Ministry urges bidding mechanism for solar power projects – The Ministry of Industry and Trade has called for a pilot scheme on realizing a bidding mechanism for solar power projects in 2020 prior to the official launch and widespread implementation of such bidding as from 2021, with the hope of ensuring transparency and feed-in tariffs in line with market prices.
This information was noted in a report by the Electricity and Renewable Energy Authority under the Ministry of Industry and Trade (MoIT) regarding the results of a recent meeting with the Government’s standing committee. The meeting raised discussions on a draft mechanism on how to stimulate the development of solar power.
The MoIT will restructure solar power projects in an appropriate manner which matches the capacity of transmission grids whilst harmonizing the interests of the State, investors, and residents, the report says.
The future development of rooftop solar power projects will also be facilitated while a closer watch will be kept on the division into different regions based on solar irradiation.
The ministry would make joint efforts with the State-run Vietnam Electricity group (EVN) and the Committee for Management of State Capital at Enterprises to scrutinize and propose a mechanism that allows the private sector to make investments in developing the power transmission system.
Indeed, the Prime Minister’s Decision No.11/2017/QD-TTg to facilitate the development of solar power projects has yielded a number of fruitful outcomes after two years of implementation.
Up to 84 solar power projects with a combined capacity of 4,500 MW have come on stream so far, thus making a significant contribution to the national supply of electricity.
However, the existing investment mechanism poses many shortcomings. In particular, the feed-in tariff of solar power remains higher than the retail price while the massive development of solar power plants has posed big challenges in transmitting and selling power to the grid.
Most notably, solar and wind power projects have spread rapidly throughout the central localities of Ninh Thuan, Binh Thuan, and Khanh Hoa, resulting in the overload of transmission lines. This has raised concerns among many investors that the capacity of solar power plants could not be fully optimized as not all of the power could be sent to the grid.
Addressing a recent press briefing at the MoIT headquarters, Bui Quoc Hung, deputy head of the Electricity and Renewable Energy Authority, noted that solar and wind power projects have grown exponentially since the implementation of preferential feed-in tariff mechanisms for renewable energy.
On average, it takes approximately six months to carry out a solar power project that has a capacity of 50 to 100MW, while the process of developing a 500kV transmission system lasts for three years, and two years for 220kV lines. As a result, the development of transmission grids has so far struggled to keep up with the swift development pace of solar power projects.
In order to tackle these shortcomings, the MoIT has sent the Government a report on how best to implement the building of power grid projects in Binh Thuan and Ninh Thuan provinces, 500kV power transmission stations, and 220kV to 500kV transmission lines in conformity with the revised national power development plan VII. Many of these projects are expected to begin in late 2019 and early 2020, Hung unveiled.
He warned that the investment and construction of these transmission lines face a range of difficulties in terms of capital mobilization, execution progress, and site clearance.
The ministry will therefore continue to require that the EVN hasten the progress of transmission line projects in order to put them into operations as planned. It will suggest that the Prime Minister should put a mechanism in place with the aim of raising capital from the private sector for developing transmission lines and easing pressure related to grid connections for solar and wind power projects.