Gia Lai Electricity and JGC Engineering Company has signed an agreement for the Japanese company to design and build a 50-megawatt solar power plant in Gia Lai province. The agreement is estimated to be worth over $47 million USD.
This is the second major solar deal that the Vietnamese government has approved since it introduced a feed-in tariff program in March 2017.
In 2016 Vietnam cancelled two nuclear power plants and switched its energy strategy to focus upon renewables and green technologies to help power the country’s expanding energy needs. The central government has instructed state entities and provinces to give quick approval to solar plants and wind farms.
The government is accelerating the construction of solar power plants and trying to nurture solar energy as the country's main source of electrical output. In 2017 it was estimated that solar power accounted for for 0.01% of the country's total power output, but the government plans to increase this ratio to 3.3% by 2030 and 20% by 2050.
Investing in renewable energy is an emerging trend in Vietnam, and projects that are estimated at $3 ~ $8 billions USD have been registered across the country during 2016 and 2017. Two incentives for the solar industry is that the cost for solar panels is falling; and the government plans to introduce a system that will allow it to buying excess solar power from companies and consumers.
The Vietnamese government had planned to build two nuclear power plants with Russia and Japan, but the plans for the plants were cancelled in November 2016 due to concerns regarding the development costs of $3 ~ $5 billion USD for each reactor that the government would have to pay in advance. Additionally, the government expressed concerns that the developers would be able to manage project development timelines that had originally been proposed.
With Vietnam’s increasing demand for energy and its limited reserves of fossil fuels, and the development of “green” and renewable energy resources, Vietnam is well positioned to take advantage of ocean, solar and wind generation technologies.
New technologies are allowing the cost of producing clean energy to drop from 3,500 VND per kilowatt hour (kWh) to 2,200 - 2,500 VND (kWh), according to government figures. He The government is creating incentives for solar power projects raising its buying price from 7.8 to 9.35 U.S. cents/kWh, while offering investors tax breaks and cutting land use fees.