GILES COOPER - Co-director, Duane Morris Vietnam LLC
Decision 13 confirms that the new FiT will only be available for projects that have their commercial operation date prior to December 31. This is a very short timeline considering the long delivery of inverters and, for many projects, procedures to complete land acquisition.
While certainly welcoming, the long delay has seriously stressed many approved and licensed solar projects. Investors and developers had been left in the dark about what revenue they would receive while simultaneously being under pressure to meet construction deadlines stated in investment approvals and power purchase agreements.
On the positive side, the decision confirms that projects that are eligible for the new FiT are those that obtained decisions on investment policy prior to last November 23. This throws a wider net than previous criteria that projects would have to have already started construction by that date.
PHAM MINH THANH - Business development manager, Southeast Asia Wartsila Corporation
Many people might think that the tight COD deadline brings headaches to developers.
However, it is believed that many developers have been waiting for this FiT to be officially signed for several months after the last draft so that they can reach financial closure and get their projects going again.
This could be the last FiT for solar in Vietnam, which means that developers will not be able to see such attractive mechanisms again when the competitive bidding scheme will be implemented.
Developers will still show a strong interest as we have seen in Cambodia. There, around 25 companies bid for a 60MW solar project backed by the Asian Development Bank.
The winning bid was at 3.88 US cents per kWh which shows that renewable energy is not only clean but it will also help the country to reduce the system cost.
FEDERICO BESTIANI – Director, Bestiani Engineering Company
The decision is certainly aiming to increase clarity and transparency in solar projects. In particular, regarding rooftop projects, it helps to clear gray areas in third-party investor projects, finally opening the door to real PPAs between companies.
This will give more clarity to investors and a proper name to an agreement that, until last year, was called in many different forms, such as operational leasing, solar asset leasing, and energy service company contracts, including a lot of grey areas and pockets of potential issues. So this decision is an improvement.
The tariff value is reasonable considering the decrease of cost of the solar equipment in comparison to the time the previous Decision 11 was issued. We expect the second FiT to create a situation similar, and even amplified, in comparison to the FiT 1, as developers now suspect that this is the last chance to get a project on FiT and, therefore, will push even harder than before.
SAMRESH KUMAR - Executive chairman, SkyX Solar
It is good to finally see the release of Decision 13. While the FiT deadline and tariff for phase 2 of ground-mounted solar power remains the same, it is understandable from the government’s perspective not to extend the timeline or to offer a higher FiT, given the uncertainty around the economic impact of the pandemic.
However, I expect challenges in the further development of ground-mounted solar power assets before the end of the deadline.
I am especially enthused by the decision’s clarifications of regulations for rooftop solar developers to sell power directly to the roof owners. This will ensure developers do not have to find any workarounds. I hope that the government increases the threshold of 1MWp and accelerates the direct PPA for assets under 1MWp soon, because that will definitely accelerate investments in the solar power sector in Vietnam.
NGUYEN THI LIEN - Vietnam project development manager, Trina Solar Co., Ltd.
The new decision is very good news for all solar investors and developers after such a long delay, showing the government’s interest in the solar market and electricity development.
However, it is a bit tough at the moment as almost all countries are on lockdown. The procurement of offshore equipment is rather difficult and mobilising foreign experts to Vietnam during this time is a challenge.
For the remaining 36 eligible projects for FiT2, I think the new decision will ease congestion for the current grid, and EVN’s efforts to upgrade the grid seem to work so far. Hopefully, curtailment could be reduced.
Solar development should develop in accordance with regional grid capacity, not focusing on just a few provinces, to prevent grid congestion. Solar energy, especially rooftop, should be encouraged in the context of delays in some big thermal projects.
BUI VIET PHUONG - Solar marketing manager, Dat Solar
Decision 13 has been widely anticipated by investors, developers, and also customers, and it will help the solar power market continue to flourish in this country, especially at the end of the year.
According to the new decision, the price of rooftop solar photovoltaic has dropped by about 11 per cent, which reduces the attractiveness to investors compared to the price in its first version,
However, the FiT is still guaranteed to attract a lot of investment that could take part in the market in Vietnam, and which could develop a multitude of energy solutions, including energy-saving projects, energy infrastructure upgrades, supply, power generation, and performance management.
The new decision also prioritises rooftop solar power, as this is the market that will help to reduce pressure on transmission system investment.
PHAM QUANG ANH - Energy expert
Decision 13 was issued too late and only partially addresses the needs of investors in the solar power market in Vietnam. Moreover, the expiration date for this decision should be at the end of 2021 to give the government more time to prepare the bidding mechanism. Investors should also have to prepare for a change in policy from 2021 onwards.
However, the new decision includes several new features, especially allowing large-scale or rooftop solar power projects to sign contracts with parties other than EVN, and opening a competitive trading mechanism for projects that cannot apply the new FiT.
Nevertheless, it is still necessary to develop clear regulations under this decision and to revise the law to have a transparent calculation method when participating in the connection and sale or purchase of electricity.
BRIAN HULL - General director, ABB Power Grids
This comes as a positive statement that the government continues to support the development of renewable energy in Vietnam. It will allow continued investment and energy diversification, thus keeping the local supply chain a pipeline of work, whilst the government finalises bidding mechanisms for future solar projects.
Indeed the deadline for project delivery is challenging, but I believe that as the ground-mounted projects covered by this decision are already well advanced, it will be possible to meet them. Current travel restrictions may post a challenge with no end in sight, while a key factor that investors/developers should factor in is to ensure suppliers have a strong local sales and service team and proven partner networks within Vietnam to avoid reliance on overseas staff.
Manufacturers like ABB Power Grids have invested in a well-diversified manufacturing capability both within Vietnam and overseas as a way to better address such situations.
CLOTHILDE DENEVE - Sales director, Shire Oak International
We, at Shire Oak International, are very positive about the newly-released Decision No. 13, signed on the 6th of April. As many companies or individuals related to the solar energy business, we have been waiting for this for the last few months.
Decision No. 13 gives clear guidance and opens up the Agricultural as well as Commercial and Industrial (C&I) rooftop sectors for further development, which are Shire Oak’s main focus in Vietnam. It will ensure the profitability of projects for investors as well as the financial benefits for roof owners, allowing the Solar Rooftop market in Vietnam to further grow. It is not only beneficial for the Vietnamese electricity market, as it will help offload the national grid, but it will also clearly support Vietnam´s sustainable development by making the future energy mix more balanced.
The current covid-19 situation is another indication of how important it will be in the future to become more independent of these kind of external factors such as force majeure. It highlights to prospective clients, in both C&I and Agriculture, the benefits of undertaking EVN sale and roof rental deals with Shire Oak. Thus, Decision No. 13 is coming at a perfect time.
Shire Oak’s ambition is to help Vietnam sustain its strong growth while helping it to reduce the impact from fossil fuels, with one factory roof at a time. The new FITs will, for now, only be available for projects put into operation before the 31st of December 2020. It is shorter than expected, but it gives us 9 months to develop a maximum of projects in order to help Vietnam build a global reputation as a responsible producer of products with a low carbon footprint.