Vietnam’s Ministry of Industry and Trade (MOIT) has proposed an almost 38% reduction on the feed-in-tariff for rooftop solar power projects, shedding light on Vietnam’s overcrowded solar power market.

Hoang Tien Dung, head of electricity and Renewable Energy Authority under the MOIT, yesterday (17 March 2021) said that MOIT is planning to cut the tariff by 30.8% to 38.9%, according to local press.

If implemented – which may be effective from next month (April 2021) – the new tariff price would land at around $0.052 per kWh to $0.058 per kWh. The previous feed-in-tariff (FIT2) that ended on 31 December 2020 was at $0.0838 per kWh.

MOIT has drafted the FIT3, with a proposed price at $0.0589 per kWh for solar rooftop projects with a capacity of 0.1MWp to 1.25MWp.

The proposed reduction came as MOIT was concerned about the oversupply in the national power system and the overloaded power grid.

Solar power has surged up to 19.4GW of electricity by the end of 2020, close to 25% of the country’s total power capacity, according to state-owned utility company Vietnam Electricity (EVN).

“Some investors in the market are opposing the FIT reduction. But the government is focused on increasing competitiveness in the market,” Vaibhav Saxena, Vietnam-based foreign counsel at Vilaf, told IJGlobal.

“They are overwhelmed, as some of them have started preparing for the auction scheme when there was no indication of FIT3 for rooftop solar power projects,” Saxena added.

MOIT, as of 7 January (2021), approved and included solar power projects with a total capacity of up to 15.26GWac into the national power development plan.

Among them, about 43 projects, amounting to as much as 5GWac in total capacity, would be under the open bidding scheme or direct power purchase agreement between independent power producers and electricity users.

The reduced FIT would result in the market facing even fiercer competition for large-scale or floating solar power projects under the auction scheme.

Similarly, Malaysia’s 1GW large-scale solar tender, which opened last week (12 March 2021), has received the lowest bid price at M$0.1399 ($0.034) per kWh.

The reduced FIT rates are nearby the tariff rates for rooftop solar under the corporate power purchase agreements between the investor and private customer, explained Saxena.

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