Thanh, the owner of an energy company in Hanoi, was sure of success when deciding to develop a solar power project in late 2018.
Everything went smoothly with his project which was added to the power development plan and the investor could sign a PPA (power purchase agreement) under which the Electricity of Vietnam (EVN) would buy electricity from the project at the price of 9.35 cent per kwh.
Thanh, like many other investors, rushed to pour money into solar power one year ago after the government released Decision 11/2017 which said investors could sell electricity to EVN at 9.35 cent per kwh if their projects began providing electricity to the national grid prior to June 30, 2019.
This explained why many projects became operational within a short time, which EVN said ‘never happened before in the history of the power sector’. In that period, about 3-4 solar power plants connected with the national grid each day.
|2019 was a special year for solar power investors: they sprinted in the first half of the year to fulfill projects, but have been idle since July, and are now waiting for a new policy.
In 2018, only three solar power plants successfully connected the national grid, but the figure increased by 30 times after six months. Most power plants became operational in April and June 2019 with total capacity of 4,500 MW. In June alone, the last month before the Decision No 11 expired, 49 projects were put into operation.
Because too many solar power plants connected the national grid within a short time, the transmission networks in some localities, especially in Binh Thuan and Ninh Thuan, became overloaded.
A report found that the 110 KV Thap Cham – Hau Sanh – Tuy Phong – Phan Ri transmission line was overloaded by 260-360 percent.
As a result, local solar power plants had to cut their capacity to ensure the smooth operation of the transmission network.
Solar power is a new type of energy, supplementing the national electricity system in the context of short supply, but the output has accounted for only about 2 percent of total electricity output since the beginning of the year. It is estimated that 25-27 million kwh of electricity is mobilized from solar power plants each day.
The solar power boom has been followed by a quiet period. EVN said from July 1 to now, only Hacom Solar (40.3 MW) and Solar Park (40 MW) have been completed.
Investors cannot make a decision because the government has not defined the new electricity purchase price.
Vietnam has offered a very high price for solar power to attract investment in this energy segment, but the country now has to recalculate the pricing to ensure sustainable development for this renewable energy.
The Ministry of Industry and Trade has told the authorities of cities and provinces and Vietnam Electricity Group (EVN) to stop proposing solar power projects under the feed-in tariff (FIT) program until a new decision is issued.