Renewable energy requires clear-cut development roadmap: expert

Regulators need to introduce clear-cut mechanisms and roadmaps for renewable energy development, so that investors can better prepare for deploying their projects, says vice chairman of Vietnam Energy Association Nguyen Van Vy.

What do you think about the proposal of developing no more solar power plants before 2030 in the latest draft Power Development Plan VIII (PDP VIII) that the Ministry of Industry and Trade (MoIT) submitted to the government on November 11?

Vietnam boasts great potential for developing solar and wind power. Particularly, the total technical potential of solar power in Vietnam reaches about 434,000 megawatts, including 309,000 MW of large-scale ground-mounted solar power; 77,000 MW of floating solar power; and 48,000 MW of rooftop solar power.

Thanks to policies to encourage the development of solar power projects stated in the Prime Minister’s Decisions 11/2017/QD-TTg and 13/2020/QD-TTg, solar energy has seen remarkable development, with the country’s total solar power capacity hitting 16,545 MW, including 8,904 MW of concentrated solar power and 7,641 MW of rooftop solar power.

As the capacity is relatively high, in the latest draft PDP VIII submitted to the government, the MoIT proposed that solar power be limited or even not developed in the next period.

In my opinion, among the types of renewable energy, solar power sees its price decrease very quickly. The price dropped from 9.35 U.S. cent/kWh stated in the Prime Minister's Decision 11 on mechanisms to encourage solar power development to 7.03 U.S. cent/kWh in Decision 13. It will go down further in the coming time thanks to developed technology.

Therefore, we should not be rigid when delivering the policy of not developing solar power before 2030.

What will happen to projects that have been completed without pricing mechanism or are not connected to the grid from now until 2030?

According to Vietnam Electricity (EVN), 7,605 MW of wind power capacity has been completed, of which 4,126 MW have been put into operation and entitled to the Feed-in-Tariffs (FiT) mechanism under the Prime Minister's decisions. Meanwhile, 62 projects with a total capacity of 3,479 MW have signed power purchase agreements with EVN but have no pricing mechanism as they missed the deadline for incentivized feed-in-tariffs (FiTs).

The MoIT recently issued Circular 15 featuring the method of formulating power generation tariff ranges for the fail-to-meet-deadline solar and wind power projects, often referred to as "transitional renewable energy projects". On the basis of the price ranges, EVN will negotiate with investors of such projects to sign power purchase contracts. When these mechanisms are in place, their power will be utilized.

The negotiation time will last from at least six months to one year, causing difficulties for investors. Therefore, the MoIT should propose the Prime Minister allow the utilization of "transitional projects" at temporary prices. When the official prices are launched, EVN will define the final payment for investors.

Do you have any comments on EVN’s recent proposal on electricity generation price ranges for "transitional projects"?

Under the proposal, based on the data of projects, EVN will calculate electricity prices to ensure that investors cover costs (including debt repayment) and have a reasonable profit (internal rate of return about 10-12%). From those prices, the Ministry of Industry and Trade will issue a price range based on which EVN will negotiate and sign power purchase agreements with investors.

What are your proposals for PDP VIII?

State agencies need to provide orientations and policies that create a stable investment environment for renewable energy sources. On the basis of reviewing the progress of major power projects under construction, it is necessary to balance electricity capacities and determine the number of projects of solar power, wind power and other renewable energy sources that need to be built in the 2023-2025 and 2025-2030 periods. The balancing needs to be carried out by region to determine the annual capacity of each type to be put into operation in each locality.

Small-capacity renewable energy projects like rooftop solar, waste-to-power and biogas power projects should enjoy FiT prices issued annually by competent state agencies for each type of technology applied, each capacity and each region.

In summary, state management agencies must issue a system of clear-cut mechanisms and policies as well as a clear-cut roadmap for renewable energy development so that investors have a basis to prepare resources for deploying their projects.

In case a mechanism expires, it is necessary to have another in place to create a continuous development process as under its orientations to 2050, Vietnam will still develop many renewable energy projects.