Rooftop solar power in Vietnam: great potential but no specific policies

Vietnam has not issued any specific policies for rooftop solar power development in the past three years despite its great potential, thereby hindering businesses, heard a forum in Hanoi on Thursday.

The forum was jointly held by the Vietnam Chamber of Commerce and Industry (VCCI), Business Forum magazine, and the Vietnam Institute for Economic and Policy Research (VEPR).

Speaking at the event, VCCI vice president Hoang Quang Phong said that under the National Power Development Plan for the 2021-2030 period, with a vision to 2050 (PDP VIII), approved by the prime minister on May 15, 2023, the government is encouraging strong development of renewable energy to reduce dependence on fossil fuels. It aims to have 50% of office buildings and 50% of residential houses use self-produced rooftop solar power by 2030.

According to Phong, Vietnam is part of 19 bilateral and multilateral free trade agreements (FTAs). This is the basis for Vietnam to connect with and engage deeper into global value and supply chains. Products and goods imported by the EU and other countries must have green certificates if they want to enjoy preferential mechanisms.

"Using rooftop solar power helps businesses stay proactive, reduces production costs, and increases competitiveness. It is also an indispensable condition in the international integration process," the official stressed.

However, he noted that the installation of rooftop solar power systems for businesses has not been promoted because there are no specific regulations, while procedures and guiding documents issued by ministries and agencies are unclear and inconsistent.

Sharing the same opinion, Nguyen Vu Chien, deputy head of the Industrial Parks Management Board of the northern province of Nam Dinh, said that a number of small factories in the province’s six industrial parks have met requirements for green exports and use of rooftop solar power. However, many other factories want to sign contracts to use rooftop solar power but have encountered difficulties.

Firstly, a document from the Northern Power Corporation stated that power companies in the region have temporarily suspended agreements to connect solar power to the national grid. "This has confused local businesses, and they have been unable to come up with appropriate solutions, Chien said.

The second problem businesses face is investment costs. Producing 1 MW of electricity costs VND13 billion ($516,000), so businesses are worried about capital recovery.

In addition, the hot season in Nam Dinh in particular and northern Vietnam in general only lasts for a short time, with weaker solar radiation than in the central and southern regions, leading to low electricity output.

"Although Nam Dinh province has sent a document proposing the Ministry of Industry and Trade (MoIT) to support the use of rooftop solar power for industrial parks, there is still no specific mechanism or regulation from the government to thoroughly resolve the issue. The province hopes that competent agencies, especially the MoIT, will issue more specific instructions on standards and methods for implementing the construction and installation of rooftop solar power systems," Chien said.

Tran Viet Nguyen, deputy head of the Business Department under state utility Vietnam Electricity (EVN), shared that rooftop solar power has great potential but there is no mechanism for its development.

In the 2017-2020 period, rooftop solar power developed strongly, making great contributions to national electricity capacity, while supporting the electricity industry and EVN to relieve pressure on the national grid, he said.

Currently, the country has more than 103,000 rooftop solar power projects with a total capacity of over 9,500 MW, half of which comes from in industrial parks.

Truong Van Cam, vice president of the Vietnam Textile and Apparel Association (VITAS), said that with a large factory roof area, businesses in industrial parks have convenient conditions for rooftop power, thus saving costs, ensuring energy supply, increasing price competitiveness, and meeting the requirement of product "greening."

However, businesses still face some difficulties such as weather conditions and unclear mechanisms for rooftop solar power development.

In addition, there is no legal framework for developing and regulating rooftop solar power. Prime Ministerial Decision 262/QD-TTg approving the plan for implementing PDP VIII only focuses on developing wind power and new energy. Rooftop solar power until 2030 will remain "self-produced and self-consumed."

Therefore, it is necessary for agencies to issue sub-law regulations to facilitate businesses’ rooftop solar power development, he said, adding the disposal and recycling of solar panels to avoid polluting the environment is also a big problem.

He proposed the government soon issue comprehensive policies and specific instructions on the order and procedures for rooftop solar power installation investment, electrical safety, and fire prevention for businesses and industrial parks nationwide; and specific regulations on the mechanism for regulating, trading, and using rooftop electricity in industrial parks and economic zones.

“It is necessary to issue a new policy to replace the expired preferential feed-in tariff (FIT) mechanism, with an electricity trading mechanism for businesses in the same industrial park,” he stressed.