Exclusive Interview With Luu Minh Tien – Chairman and CEO, Solar Electric Vietnam JSC

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SolarQuarter ASEAN magazine had an exclusive conversation with Luu Minh Tien – Chairman and CEO, Solar Electric Vietnam JSC. and understood some key learnings and challenges that the company faced during Covid crisis.  He also spoke about the major projects the company undertook and the future outlook of the solar sector in Vietnam.

  1. What have been some key learnings and challenges for the year especially after having faced the Covid crisis?

There have been many critical changes for human beings during “Covid 19” as the market and business had to adapt to the new normal.

Some main challenges were:

  • The covid-19 pandemic has had a profound impact on the global economy and the way businesses have been running. Just in Vietnam, in 2020, there were more than 100,000 businesses that announced to stop doing business, which would create the structure change for the market with a huge impact in the supply chain of many sectors. 
  • Companies were forced to constantly change their business plans in the short term with a lot of additional costs, especially for logistic cost in order to keep track with the long term goals. 

Some key Lessons learned: 

  • The lesson learned here is business needs to be ” in cautious status” all the time. No matter how difficult the situation, there will always be opportunities. SEV realizes that the market will bounce back at the end of the pandemic, and we insist in our long term business strategy with the confidence in RE sector. 
  • Digital transformation is a trend and becoming vital and crucial for businesses to sustain during covid time. With the development of society and the increasingly competitive market, digital transformation is inevitable. SEV has quickly transitioned to this new working mode to adapt with new technology- applying ERP in the company’s operation, which certainly brings certain advantages. 
  1. Please brief our readers about the recent projects that you have undertaken in Vietnam. What has been your biggest challenge so far?

We invested in some outstanding projects in rooftop solar power in 2020 such as: Nam Tan Uyen Industrial Park project, Binh Duong 4.4MWp; Project Viet Vuong 3 – Ben Tre 3.75MWp; Boho Décor Long An Project 1.8MWp; And some projects are ready for investment in Q4/2021-Q2/2022 such as: 7MWp Yuzhan Bac Ninh project; An Phat Hai Duong Project 11MWp. 

Big challenges for us are as follows: 

  1. For the projects in 2020: 
  • The biggest challenge is the projects must be COD in the short timeline simultaneously. As an EPC, within 4 months until the end of the FIT2, December 30, 2020, SEV completed more than 20 MWp. 
  • At that time, all the main components such as solar panels and inverters were in shortage of supply, which led to the rise in input price for all projects, likewise, high logistic cost, labour cost, etc also ended up with significantly increased total costs. 

 2. For 2021 and possibly the end of the second quarter of 2022: 

  • A policy gap has appeared since no new policies have been announced yet to replace FIT 2, and there is no specific plan or timeline for new policy which means uncertainty. The implementation of the new projects have been faced with many difficulties, the stakeholders are struggling to know how to do it right, despite the installation for self-consumption purposes. 
  • There is a super cycle of increasing commodity prices globally, basic materials such as steel, copper, aluminum have increased continuously and show no sign of stopping. Leading to a series of manufacturing industries such as panels, inverters with a crisis of lack of raw materials, lack of chips, etc. This led to an increase in total investment of a solar project up to 20-25% compared to 2020. 
  • Global shipping is in crisis, freight rates are 10 times higher than the historical peak average, containers are scarce, some major seaports in the world are blocked or interrupted because of covid-19. All of these cause a sudden increase in freight costs, slow down the transportation process, lead to a longer project implementation time, and increase all direct and indirect management costs. 
  • In Vietnam, strict measures to control Covid-19 have restricted movement between regions, slowed down the circulation of goods, indirect costs for testing, and working conditions have increase the costs significantly. 
  • In the context of increasing global inflation pressure, national central banks have increased their money injection to promote and maintain economic activities. This leads to the cash flow of investors looking to safe investment channels such as real estate, gold rather than investing in production, medium and long-term investment.
  1. Tell us a bit about the recent technology and cost trends in the South East Asian solar market. 

Popular module technology is still mono-crystalline technology. The trend was from mid-2020 to now, and possibly until the end of 2022, there is no breakthrough in solar panel technology other than technology from the big manufacturers. The world’s leading manufacturers such as Longi, Canadian Solar, Trina Solar, Jinko Solar, etc are continuing to improve technology to increase the efficiency of modules to maximize the yield in a certain area. The best current commercially produced panels are 450Wp; 500Wp; 540Wp; 600Wp.

Inverter technology in the world is developing in a distributed direction. Instead of using large central inverters 2-3-5MW, farms are tending to increase the rate of using string inverters with a capacity of 100kW-250kW. String inverter technology is showing advantages such as simpler installation, easier in operation, maintenance and replacement compared to central inverter technology. 

Inverter devices are increasingly integrated in the all-in-one trend, integrating and expanding more important protection features and in tandem with a faster development from panel manufacturers. 

The trend of improving technology leads to a significant reduction in land use in the solar PV sector from the time of 1.2ha/1MWp until now with only 0.7ha for 1MWp. However, in 2021-2022, due to the covid-19 pandemic, total investment costs have a short term increase.

  1. How do you see the solar market progressing in Vietnam in the next 5 years?

Solar energy in particular and renewable energy, in general, is an inevitable trend globally, and Vietnam is no exception to that trend. The draft Power Plan VIII is being promoted by the Government of Vietnam to 2035 with a vision to 2045, the proportion of renewable energy accounts for about 25%-30% of the total power generation structure. And compared to the present time, this capacity will need to be increased more than 2 times to keep the market be a very potential market. 

VN is currently the preferred destination for global corporations and manufacturing enterprises in the supply chain rearrangement. Therefore, it is almost certain that the load demand will increase markedly in the coming years. Since then, the demand for developing electricity sources for Vietnam’s economic development will increase significantly. 

Vietnam is increasingly expanding and strengthening international cooperation, multilateral cooperation, participating in regional and global trade organizations, so Vietnam will have to fully participate in standards, and international regulations. The commitment of the Vietnamese government to not trade off the environment for economic development has been partly demonstrated in the past two years and will continue to be strong in the coming years. Therefore, the renewable energy industry, in particular, will have great development momentum in Vietnam in the coming years, with advanced and environmentally sustainable technologies.

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