Lower costs herald solar energy flare-up

Solar energy has bright prospects in Vietnam, and solar energy development in the country can benefit from the massively decreased costs of solar technology, write Sonia Lioret and  Rainer Brohm of the MoIT/GIZ Energy Support Programme.

A great opportunity

Vietnam’s fast-growing economy has placed tremendous pressure on the country’s fossil fuel-dependent electricity production over the past few decades. In this context, solar energy can be one of the key solutions for Vietnam to address its energy challenge. At the same time, developing solar energy contributes to climate change mitigation, the reduction of environmental and health problems related to fossil fuel-based power production, and to Vietnam’s transition into a green economy.

The solar irradiation levels in Vietnam are comparable to most countries in the region, including developed solar markets such as China, Thailand, and the Philippines, as well as to mature international solar markets, such as Spain, Italy, and the US. Even though the total installed capacity is now only around 10 megawatts (MW), the long-term theoretical potential for solar photovoltaic (PV) applications is estimated to reach 130,000 MW.

All over the world, solar energy is playing a more and more important role in the global energy structure. Solar PV was the fastest growing renewable energy source in 2016, with more than 70 gigawatts (GW) in new installations worldwide, with the majority taking place in Asia. By now, solar energy truly leads the “green revolution” in the energy sector.

As solar energy technologies are high-tech products, Vietnam will also add a new, high-tech industrial sector to its economy by promoting the domestic development of solar energy. Furthermore, the distribution of solar energy production across the country will create a high share of added value on the local level. Therefore, the country could benefit from a growing domestic solar industry along the value chain – from manufacturing key components of solar power systems (such as solar cells and modules) to project development and the construction and operation of power plants.

It is clear that the government of Vietnam has realised this potential. In the revised Power Development Plan (PDP) VII, the government has set targets to increase solar PV capacity from around 10 MW at the end of 2016 to 850 MW by 2020 and 12,000 GW by 2030. With the current introduction of the feed-in-tariff (FiT) of 9.35 US cents/kilowatt-hour (kWh) and Decision No. 11/2017 on the Support Mechanisms for the Development of Solar Power Projects, it is clear that Vietnam is intent on joining the global trend of harnessing the vast, clean, and renewable resources of the sun.

Vietnam takes its own path 

Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH (GIZ), on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), has had a continuous presence in the Vietnamese renewable energy sector since 2009. Working together with our main local partner, the Ministry of Industry and Trade (MoIT), we have been supporting the Vietnamese government in developing the renewable energy sector.

We are convinced that renewable energy, particularly solar energy, has a bright future in Vietnam. Solar energy development can benefit from the massively decreased costs of solar technology. Only 10 years ago, a solar power system would have cost more than $6,000 per kilowatt (kW), but today you can build large-scale solar power plants for less than $1,000 per kW – a cost reduction of more than 80 per cent.

We are also convinced that Vietnam has its own path to take up renewable energy that might not be the same as the well-trod paths of other countries. In Germany and in most European countries, the big utilities were among the last to invest in renewable energy. They ‘woke up’ a little late, and now they are trying to catch up with the smaller and more flexible players on the market. What we observe in Vietnam now is rather different. We see that EVN and other major Vietnamese companies are at the forefront of renewable energy and solar energy development, and this will definitely be an advantage for the development of the sector.

This trip around the sun

To date, there are no large-scale solar PV capacity installations yet in place in Vietnam, but changes are happening fast with more than 50 larger projects already in the planning. Most of them have obtained an investment licence, and many are situated in the central and southern provinces of the country, such as Binh Thuan and Ninh Thuan. We have also been observing very closely some of the substantial steps that Vietnam has taken in the past years towards the development of solar energy. The ewly introduced FiT is a really important milestone as it lays out an important framework to attract private investment into solar energy development.

The market potential for solar PV investments in Vietnam in both the commercial and industrial rooftop sector are also on the rise. In 2017, the country saw the first projects on factory roofs that exceeded the size of 1 MW.

Even though Vietnam has only started developing solar energy, it is already looking into innovative technology applications for solar PV, such as floating solar panels on important water reservoirs and so-called Aqua/Agro-PV solutions, like supplementing a shrimp farm with small-scale power production. Electricity of Vietnam and other major Vietnamese companies are at the forefront of developing these innovative technologies and applications.

A trusted partner

Germany has more than 50 years of experience in research and development, and a track record of more than 20 years in developing renewable energy. The German government has made a long-term commitment to the development of the Vietnamese energy sector. GIZ is willing to share with Vietnam its specific experience in renewable and solar energy, which could serve as a guiding light for the development of the sector. As part of our Energy Support Programme, together with MoIT we have organised various activities in policy advisory, capacity building, technology transfer, and research co-operation to facilitate the uptake of the solar energy sector in Vietnam. Examples include a business study tour to Germany in 2016 for Vietnamese policymakers, a solar PV training week for project developers in 2017, and the newly-started development of a National Solar Assessment and a net metering policy for solar rooftop projects through the EUEI-PDF initiative.

We see that the German renewable energy industry has been quite eager to invest in the emerging Vietnamese market and to partner with Vietnamese companies to develop renewable power projects. The latest targets of the solar PV sector outlined in the revised PDP VII and the political momentum initiated by the approved solar PV support mechanism in 2017 have grabbed the attention of German investors.

Very recently, the abundant opportunities for German companies in the renewable energy field in Vietnam have been emphasised by Vietnam’s Prime Minister Nguyen Xuan Phuc during a German business forum organised in Berlin in the framework of his visit in Germany for the G20. Brigitte Zypries, German Federal Minister for Economic Affairs, also highlighted the existing co-operation between German and Vietnamese companies in this field. GIZ is glad to see that Vietnam is now actively joining the global trend of developing the solar energy movement. This will contribute to the country’s energy security and energy independence, while opening the door for a new, high-tech industrial sector. It goes without saying that the adoption of these new technologies will have a positive impact on the country, promoting economic growth, creating jobs – including green jobs – and increasing energy efficiency. As a long-term partner, GIZ will continue to support the development of the renewable energy sector and solar energy in Vietnam.

Source: VIR

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