Vietnam to Go Back to Solar Auctions, Decides to Ditch Feed-in-Tariffs

The FiT tariff will only be applicable for projects that are commencing construction and commissioning in 2020


After months of confusion and uncertainty over the future of renewable projects in Vietnam, Prime Minister Nguyen Xuan Phuc has announced that the country will go back to conducting solar auctions, doing away with the feed-in-tariff (FiT) mechanism.

Speaking on the topic of FiT, which has been prevalent for rooftop solar projects in the country, the prime minister said that the development of the solar sector requires the introduction of an auction system for the ground-mounted solar projects.

But all’s not over for FiTs as it will still be applicable for projects that have signed the power purchase agreement (PPA) and are commencing the construction in 2020 or are commissioned in the year apart from rooftop solar.

The decision comes five months after the expiry of the blanket 9.35c/ kWh FiT that was issued in April 2017. The move kicked off a huge gold rush, which saw an influx of several companies in the solar space. As a result, nearly 4.5 GW of solar generation capacity became operational by July 2019.

The spike in numbers was 500% more than the projected value for 2020, which was somewhere around 850 MW. This speaks a lot about the development that has taken place in the country’s renewable energy sector and how the private sector has played its part in getting these projects developed, financed, and constructed.

The prime minister also talked about the lack of grid infrastructure in place that has acted as an impending force for the growth of the renewable energy sector in the country.

Noted that specific policies to support Ninh Thuan province in socio-economic development will apply until Ninh Thuan province reaches the full capacity of 2,000 MW or until 2020, whichever comes first.

Earlier this year, the Asian Development Bank (ADB) signed a $37 million loan agreement that would finance the installation of a 47.5 MW floating solar project in Vietnam. The global lender signed the agreement with Da Nhim–Ham Thuan–Da Mi Hydro Power Joint Stock Company (DHD) to facilitate the floating solar installation on the man-made reservoir of DHD’s existing 175 MW Da Mi hydropower project.

In an important development last year, the United States Trade and Development Agency (USTDA) had awarded a grant to Vietnam Electricity (EVN), Vietnam’s state-owned power company, to examine the feasibility of deploying advanced energy storage technologies in Vietnam.

These technologies, including battery energy storage systems and flywheels, can help EVN reduce power shortages and losses and support increased renewable energy generation throughout the country.