From June 1st, 2017, Vietnam Electricity will be obligated to purchase all the electricity amount generated from grid connected solar power projects with the feed in tariff at connection points of VND 2,086 VND per kWh (not including value added tax equivalent to 9.35 US cent per kWh).
Households are free from paying electricity bills
The Prime Minister’s Decision clearly states that rooftop solar photovoltaic projects will apply net energy metering mechanism by using bi-directional power meter systems. In a payment cycle, if the solar power generated from a rooftop solar PV project is bigger than the amount consumed by the consumer who owns the PV project, the residual electricity will be transferred to the subsequent payment cycle. At the end of a year or upon terminating the power purchase agreement, the excess generation amount will be paid by the electricity purchaser at a regulated rate.
Businesses pour funds into solar energy projects
According to Decision No. 11, the purchaser will be obligated to purchase all the electricity generation from solar energy projects. Power purchase agreement duration of solar energy projects is fixed at 20 years commencing from commercial operation dates. In addition, solar energy investors are offered preferences on capital, tax, land use, etc.
The South Central Vietnam has a big potential for solar energy development. According to the Department of Industry and Trade of Binh Thuan province, until the end of 2015 only one Korean invested project was approved, but in March 2017 alone, the People’s Committee of Binh Thuan province approved two other investment projects.
At present, the largest solar PV project in Binh Thuan province is located in Song Binh commune (Bac Binh district), with capacity of 200 MW, covering a surface area of up to 282 ha and being invested by EVN. The project’s documentation has been under development so as to include the project in the additional master plan for power development of the province. The entire solar energy potential area of Binh Thuan province is more than 8,400 ha. The total capacity being planned is 5,035 MW.
Of which, 4,500 MW has been planned for development until 2030. Besides 37 investors being permitted by the local authorities to do surveys, investigations or make investments, quite many other investors are in the process of application for studies, solar radiation surveys, and project document establishment. Mr. Duong Tan Long, Manager of Electric Power and Energy Management Office (under Department of Industry and Trade of Binh Thuan province), said that the local authorities have been conducting the final review of a master plan for solar energy development with vision to 2030. Even hydropower reservoirs, irrigation reservoirs have been integrated in the master plan since these reservoirs are completely eligible for floating PV panel installations.
Additionally, Ninh Thuan province also attracts a lot of solar energy development projects. According to the Department of Industry and Trade of Ninh Thuan province, among from totally 8 projects being approved, two projects have completed their survey and investigation stages and are their project documentation are being submitted to the Provincial People’s Committee for review prior to submission to the Ministry of Industry and Trade for approval; about 40 other investors have submitted their application dossiers for developing solar energy projects in the province. Solar energy experts stated that a lot of local and foreign investors such as South Korean, Thailand, German investors, etc. desire to invest in this area, with capacity size of each project ranging from 30 - 100 MW.
Being a solar panel manufacturer and solar energy investor, Mr. Canh said: “Although the regulated feed in tariff of US cent 9.35 per kWh is lower than that in many countries in the region and the expected feed in tariff of investors (higher than US cent 10 per kWh), the availability of such a trading mechanism and tangible feed in tariff is considered a success in solar energy development area in Vietnam. I assume that if investors well manage and accept a moderate profitability, this current regulated feed in tariff is workable. Given the present context that investment costs of solar energy are steadily downward, earnings will be more stable”.