Vietnam FIT May Get Extension

• Vietnam government has proposed to increase the FITs from the original expiration date of June 30, 2019 to June 30, 2021
• Draft released by the government also suggests reducing the FIT levels based on various parameters
• Under the suggested policy change, it will consider solar irradiation of the location and also solar technology used
• Rooftop solar plants will also be awarded 20-year FITs for projects commissioned before June 30, 2021

Having attracted huge interest of the global solar power industry for its attractive feed-in-tariff (FIT) valid until June 30, 2019, Vietnam is now mulling a 2-year extension for the PV  incentives to remain in force. Vietnam's Ministry of Industry and Trade has prepared a draft policy to extend the policy till June 30, 2021.

However, the draft proposes changes in FIT rates. Currently, it is fixed at very high $0.0935 per kWh under Decision 11/2017/QD-TTg (see Vietnam Introduces Solar Incentives). If implemented as planned the revised tariffs would be still very attractive over the entire range between $0.0659 per kWh to $0.0985 per kWh.

The level of the proposed FITs to be awarded will depend on certain boundary conditions, the first one being solar irradiation levels of various regions. Market intelligence consulting firm Enerdata says higher tariffs will be proposed for provinces with lower solar irradiation and potential, mostly in the northern provinces of the Asian nation.

Another factor will be the solar application chosen – floating solar, ground-mounted solar, rooftop solar and integrated solar and electricity storage projects. The tariff level will also depend on the year of grid-connection, as there will be a gradual reduction of tariffs between July 2019-June 2020 and July 2020-June 2021.

FITs for rooftop solar

Also for rooftop solar projects, the ministry proposes to award FITs over 20 years for projects commissioned before June 30, 2021. These projects could be deployed using different models – a whole power selling model, consumption household model, direct power sale and purchase model and an intermediary power sale and purchase model.

In January 2019, Vietnam replaced its net metering payment mechanism for solar power generation from rooftop solar projects with a direct trading scheme under the regulation code 02/2019/QD-TTg (see New Payment Scheme For Rooftop Solar In Vietnam).

IHS Markit believes the intention of the proposed FIT changes is to spread out solar development more evenly through the nation; currently the projects are concentrated in provinces with the highest irradiation (see Vietnam Large Scale PV Pipeline Reaches 20 GW).

The draft is likely to propel demand in the coming months to profit from the current incentive scheme, guaranteeing high FITs also in high-irradiation regions. "This will motivate developers to meet the 30 June 2019 deadline to qualify for the rewarding $93.50/MWh feed-in tariff," IHS Senior Research Analyst Joo Yeow Lee wrote in a comment on the new proposal

Independent consulting firm Rystad Energy expects 40 projects with 2 GW capacity to come online in 2019, worth some $2 billion. It believes the top 5 projects under construction will be larger than a 132 MW solar power plant in the Philippines, which is the largest solar power plant in Southeast Asia so far.