Overview Of Vietnam’s Solar Market

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Solar energy is the power that is present everywhere in abundance. Owing to policy support and decline in the cost of technologies, solar power capacity has grown tremendously in the past few years. Speaking of Vietnam, the country’s power mix uses a lot of renewables and the majority share goes to solar. The protagonist of the solar success story of Vietnam has to be its governments’ efforts to minimize reliability on non-renewable energy sources. This article provides you insights into the country’s solar sector and the various angles of the same. 

Growing Demand

Like most developing nations, Vietnam also turned to coal to meet all its energy needs. The reason behind the same was that coal is the cheapest and the most convenient alternative for power supply. Renewable resources, on the other hand, have become more appealing as a result of technological advancements and increasing environmental concerns. Solar energy played a minor role in Vietnam’s energy policy in 2017. But, by the end of 2019, Vietnam had surpassed Malaysia and Thailand as the Southeast Asian country with the most solar panels installed. The country now has 5 gigawatts (GW) of photovoltaic projects under construction, far exceeding the goal of 1 GW by 2020.

From 2013 to the year-end 2018, Vietnam’s power sector grew in lockstep with the country’s economy, reaching USD 223.9 billion in 2017, making it one of the world’s top 20 fastest-growing economies, with year-over-year growth rates varying from above 5% to 7.1%. In Vietnam, there is a huge amount of untapped solar energy resource capacity. Owning to the above statement, various companies see huge potential in Vietnam to build and run solar-powered and solar-related projects.  

Feed-In-Tariffs (FiT) Mechanism 

The Feed-In-Tariff (FiT) mechanism is expected to expand the solar industry in Vietnam further. FiTs stimulate investment in renewable energy by guaranteeing producers a higher-than-market price. FITs help mitigate the risks associated with renewable energy production because they normally require long-term contracts. The Vietnamese government approved new solar FiTs in April 2020, ten months after the previous FiT program ended in June 2019. The new tariffs are 10% to 24% lower than the previous ones, and they are still standardized across regions, but they are differentiated by type. Tariffs for ground-mounted, floating, and rooftop solar panels vary. As of 2021, in order to alleviate grid pressures in the region, Vietnam will slash feed-in tariffs available for rooftop solar installations by up to 38%. A further revised version of the tariff is expected to come anytime soon which will take down the rate even further.

Future Outlook 

Vietnam continues to plan to introduce an auction process in the future. All projects that do not qualify for the new FiT rates will have to compete for funding. The scheme would help the government better manage renewable energy production across the country by allowing it to issue a call for tenders and choose the most cost-competitive firms. According to a news report, over the next 20 years, state-owned utility Electricity of Vietnam (EVN) expects to invest USD 123.8 billion in the construction of Vietnam’s national power grid. According to the United States International Trade Administration (ITA), there are plans to invest in the construction of up to 98 new power plants with a total capacity of 59,444 megawatts (MW). EVN intends to build 48 of them, totaling 33,245 MW of power generation capacity, at a cost of USD 39.6 billion. The Vietnamese government also proposed that the power transmission system should be established, and that power be sourced from the northern, south-central, north-central, and central regions. It also reported that smart grid research and Industry 4.0 technologies will be used to optimize transmission systems. With this, the government wants to bridge the demand and supply of power to almost all regions of the country. Furthermore, the government also wishes to connect various power grids not just in Vietnam but also in the neighboring countries. 

Conclusion 

The journey of shifting from a coal-driven economy to a solar-driven one can be tough but Vietnam is one successful example of this. Vietnam has a lot of potential when it comes to solar energy and that is extremely clear from the above discussion. Moreover, to make things better, the Vietnamese government is also trying and picking out different strategies and policies to make solar energy to new heights. With recent developments and technologies, the citizens of Vietnam will cherish the many advantages solar energy has to offer. 

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