WORDS ON THE STREET 70th anniversary of Hanoi's Liberation Day Vietnam - Asia 2023 Smart City Summit Hanoi celebrates 15 years of administrative boundary adjustment 12th Vietnam-France decentrialized cooperation conference 31st Sea Games - Vietnam 2021 Covid-19 Pandemic
Home / Economy / Industry
Vietnam new solar FITs does not help much to attract further investment: Fitch
Ngoc Thuy 13:19, 2020/04/24
The government intends to draft a new power development plan by June 2020, which Fitch believed will focus more directly on the development of non-hydropower renewables.

Fitch Solutions suggested Vietnam’s new solar feed-in-tariffs (FiTs) will do little to support investor sentiment, as projects under development will struggle to meet the deadline.

In early April 2020, the government finalized the solar FiT at USc7.09/kWh for ground mounted plants and USc7.69/kWh for floating plants, while rooftop solar maintains the high rate of USc8.38/kWh.

 

Solar projects are required to achieve commercial operation by December 31, 2020 in order to attain these FiT rates, which is in line with the initial exemption clauses ordered by the Prime Minister.

According to Fitch, this is a very tight deadline with approximately eight months, given that solar developers also have to finalize land acquisitions, power purchase agreements and project procurements before they can even begin construction in earnest.

Therefore, it is expected Vietnam’s robust renewables growth will be driven by investments outside of this initial FiT allotment.

While Fitch initially believed that some developers might try to rush the completion of their projects to meet the 2020 deadline, it noted that this will be very challenging in light of recent events in the global market.

The Covid-19 pandemic will likely exacerbate the problem for developers, given expectation for near-term project delays due to supply chain disruptions, particularly for solar cells and module delivery from China, labor shortages, foreign financing challenges and the potential threat of a lockdown.

 Vietnam & Regional Average - Power Risk/Reward Index.

For developers with existing power purchase agreement (PPA) contracts, it is also unclear if the ‘force majeure’ clause will allow extensions to commercial operations deadlines (CODs), as the relevant legislation remains vague, particularly as the power purchaser, Electricity Vietnam (EVN), is a state-owned utility.

Furthermore, transmission infrastructure development has not kept pace with the rapid capacity growth in the country, which poses more downside risks.

In particular, the rapid build out of renewable projects in Ninh Thuan and Bình Thuan has caused grid overload and renewables curtailment in recent months, and some wind and solar plants were forced to reduce their output as a result. As such, developers could also face challenges in grid integration, particularly if numerous projects achieve grid connection in 2020 as developers rush to meet the FiT deadline.

Nevertheless, Fitch said the government remains highly committed to boosting the country’s renewables growth, particularly as it is seen as a potential strategy to deal with looming power shortages, and may provide other supportive mechanisms to retain investor interest.

The government also intends to draft a new power development plan by June 2020, which Fitch believed will focus more directly on the development of non-hydropower renewables.

RELATED NEWS
TAG: solar renewable energy feed-in-tariffs covid-19 coronavirus nCoV pandemic
Other news
15:17, 2024/11/04
Hiring multitaskers: Priority for Hanoi companies
Several sectors experience increased hiring demand in the remaining months of 2024
18:17, 2024/11/03
Hanoi seeks partnerships to build skilled workforce for digital transformation
Vocational training institutions play important roles in developing a quality workforce prepared for large companies.
18:35, 2024/10/30
Hanoi to host Vietnam-Asia Smart City Summit 2024
The summit aims to share best practices and promote cooperation among Vietnam's provinces and cities in building and developing smart cities.
15:53, 2024/10/29
Vietnamese spend $8.9 billion on ecommerce
The total transaction volume in the Jan-Sep period increased by 37.7% compared to the same period last year.
14:48, 2024/10/29
Hanoi steps up inspections to crack down on unsafe food
The purpose of the survey is to gain a thorough understanding of the local food safety situation and to identify non-compliance promptly, allowing for corrective actions to be taken to mitigate health risks.
22:24, 2024/10/23
SEMIEXPO Vietnam 2024 to foster growth of semiconductor industry
The exhibition aims to develop the ancillary industry ecosystem and attract investment from the world's leading semiconductor companies.