Vietnam energy market presents 'pioneering opportunities'

While the energy market is much more consolidated in the Philippines, Indonesia and Thailand, companies in Vietnam have the chance to innovate and be the first players in many segments, says Sebastien Prioux, CEO of French-invested GreenYellow Vietnam.

GreenYellow is producing solar energy on-site for companies in Vietnam. Please tell us about your projects in the country.

In Vietnam, we have been focused in the last 22 months on targeting private clients mostly for self-consumption with rooftop solar projects. We have as of today a portfolio of 65 MWp of private PPA (power purchase agreement) projects with key international and local corporations like Vinatex, Phong Phu, Megamarket, GO! Mall, Giavico and Saigon Food.

We target clients having big electricity bills and a stable load profile, and we propose to reduce the bills by selling electricity to them from solar power generated on-site. It is a very interesting model because we can offer discounts of up to 50% on the commercial tariff. We produce on-site the energy they need and we design the solar system to fit their load profile.

How would you compare the Vietnamese energy market with regional peers, where GreenYellow has made its presence felt?

Vietnam offers a series of advantages compared to other markets. First of all, the demand for energy is very high, from both local and international companies. Secondly, the time to enter the market for companies like GreenYellow is very favorable. We arrived when the government's second feed-in-tariff (FiT) policy was being deployed, and now we are engaging in bigger projects in different segments as the Power Development Plan VIII (PDP8) is being finalized.

So it is very good to plant our seeds with key partners, such as local authorities, for the next investments. We want to engage in renewables, energy efficiency and battery storage. In the Philippines, Indonesia and Thailand where we also operate, the markets are already much more consolidated. Here in Vietnam, there is room to innovate and be the first player in many segments.

We believe that despite the challenges we have faced last year, there is a unique advantage of being in Vietnam now and already having built up a very serious portfolio of references.

What challenges do you face in project implementation here?

In renewable energy generation, the current main challenge is local regulations. The regulations on rooftop solar power introduced in 2020 are too permissive. We have seen many projects built improperly, not respecting the construction standards or deadlines for commissioning, and this led to a huge overcapacity on the grid.

Clearly, we are not an investor pushing for the third FiT implementation (for rooftop solar at least). We understand that it will be costly for EVN and state authorities, and there are many other ways to support the authorities with more renewables and to balance the load on the grid, such as promoting self-consumption on-site among private companies and immediately implementing some pilot projects of battery storage to support the grid (backup power or frequency regulations on some distribution loops).

In practice, we push for more strict and clearer regulations to be applicable in all provinces as they are currently not the same. For a foreign investor operating in more than 60 sites in Vietnam, this is still a big challenge for every project.

What should the Power Development Plan VIII deliver to fuel private investments in power generation and build a greener energy mix?

It is indeed a big challenge, but we have been very pleased to hear from the Prime Minister during the COP26 that the power generation from coal will be reduced in PDP8, and more importantly the target of net-zero emissions by 2050 is very promising. We fully support this roadmap.

In practice, PDP8 must be seen as a pact between private investors and public authorities. Vietnam will only reach this target if there are strong commitments from both sides on improving the grid, stabilizing the grid, and managing the renewables ‘’intermittency’’, which is only possible if private operators commit on some rules to support the grid authorities. Forecast of production for all big power generation sources is a must. And I personally believe that the interactions between key departments such as Dispatch Center, Electricity Regulatory Authority of Vietnam (ERAV) and Electricity & Renewable Energy Authority (EREA) must increase.

At the same time, state authorities must make it clear for all investors what will happen to the direct power purchase agreement (DPPA) pilot program, a big signal for the international community; and what will happen to self- consumption, a key point for all factories exporting outside Vietnam. If you don’t have green energy supply, you cannot be qualified to sell your products to your clients.

At the end of the day, the most important point remains the safety of the grid and a well-balanced load which is the first priority. The green energy mix can only be done in respect to these basics.