of FIT3 after December 31, 2020 to promote the development of the rooftop solar electricity market in Vietnam. The Government and the State also need to improve, renovate and upgrade the transmission lines to release capacity for factories.

In many viewpoints, in the immediate future, the Ministry of Industry and Trade should issue circulars and documents guiding the implementation of FIT2 to ensure sufficient time for the parties to enjoy the incentives from this policy.

In the long term, the Government needs to develop a sustainable solar power development policy with a clear and transparent roadmap to encourageinvestors' trust and ensure the healthy development of the market.

On the new price of solar power, Ms. Tran Huong Thao, Chief Representative of the Northern branch, Polytechnic Solar Power Company (SolarBK) said that FIT2 was born like a supporter for solar power.

However, it does not stop at FIT2; Vietnam needs a long-term, clear-oriented development policy for the solar power industry. In this way, Vietnam has just caught up with other countries in the process of transforming renewable energy at present speed.