Vietnam Business Channel

The World Bank’s new strategy will help Vietnam increase its solar power capacity

Vietnam’s solar power capacity will continue to increase during the next five years

The World Bank has just announced new approaches to the bidding and deployment of solar projects that it believes could boost Vietnam’s solar generation capacity from the current 4.5 gigawatts to the tens of gigawatts range in ten years.

The World Bank’s Vietnam Solar Competitive Bidding Strategy and Framework report recommends two new deployment schemes for projects: Competitive bidding for solar parks, and ‘substation-based bidding’ —based on available capacity at electrical substations.

According to the World Bank, the implementation of these two approaches would address the curtailment issue as well as improve risk allocation between public and private investors.

The first pilot tenders — 500 megawatts (MW) for substation-based bidding and another 500 MW for ground-mounted solar parks — are being planned for later in 2020 with the technical and financial support of the World Bank.

A key point of the World Bank’s report, which is supported by the Global Infrastructure Facility (GIF) and the World Bank’s Energy Sector Management Assistance Program (ESMAP), is that the expansion of solar power could also create thousands of new jobs in Vietnam.

The report estimates that solar generation capacity in Vietnam could generate as many as 45,000 new jobs in the future. 25,000 of these new jobs would be in project development, services and operations and maintenance annually through 2030. An additional 20,000 jobs in manufacturing can also be expected once Vietnam maintains its current share of the global solar equipment market.

Beyond the new approaches to competitive bidding, the World Bank also recommends that Vietnam set both yearly and medium-term solar deployment targets. It also recommends revisions to the legal framework that apply to the competitive selection of power producers.

Ousmane Dione, World Bank Country Director for Vietnam. Photo courtesy of the World Bank 

The need for the report

The report comes as Vietnam is considering moving from a feed-in-tariff (FIT) policy to a competitive bidding scheme for solar projects to reduce the cost of solar generation. The FIT policy has been successful in recent years, and has spurred the deployment of solar power projects at a time when Vietnam has also become a world leader in solar module manufacturing.

However, this successes has also given rise to new issues, including curtailment, which is defined in this context as the underuse of solar generation capacity.

Ousmane Dione, Country Director for Vietnam of the World Bank said, “The World Bank is fully committed to helping Vietnam achieve its sustainable energy ambitions. We expect that this new strategy will open up a new chapter in Vietnam’s already successful solar power expansion.”

With the support of the World Bank, the Government of Vietnam is designing the program based on the present strategy developed with input from several ministries, the private sector, and development partners.

In fact, the deployment of new solar generation will be a critical factor for the Government of Vietnam to meet its Nationally Determined Contribution (NDC) climate change target and reduce its need for new coal generation.

Hoang Tien Dung, General Director of the Ministry of Industry and Trade’s (MOIT) Electricity and Renewable Energy Authority (EREA) commented on the World Bank’s recommendations and said, “In particular, the World Bank’s support to the Government’s effort in shifting from FIT to a competitive bidding mechanism for solar PV could be applied for other types of renewable energy in the future. It contributes to the sustainable and transparent development of renewable energy in Vietnam by harmonizing the interests of private investors, the government and customers.”


Editors Note:
To read the World Banks report – “Vietnam Solar Competitive Bidding Strategy And Framework” ... CLICK HERE!!




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