Framework urged for battery storage

April 18, 2022 | 16:00
(0) user say
Along with standardising the quality of rooftop installations for self-consumption, it is hoped that investment in battery storage systems will be ramped up in order to avert grid congestion.
Framework urged for battery storage
Photo: Le Toan

Luu Manh Tien, CEO of Solar Electric Vietnam, said that thanks to the mechanisms for renewable energy, Vietnam could lead Southeast Asia’s energy transition. However, after installing more than 20GW of renewable energy in three years, output cuts and a lack of quality for solar installation remain barriers to further development.

“The market will move towards self-consumption and energy storage projects because of their superiority and advantages in reducing pressure on the grid,” Tien said at last week’s SolarEnergy Future Vietnam 2022 conference in Ho Chi Minh City, the largest energy event in the country.

State-run Electricity of Vietnam has proposed that the Ministry of Industry and Trade allow investors to fund storage systems in wind and solar power plants to improve operational efficiency and reduce the capacity that must be cut. In which, the electricity price from battery storage systems (BESS) should not exceed the electricity price of a renewable energy plant.

Currently, Vietnam’s power system is heavily dependent on hydroelectricity and thermal power. The ratio of installed renewable energy, including wind and solar power, is about 27 per cent. However, the maximum output remains low, at about 9.6 per cent.

In addition, John Pham, sales director at GoodWe Vietnam, said that the transition out of fossil fuels will not be easy. “Investors and developers are seeking more solutions, including BESS, thanks to greater market readiness and reasonable cost. In Vietnam, GoodWe’s efforts to improve products, services, and professional cooperation have convinced many partners to join us and establish complete, efficient, and green energy solutions for users,” said Pham.

Such battery storage solutions are expected to grow strongly in the future, with great potential for expansion as stated by Power Engineering Consulting 3 JSC (PECC3).

However, Phat Nguyen, legal counsel of PECC3, said at the conference, “Despite such high growth of renewable energy in Vietnam over the years, BESS has not yet been deployed at a rate large enough because there is no regulative mechanism in place on the quality level of rooftop installations, or investment in energy storage in Vietnam.”

Nguyen suggested that the government must issue a mechanism and legal basis for investment in BESS including standard techniques and lifetime features.

“According to the current legal documents, such a system is not allowed to participate in providing services to the power system, because this is a new type of electricity. BESS is not defined in the regulations,” Nguyen explained.

Companies supplying storage equipment for renewable energy power projects – such as SMA Solar Technology AG, Shenzhen Growatt New Energy Co. Ltd., and Hopewind Electric Co. Ltd – are all represented in Vietnam.

The BESS market is expected to reach a volume of up to $31 billion by 2029, according to Fortune Business Insights. Meanwhile, consultancy Marsh McLennan expects that combining solar and wind projects with on-site BESS solutions could control fluctuations in power output, releasing power to the grid when demand is highest and maximising revenues.

Last year, AMI AC Renewables integrated a Khanh Hoa Energy Storage project into its operating 50MW AMI Khanh Hoa solar farm. This is Vietnam’s first pilot utility-scale battery energy storage system. By 2030, Vietnam could have two more storage hydroelectric power plants under the nation’s official power plan for the decade.

Dr. Miguel A. Ferrer - Managing director, Shire Oak International

Every month, our team works hard to sign power purchase agreements (PPAs) with enterprises and strategic cooperation with corporations and industrial zones in Vietnam.

In March, we signed an MoU with Searefico Corporation and PPAs with Hwaseung Enterprises to develop Photovoltaic plants at 7 Hwaseung factories with a total capacity of up to 18 GWh a year. In April, we are preparing to sign the cooperation agreement with Shinec.

In 2022, we are targeting to implement the plan we have set to do. Especially, we are setting goals to expand our South Korean client portfolio, following our successful cooperation with Hwaseung Enterprises. We understand that growing sustainably is one of the priorities for Korean companies in our operating markets.

As a developer, we are looking for a stable policy environment and transparent pricing structure because these factors will make it easier for solar projects to be implemented. Right now, we are waiting for the Power Development Plan VIII with reasonable solar capacity and expecting that there are no limitations for self-consumption projects.

Huynh Quang - Business development manager, Super Energy Vietnam

Since our first entry into Vietnam in 2017, we have developed many solar and wind projects. For any project development, I believe there are always several types of problems, and it is a big achievement to bring any project into commercial operation (COD) on time.

After reviewing the latest proposal from the Ministry of Industry and Trade (MoIT), I think it would impose lots of difficulties on investors once approved - especially on projects under transitional status which have completed construction but could not reach COD due to expired mechanisms.

The November 2021 deadline for many ventures was one problem. In addition, transitional wind projects have been calculated based on the previous price scheme, and if we impose the new scheme it will cause a significant plunge in their financial performance given the drop in electricity selling prices and more. This will result in projects being unbankable or even going bankrupt.

I suggest extending the feed-in tariff scheme for wind for one more year, with consideration of reducing selling prices slightly, by 5-7 per cent. For the latest draft of the proposal from the MoIT, I believe it would be fair to apply to projects going into COD after October 2022 since they will have time to adapt and absorb the new mechanism.

Giles Cooper - Partner, Allens

I would like to see greater flexibility in the project planning and approval process. As technology develops and the market matures, new opportunities will arise to exploit clean forms of energy and the policy framework should be able to adapt quickly to benefit from this.

Energy storage and green hydrogen production are two clear examples of developments the regulators should see coming and at least be willing and able to address decisively at the right time.

Finally, I would also like to see a direct power purchase agreement pilot approved which will facilitate a fuller assessment of the demand and willingness of the private sector, particularly large manufacturers, to essentially underwrite new clean power generation capacity.

By Phuong Thu

What the stars mean:

★ Poor ★ ★ Promising ★★★ Good ★★★★ Very good ★★★★★ Exceptional