Northern Vietnam solar power projects to enjoy higher selling prices

Solar power projects in northern Vietnam, where radiation levels are much lower, will enjoy higher selling prices than their counterparts in the central and southern regions.

Per a draft circular on methods for fixing price brackets for solar and wind power plants that has been put up for public feedback by the Ministry of Industry and Trade (MoIT), the prices will be based on solar radiation intensity in each region.

The aim is to facilitate development of this power source in Vietnam’s northern region.

This regulation will apply to newly developed renewable power projects.

According to the draft circular, this price-fixing method is similar to that applied to renewable power projects that missed out on the Vietnamese government's preferential feed-in-tariffs (FiTs) deadline, or transitional projects.

However, some input parameters to calculate the price brackets will be different, such as installed capacity, repayment period, equity/loan ratio and profit margin, among others.

The circular also updates parameters of investment, foreign currency loan ratio, operation and maintenance (O&M) cost ratio and loan interest rates.

State utility Vietnam Electricity (EVN) will be responsible for fixing the price brackets after selecting a suitable consultant to collect input data. This should be submitted to the MoIT early November for appraisal and approval.

If and when needed, especially at a time when many solar and wind power plants will directly negotiate electricity prices with EVN, the MoIT will set up an advisory council to appraise the price brackets submitted by this group.

The National Power Development Plan VIII (PDP VIII), approved in May 2023, estimates Vietnam's solar power potential at about 963,000 megawatts, of which 87% is ground-mounted solar. The total capacity of solar power sources is expected to increase by 4,100 MW by 2030 and reach 168,594-189,294 MW by 2050, with 252.1-291.5 billion kWh of electricity to be produced each year.

By 2030, the country is also expected to maximize the technical potential of offshore wind power at about 600,000 MW. Offshore wind power serving domestic demand will reach about 6,000 MW by 2030, accounting for 4% of the country's total power generation capacity. The figure is expected to increase to 70,000-91,500 MW by 2050, or 14-16% of the total.