Scaling up rooftop solar in Vietnam – more than 9 GW installed in 2020

Source: press release, 1 February 2021

illustration: Leader Associates
illustration: Leader Associates

Vietnam installed a record 6.71 GW of Rooftop Solar in only one month (December 2020). More than 9 GW of rooftop solar and 1.549 GW utility-scale solar installed in the country in 2020.

What’s Driving Vietnam’s Rooftop Solar Boom?

Basic Reasons:

  • Large Electricity Demand: EVN aims to increase capacity of 6-7 GW per year to match demand and plans to increase renewables energy mix to 21% by 2030. In addition, Vietnam is expected to exceed its 1GW rooftop target by 2025 comfortably.
  • Under the COVID-19 Situation, Vietnam is one of the countries in Southeast Asia which the power of demand grows. The other three countries with positive power demand growth are Myanmar, Indonesia and Philippines.
  • Still heavily rely on fossil fuel: 38% of total installed capacity are coal-fired power plants in North and Central as of 2018, and 18% of total installed capacity are gas-fired plants in the South.

Political and financial Reasons:

  • The new FIT is 8.38 US cents/kWh, a bit lower than the previous one, which is 9.35 US cents/kWh. It’s only available for projects commission due 31 December 2020. The tariff will last 20 years since commissioning. Even if with reduction of tariffs, solar power projects are still financially viable.
  • The rooftop and ground mounted market in Vietnam is foreseeable since the schedule on regulation modification has been mapped out.
  • The returns for commercial and industrial (C&I) market in Vietnam are higher than other markets and PIRR can be from 9% to 13%.

The Requirements for rooftop PV in Vietnam:

  • For PV rooftop system≥ 1MWp, the projects are required to be added into the master plan, prepare specialized reports and obtain Electricity Vietnam (EVN) operation licenses.
  • For PV rooftop system ≤ 1MWp, developers need to work with provincial EVN to register the capacity of the plant, kinds of modules, inverters that complies with EVN grid codes.
  • For PV rooftop system > 3kWp, it must be connected to 3-phase grids.

Responsibility of EVN:

  • Supply and install for 2-way meters.
  • Calculate for production at the end of the period.
  • Instruct registration; collect the requested dossiers for PV rooftop project; provide the procedures of testing; sign PPA.
  • Yearly payment.

Responsibility of Investor:

  • Prepare requested dossiers.
  • Comply with EVN grid codes.
  • Together with EVN check energy production periodically in every level of low-mid-high electricity time.

Typical C&I Financing Strategy:

  • The first 5-10 MW of projects are usually financed full equity.
  • Once the company has demonstrated sufficient track record and scalability, debt providers can be involved to finance a larger pipeline: typically, minimum USD 15-20 million worth of debt.
  • Once the first 15 MW are built, we can start contemplating refinancing the operating portfolio with better terms.

Therefore, the optimal financing models for renewable energy projects in Vietnam is to finance with equity, and to refinance with debt.

Leader Associates, as a global leading renewable energy event organiser, is committed to clean energy and stands at the forefront of environmental sustainability. We put faith in our work to make renewable energy available and affordable through practical business platforms and non-business programs.

Upcoming Vietnam Events:

Solar Energy Future Vietnam 2021 (17-18 May | HCMC Vietnam) – visit www.vietnam.leader-associates.com/sefv for more information.

Solar PV SHOW Vietnam 2021 (09-10 November | Adora Center HCMC Vietnam) – find out more at www.solarshowvietnam.com.