Prime Minister Nguyen Xuan Phuc has asked the Ministry of Industry and Trade to report on the uncontrolled development of solar power projects, according to a notice from the Government Office.

Technicians install rooftop solar panels 

The Government has expressed concern that a large number of active solar power plants could lead to the overload of current transmission systems.

The ministry has been asked to report on the plan for national solar power development, with special attention being given to power structuring and electricity transmission grid development, prior to December 15.

The prime minister also required the ministry to present an overview of registered and licensed solar power projects and put forward solutions to a possible overload before December 20.

The ministry has been ordered to issue a new decision to replace the prime minister’s Decision 11/2017 on preferential mechanisms for the development of solar power projects.

The notice said there should be no legal loopholes, conditions for development should be created and investors in these projects should suffer no ill effects.

Decision 11/2017 requires State utility Vietnam Electricity Group (EVN) to purchase all output from solar power projects connected to the national grid at VND2,086, or 9.35 U.S. cents, per kilowatt-hour, excluding value-added tax.

Electricity purchase contracts with EVN are set to last 20 years when the commercial operations of these projects begin. The low price, along with various capital, land and tax incentives, is expected to enable these investors to earn a profit.

The decision, which came into effect in early June last year, will expire in late June next year, leading many investors to speed up work on solar power projects to enjoy incentives related to the power price.

According to the trade ministry, more than 120 projects were added to the plan for national electricity development, as of this September. The total electricity generation capacity is estimated to reach 6,100 megawatts (MW) by 2020 and 7,200 MW by 2030.

Some 25 of the 120 projects have already signed power purchase agreements with EVN.

Meanwhile, more than 200 solar power projects are awaiting approval, with a combined capacity of over 13,000 MW.

The ministry said that the total registered capacity for this source of clean energy is up to 26,000 MW, accounting for some 60% of the country’s total electricity generation capacity, at over 47,000 MW.

Solar power plants are mainly located in the central and southern regions of the country where sunshine is abundant. New transmission systems will need to be built or existing ones upgraded to handle the increased load.

Otherwise, these plants would cause the overload of existing systems, and the operators of solar power plants would not be able to sell their electricity to the national grid, due to their limited transmission capacity.

SGT