According to the Electricity of Vietnam (EVN), Vietnam's total energy capacity has reached 78,300 MW, of which 26.5% is renewable energy, which is mainly developed by private investors.
From January to October this year, renewable energy production reached 29.87 billion kWh or 13.2% of total electricity production (solar energy - 22.65 billion kWh, wind energy - 6.91 billion).
This number is higher than other countries (10% world average), such as the United States, France, China, Indonesia and Thailand.
This is due to preferential tariffs for solar and wind energy in 2017-2021. In Decree 11/2017 dated 11 April 2017, the Prime Minister set a FIT (green tariff) price of 9.35 cents per kWh or 2,200 VND.
This means that projects that were commercial before 1 July 2019 are granted FIT for 20 years from the first day of operation.
These policies have helped attract billions of dollars in investment capital for renewable energy projects
By January 1, 2021, when the FIT process ends, the total grid and rooftop solar capacity will be 16,500 MW, of which 9,000 MW is on land and 8,000 MW is rooftop.
Investors in solar energy can count on good returns so far.
Investors reported that the solar energy investment rate in 2018 was VND 18-20 billion per MW. Therefore, 50 MW requires capital of VND 1 trillion.
Regarding the power project in Khanh Hoa in the south, the monthly profit from electricity sales will be 12.5 billion VND and 150 billion VND per year if the electricity price is VND 2,000 per kilowatt.
If fully utilised, the project can recover the investment capital within seven years, remaining profitable for 13 years.
However, this is only in theory. In fact, investors cannot use the design capacity due to transmission line problems.
After 30 June 2019, the FIT price changes from 9.35 per kWh to VND 7.09 or 1680 (land) according to Resolution 13/2020 which took effect on 22 May 2020.
However, the price attracted investors as the exchange rate was lower than in the past.
This is why many solar projects are bought by foreign investors after completion. Buying such a project provides the investor with stable income for at least 20 years and the risk is very low.
As for wind energy, this area has also attracted many investors after the issuance of Prime Minister's Decree no. 39 of 2018. The FIT price for wind power is 8.5 cents per kWh or VND 2,000.
By the end of 2021, the total wind capacity will reach 4,126 MW.
New prices are waiting for you
Wind and solar energy have been the focus of investor interest since 2017.
However, the FIT pricing regime for wind and solar energy expires in 2020 and 2021 and the new mechanism has not been implemented.
The Eighth National Power Development Plan (Plan 8) has not been approved, while Vietnam has also committed to net zero emissions by 2050.
In Plan 8, the Ministry of Industry and Trade proposed that Vietnam promote renewable energy sources such as wind and rooftop electricity at a reasonable cost.
The Eighth Plan gave priority to the development of onshore and offshore wind power.
In a statement dated September 23, 2022, Vietnam plans to acquire a total of 16,281 MW of onshore wind capacity and 7,000 MW of offshore wind capacity.
The draft Eighth National Plan indicates that the share of renewable energy capacity will increase from 21.6% in 2030 to 54.4% in 2050.
The end of the FIT program and the use of tenders will allow wind and solar energy to be offered at more competitive prices.
Longbang
