Bidding to mature Vietnam renewables development: expert

A future bidding mechanism will help Vietnam avoid overabundant development of renewable energy, with only the best investors joining the game, says Vietnam Energy Association’s chairman.

Vietnam’s feed-in-tariff (FiT) for renewable energy, in the range of 8.38-9.35 cents per kWh, has attracted many investors, resulting in the current abundance, Tran Viet Ngai told a workshop in Hanoi on Friday.

Since the end of 2021, installed solar and wind power generation capacity reached almost 21,000 megawatts, accounting for 27% of the total installed capacity, he said. "Investors have capitalized on the good prices, causing such massive development."

Therefore, Ngai, former deputy general director of Vietnam Electricity (EVN), noted it is advisable for regulators to rapidly issue a bidding mechanism to select investors.

The Ministry of Industry and Trade (MoIT) has repeatedly mentioned a shift from the preferential FiT scheme to bidding prices. However, it has not introduced the long-expected mechanism.

Bui Quoc Hung, deputy director of the ministry’s Electricity and Renewable Energy Department, told an MoIT press conference one day before the workshop: "The FiT for renewables is applicable for just a certain period of time, and extension is no longer appropriate."

However, some investors disagreed. They argued that Vietnam’s goal of having 7 gigawatts of offshore wind power by 2030 is seen as a big challenge if developers are selected via bidding alone.

If Vietnam relies only on auctions in selecting developers, it is likely that the first offshore wind farm in the country would not start operation until 2030, Mark Hutchison, a representative from the Global Wind Energy Council, an international trade group for the wind power industry, told a sector workshop in Hanoi earlier.

Like him, Nguyen Thanh Binh, deputy CEO of Vietnamese conglomerate T&T Group, said Vietnamese regulators should work out a transitional period before shifting to merely auctions.

Binh added if only-bidding is introduced, it is also likely that there would be cases in which investors seek projects, and then quit later. Therefore, it is advisable to select investors via both non-bidding and bidding mechanisms, he suggested.

The Friday workshop also heard concerns from experts about huge amounts of investment needed for Vietnam’s energy security goals.

In the draft Power Development Plan VIII (PDP VIII) already submitted to the government, the high-performance scenario set the total investment for 2021-2030 at around $165.7 billion, including $131.2 billion for power generation and $34.5 billion for transmission. This total is 1.5 times higher than that in the revised Power Development Plan VII.

It means PDP VIII requires about $3.45 billion a year for power transmission investment. But EVN said the state utility was able to arrange only roughly $1 billion a year for the burden between 2011 and 2020.