‘Government fossil fuel subsidies holding back Vietnam solar’

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on reddit
Reddit
Share on email
Email

Solar project developers should be flocking to the large land are and natural solar resources of Vietnam, but government diesel prices are barring the way, the CEO of a developer operating in the country has claimed.

Paul Puthenpurekal, president and CEO of renewable energy developer, Solutions Using Renewable Energy (SURE) told PV Tech that developing solar in Vietnam “should not be a problem, but the government has its own constraints and markets, which is why it doesn’t want diesel to go away”.

Speaking at Solar Energy South East Asia 2014 held in Bangkok last week, Puthenpurekal said SURE is seeking to develop a 20MW hybrid off-grid solar project, to complement SURE’s existing biogas plant in Vietnam. “We are just waiting for the government to give some degree of indication of if it will accept such a solar proposal.” The use of hybrid and off-grid technology will increase the plant’s flexibility and decrease the need for added infrastructure, Puthenpurekal said.

However at current tariff prices, solar development “is not possible” – diesel-generated power is now US$0.06 per kWh in Vietnam, “too low” for solar to compete, said Puthenpurekal.

To break even, Puthenpurekal said US$0.10 per kWh is required and about US$0.12 per kWh is needed to make projects profitable.

This pricing should still make solar completely viable and economical in Vietnam, as currently the price of electricity in Vietnam is far beyond US$0.10-12, “but the government is suppressing the prices based on subsidies [for diesel].”

Puthenpurekal said without subsidies, diesel fuel costs close to US$0.30 per kWh – three times the break-even cost of solar energy.

The majority of Vietnam’s electricity generation comes from small diesel generators “with wires hooked up everywhere, to a big diesel generator that sometimes doesn’t run – that is how the system is today”, said Puthenpurekal.

Puthenpurekal said the government is reluctant to change “anything running economically today, no one wants to take [subsidies] away”.

“It is hard for a market to jump from US$0.06 per kWh [for subsidised diesel] to US$0.10 or US$0.12 per kWh, especially in a socialist political setting,” said Puthenpurekal.

Instead Puthenpurekal suggests the government should allow solar development and for energy prices to double, with a five-year price freeze. “Something like that could happen, but, people cannot afford it, especially because of politics,” he said.

Puthenpurekal said not only are government diesel subsidies preventing solar energy generation, but a lack of consistency in government policy is also deterring development. “The government might change its mind tomorrow and say: well for now this is the new law!”

“It is a very regulated,” said Puthenpurekal, however, there is still hope for solar if it can be seen as fulfilling a basic need. “If you are providing basic amenities to people, I doubt government will change its way, all the more as it is a socialist government.”

Currently the government “is always very aware of solar” with a “clamour” to bring in a feed-in tariff, as there is already for other renewable energy generation projects, but “solar is still a challenge, [government] have not come up with the specifics”, said Puthenpurekal.

Vietnam has 3 million people without electricity access, but with more people living in “urban clusters” than other Southeast Asian, rural island systems, “it is hard for a grid to reach [islands], Vietnam is easy because it is one contiguous land”.

26 January 2022
Join this free webinar for our analysis of the growth of N-Type technology including; new capacity expansions and production output. We'll also be looking at the global manufacturing footprint with forecasts on how much product will be made outside of China this year and which companies are driving technology change across the crystalline silicon value chain.
23 February 2022
Held annually since 2016, the Energy Storage Summit Europe is the place to be for senior stakeholders in the European storage industry. Designed to accelerate deployment of storage, we examine evolving chemistries, business models, project design, revenue stacks and use cases for storage. The 2022 edition will include exclusive content around longer duration solutions, energy strategies for wide-scale deployment of EVs and "EnTech", the event which sits at the intersection of digitisation, decentralisation and decarbonation of the power system. Come to meet TSOs, DSOs, Utilities, Developers, Investors and Lenders and leave with new contacts, partners and a wealth of information.
7 March 2022
Take your chance to join the most powerful platform in the MENA region. Middle East Energy (MEE), Intersolar, and ees, the leading energy exhibitions are joining hands to co-deliver an outstanding renewables and energy storage event at Middle East Energy 2021. Renewables and energy storage at MEE is the largest gathering of solar and renewable energy industry professionals in the Middle East & Africa, offering the most effective trade focused platform to international manufacturers and distributors looking to meet regional buyers.
8 March 2022
As Solar Finance & Investment enters its ninth year, we sit on the cusp of a new power market with solar at its heart. The 2022 edition of the event will build on our years of expertise and relationships to bring investors and lenders together with top developers. Connect with leaders in the field and use exclusive insights to drive investment and development decisions for the future. Meet new and existing project partners at the largest gathering of European solar investors and lenders.
23 March 2022
When it comes to storage, the US market exceeded a gigawatt of advanced energy storage installations (weighted towards lithium ion) at 1.46 GW, more than the previous six years in total! An exponential growth rate could see the market hit 7.5 GW p.a. by 2025. The summit will provide a wealth of content around this vital piece in the US power puzzle, with sessions dedicated to explore how companies are making money from batteries, the latest chemistries and their applications as they apply to different use-cases. We ask how investors can match ESG criteria to batteries and we will bring case studies of successful deployment and project execution onto the stage to examine how you can ensure your own projects are successful.
29 March 2022
Now in its 10th sell-out year, Large Scale Solar returns to Lisbon in 2022. We are excited to gather together face-to-face with the European solar industry as we provide unique and exclusive access to a powerful selection of the market's key stakeholders. Join this elite summit to find out how the market is maturing, which new markets are becoming more exciting, how technology is evolving and who's driving the market forward into the 2020s. Always senior, packed with developers, EPCs, utilities and investors this is the event for companies serious about European solar PV.

Read Next

January 25, 2022
Regulators in Nevada have paved the way for two solar-storage hybrid projects to replace a legacy coal power plant in the US state, approving their sale to utility NV Energy.
January 25, 2022
The Czech Republic’s largest utility, ČEZ Group, should scale up its domestic solar PV portfolio over the next decade instead of pursuing new nuclear power plants, the Institute for Energy Economics and Financial Analysis (IEEFA) has said.
January 25, 2022
SK Ecoplant, part of the South Korean conglomerate SK Group, has signed a US$200 million joint venture (JV) agreement with Vietnamese rooftop specialists Nami Solar for the development of 250MW of rooftop solar in Vietnam over the next four years.
PV Tech Premium
January 25, 2022
European solar power purchase agreement (PPA) prices can be expected to level off this year following a turbulent end to 2021 as the market undergoes a shift in the balance of power to the seller side.
January 25, 2022
Indian PV encapsulant and backsheet manufacturer RenewSys has brought its encapsulant production capacity up to 3GW with the commissioning of a new line in Bengaluru, India, with the company eventually targeting 11GW of capacity through a “phased manner”.
January 25, 2022
A consortium including Saudi solar developer ACWA Power has inaugurated the 500MW Ibri 2 solar project in Oman, which becomes the country’s largest utility-scale solar project to date.  

Subscribe to Newsletter

Upcoming Events

Upcoming Webinars
January 26, 2022
Free Webinar
Solar Media Events
February 23, 2022
London, UK
Solar Media Events
March 8, 2022
London, UK
Solar Media Events
March 23, 2022
Austin, Texas, USA
Solar Media Events
March 29, 2022
Lisbon, Portugal