Vietnam’s Ministry of Industry and Trade (MOIT) has urged local governments and state-owned Vietnam Electricity (EVN) to stop licensing new solar power projects until further notice although the country is in dire need of power.

A solar farm

Under Circular 9608/BCT-DL, the ministry asked cities and provinces and EVN to suspend new approvals for large-scale PV projects under the Feed-in-Tariff (FiT) scheme.

The ministry’s decision was made in the context that around 8,935 megawatts (MW) of utility-scale solar capacity had been already approved for development across the country over the past two years.

Some 4,500 MW of those projects had become operational by the end of last June when the first phase of the country’s FiT scheme expired.

According to a government notice dated on November 22, the FiT scheme will be applied for current projects and those becoming operational in 2020.

The MOIT is now working with ministries and agencies to complete the draft of a new auction mechanism.

Earlier this month, Deputy Prime Minister Trinh Dinh Dung said that Vietnam will need to add around 8,000 MW of new generating capacity per year to keep up with rising electricity demand, which is growing at an annual rate of around 10%.

In another move, in November, the government announced that selling prices of solar power applied from July 1, 2019 in Vietnam would be calculated via public action.

Accordingly, the encouraging prices would be applied for only projects that have signed the power purchase agreement (PPA) and are put into operation in 2020 while the remaining projects (the new ones) would go through public auctions to determine the selling prices.

This move is aimed to lower the solar power prices which current stand at 9.8 US cents/kWh applied for solar parks that came operational before June 30, 2019.

Solar power projects mushroomed after the government approved Decision No. 11/2017/QD-TTg in April 2017, offering a FiT of 9.8 US cents/kWh to encourage the private sector to invest in clean energy sources that can help meet the country’s surging electricity demand.