The government is studying a plan to let investors bid on solar power prices after its incentive pricing policy has run out.
The Ministry of Industry and Trade has been tasked with studying this possibility with assistance from the World Bank and the Asian Development Bank. It is to report its study results to the government before December 15.
Rooftop solar power prices will remain fixed. The trade ministry has proposed a price of $9.35 cents per kWh from now until the end of 2021.
The bidding policy, if approved, will overrule a previous proposal of the trade ministry to fix feed-in tariff (FIT) prices for solar power at VND1,620 (7.09 cents) per kWh, 32 percent lower than the incentive price offered to projects that began commercial operations by June 30 this year.
Investors have said that the lowered feed-in tariff will demotivate investment in new plants. Le Thanh Tung, chairman of renewable energy firm Ecotech Vietnam, said that with costs to produce solar power remaining unchanged, a lower feed-in-tariff will cut into the company’s profits.
This will exacerbate the situation for investors already facing funding problems, he said, explaining that banks have tightened their conditions on providing credit for solar projects and were imposing higher interest rates.
A government decree issued in 2017 set a feed-in tariff of $9.35 cents per kWh for 20 years, urging investors to complete their plants before June 30 this year.
89 new renewable power plants became active before the deadline, resulting in an overload on the national grid. Some plants had to operate at about only 60 percent of their maximum capacity, which investors said could causes losses this year.
The registered capacity of solar power projects in Vietnam has reached 25,000 MW, far exceeding the government’s initial target to have 4,000 MW by 2025.
Renewables currently account for 9 percent of Vietnam’s energy mix, already surpassing the target of 7 percent set for next year, according to national power utility Vietnam Electricity (EVN).