[Member’s News] – Vietnam to rejig solar FiT

Mia Tahara-Stubbs

The Vietnamese government is looking to rejig its solar feed-in tariff (FiT) by the end of 2019.

The Ministry of Industry and Trade (MOIT) is set to submit on 15 September (2019) its new draft solarFiT policy to the prime minister’s office for approval and is hoping to introduce the new policy by the end of the year, IJGlobal has learnt.

Once implemented, the new solarFiT policy will be valid until December 2021, according to VILAF Hanoi managing partner Dang Duong Anh. MOITis planning to switch to reverse auctions from 2022.

The time frame should “give ample time to investors to implement the project” while the government works on its renewable auction policy, he said. The government is prioritising actions to control power generation and supply costs, according to Dang.

The latest version of the solar FiT will replace the draft policy published in January (2019), which has turned out to be unpopular with investors. Under the previous draft policy, the country was split into four zones with solarFiTsvaryingfrom $0.07 to $0.09 per kWh through to the end of June 2020, depending on the zone. In the second year starting July 2020, the FiT would have been cut to $0.0671 to $0.088 perkWh.

The newest plan has maintained the complex four zones for now but stakeholders are “still discussing the issue” and “no decision has been made on whether there will be four, or whether the number of zones will be reduced to two,” said VILAFlawyer Vaibhav Saxena.

For now, the ministry has yet to determine what the solar FiTs in each zone may be over the next two years. What is clear, however, is that MOIT has decided to set the rooftop solarFiTat $0.0935 perkWh. The government is seeking to promote rooftop solar to reduce grid load and stabilise power shortage which are already happening in southern Vietnam, according to Saxena.

Something else that will remain unchanged is the 20-year power purchase agreement (PPA) with state utilityEVN.The PPA had been considered problematic because it had no ‘take-or-pay’ mechanism, nor did it address issues such as the absence of arbitration and termination clauses or guaranteed access to state utilityEVN’sgrid.

However, developers turned out to be undeterred by the lingering concerns over the PPA. Nearly 4.5GW of solar capacity was built under the previous solarFiT, which expired in June (2019), according to VILAF.

Plenty more is in the pipeline. More than 330 solar projects with a total capacity of 26GW is in various stages of the approval process. Of that, 121 projects with a combined capacity of 6.1GW have been approved and included to national and provincial power development plans, according to MOIT data.

Retrieved from IJGlobal. 

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