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Vietnam may cut FIT for large-scale PV up to 20%

Source:PV Men

Vietnam pledged in the Paris Agreement to achieve 20% of solar in the nation’s renewable energy mix by 2030. The country is well on the way to meet this target, having exceeded the 2025 goal of 4 GW of solar PV—set under its 2020–2030 plan for installed capacity—ahead of June 30*, 2019.

*June 30 is the deadline for the country’s first FIT scheme, which compensates PV projects at VDN 2156/kWh or USD 0.0935/kWh.

The sheer volume of PV capacity to be commissioned poses a challenge to the capacity of Vietnam’s grid and prompts Vietnam Electricity, the state-owned utility company, to adjust the feed-in-tariff (FIT) rate.

According to Vietnam’s Energy Conservation Center, the Ministry of Industry and Trade (MOIT) has recently proposed a draft proposal to cut the FIT by 20% for large-scale PV, meaning that the FIT level will be reduced to VND 1620/kWh (USD 0.0709/kWh) for ground-mounted PV and VND 1758/kWh (USD 0.0769/kWh) for floating PV, while maintaining the rate at VND 2156/kWh (USD 0.0935/kWh)** for rooftop PV. The government estimates that nearly 5 GW of PV had been installed nationwide under the expired FIT scheme. The VND–USD exchange rates here are presented in non-real time terms

**The VND–USD exchange rates here are presented in non-real time terms.

While higher tariffs are proposed for northern provinces where solar irradiation is lower to encourage solar adoption, the proposed FIT levels are meant to apply to all provinces of the nation.

Vietnem larfe-scale project

Graph: According to stats, Vietnam has deployed 5 GW of solar under old FIT scheme

Under the draft plan, the 20-year FIT levels exclude value-added tax, which is adjusted according to the VND–USD exchange rate. The new FITs would be applied to PV projects that are grid-connected between July 1, 2019, and December 31, 2021. Meanwhile, the old FIT rate of USD 0.0935/kWh is still applicable for projects under development in the province of Ninh Thuan until the end of 2021. On August 31, 2018, the first FIT policy, which was supposed to end on June 30, 2019, was extended for twelve months.

The MOIT’s draft plan for FIT does not cover rooftop PV because the FIT rates that span the period from July 1 this year to June 30, 2021 had been adjusted earlier in July under a program to promote rooftop PV. This program sets a target of bringing a cumulative 1 GW of rooftop PV online by the end of 2025.

191008_3_en_Vietnem rooftop PV FiT

With nationwide electricity demand growing by 10% each year, Vietnam needs to add an annual 3.5–4 GW of new generation capacity. It leverages the domestic PV industry and projects in pipeline to achieve its PV installation targets over the past years. If the draft plan for FIT reduction becomes a working one and gets implemented, it will encourage developers to bring large-scale projects online before the FIT rate is reduced.

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