A unit of monopoly electricity provider Electricity of Vietnam (EVN) has unveiled a plan to build two solar power plants in the south-central province of Ninh Thuan with a combined capacity of 350 MW.

The Power Generation Corporation 3 (Genco 3) plans to build a photovoltaic farm on an area of 554 ha at a total cost of VND9.58 trillion ($421.8 million), EVN said on its website.

It expects to begin construction in the second quarter of next year and put the plants into operation in the first quarter of 2021.

It will also use the site for hi-tech agricultural production.

Genco 3 currently operates 12 thermal and hydro power plants around the country with a combined capacity of 6,549 MW, accounting for 17 per cent of the country’s power production.

Foreign businesses have recently expressed interest in investing in solar power in Vietnam, where energy demand is growing rapidly. 

Singapore’s Sinenergy Pte. Ltd. has been the latest to express interest, in building a 300 MW farm in Ninh Thuan.

Last month, Prime Minister Nguyen Xuan Phuc issued a long-awaited decision approving the mechanism on the development of solar power projects, Decision No.11/2017, introducing a tariff of $0.0935 per kWh for the purchase of electricity from grid-connected solar power plants. 

This is higher than the tariff applied to onshore wind power projects of $0.078 per kWh.

According to global law firm Mayer Brown JSM, this regulation had been in the drafting stage for several years with limited tangible progress. 

While both foreign and local investors have expressed keen interest in developing solar as a potential renewable power source in Vietnam, concrete projects have stalled.

The lack of clear guidance on the development scheme, especially with respect to the tariff structure, has been an impediment to the development of Vietnam’s solar aspirations.

Decision No.11 could therefore play a vital role in realizing the government’s goal under Master Plan VII for renewable energy to contribute 9.9 per cent to the country’s total electricity production by 2020 and 21 per cent by 2030.

EVN, under Decision No.11, will be the single purchaser of electricity generated from solar power projects, as is the case with respect to all Vietnamese independent power projects. 

It is required to buy all power generated from on-grid solar projects, with priority given to deploying the full generating capacity of the system. 

The sale and purchase will be carried out through a 20-year term standard power purchase agreement (PPA) to be issued by the Ministry of Industry and Trade.

The government aims to bring installed solar power capacity from its current insignificant figure to 850 MW by 2020, 4,000 MW by 2025, and 12,000 MW by 2030. 

Of total power generation capacity, the proportion of solar power is expected to reach 0.5 per cent by 2020, 1.6 per cent by 2025, and 3.3 per cent by 2030.

VN Economic Times