HCM City (VNS/VNA) - A long-term plan for renewable energy sourcessuch as solar and wind must be devised for Vietnam to realise its goal ofconnecting the entire country to the national grid, experts have said.

Renewable energy will play an essential role in helping Vietnam accomplish thegoal by 2030, but more Government efforts are needed to attract investment inthe sector, they noted.

Speaking at a recent international conference on renewable energy held lastweek in Ho Chi Minh City, experts said that annual energy consumption in thecountry had risen by 10 per cent in recent years, and the country was at riskof facing power shortages in the 2020s.

Vietnam has the potential to reach 35,000MW generated by the sun by 2030,according to researchers. Solar energy projects, including rooftop solar, are viewedas one of the major solutions to reduce pressure on the electricity sector.

The generation of 1kWh of solar energy will help reduce CO2 emissions by 0.6612kg, according to the Ministry of Natural Resources and Environment.

Solar energy, a clean energy resource with relatively high output, would alsoreduce the amount of state spending on power generation and transmissionfacilities.

If only two million rooftops have solar panels (with a capacity of 10 kW perroof), the country would cut by 16 million tonnes the amount of coal needed peryear for coal-fired power plants.

Tran Viet Nguyen, deputy head of the Electricity of Vietnam (EVN) businessdivision, said that EVN offices last year installed rooftop solar systems at 54locations with a total capacity of 3.2 MWp.

Some 1,800 customers, including offices, businesses and households, areinstalling rooftop solar systems with a total capacity of 30.12 MWp, he said.

In HCM City, EVN has installed rooftop solar systems with a total capacity ofnearly 1,130 kWp and is continuing to deploy other systems.

However, Tran Dinh Nhan, EVN general director, said this amount was far belowthe potential of Vietnam, attributing the reason to a lack of specificregulations about electricity purchases when households connect their solarpower systems to the national grid.

In addition, information about rooftop solar power remains unclear and the costof solar power investment at 20-25 million VND (1,000 USD) per kWp is stillhigh, while there is little Government support policy for solar power projects.

Customers continue to be reluctant to invest in solar systems due to a lack ofinformation about product quality, operating methods, and equipment warranty.

With the goal of reaching solar output of 1GWp by 2020, Prime Minister NguyenXuan Phuc recently approved Vietnam’s renewable energy development strategy to2030.

The Ministry of Industry and Trade has also issued Circular 16 on solar projectdevelopment and power purchase agreements (PPAs) in order to solve issuesrelated to taxes and payment methods for rooftop solar power projects.

By the end of last year, about 10,000MW of solar energy had been generated bylarge solar projects, according to the Ministry of Industry and Trade.

More than 100 power purchase agreements (PPAs) were signed with two of themhaving total capacity of 86MW, the ministry said.

PPA is a financial agreement in which a developer arranges for design, permits,financing and installation of a solar energy system on a customer’s property,at little to no cost.

The developer sells the power generated to the host customer at a fixed ratethat is typically lower than the local utility’s retail rate.

This lower electricity price serves to offset the customer’s purchase ofelectricity from the grid while the developer receives income from the sale ofelectricity as well as any tax credits and other incentives generated from thesystem.

At the end of the PPA contract term, a customer may be able to extend theagreement, have the developer remove the system, or choose to buy the solarenergy system from the developer.

PPAs usually range from 10-25 years and the developer remains responsible forthe operation and maintenance of the system for the duration of the agreement.

EVN currently cannot sign PPAs with customers because of the lack of officialinstructions on how to buy solar electricity from households.

Nhan, EVN general director, said the electricity sector would assist householdsand enterprises in installing solar power systems and help them with proceduresto connect to the national grid and sign power purchasing agreements.

He said the buying of solar electricity connected to the grid would be done assoon as there are guiding circulars issued by the authorities.

EVN will pay for installation of electricity meters to measure the volume ofelectricity consumed as well as connected to the grid.

Samresh Kumar, managing director for principal investments at VinaCapital, saidit was important to mobilise international capital to improve the developmentof rooftop solar energy.

Hoang Quoc Vuong, deputy minister of Industry and Trade, said that a circularto amend Circular 16 would soon be issued by the ministry after collection ofcomments from ministries and sectors is completed.

The new document will specify the method of payment for the purchase of solaroutput via specific contracts. The legal document is also expected to encourageinvestment in and development of rooftop solar energy in the future, he said.

Ngyen Tam Tien, CEO of Trung Nam Group, said that renewable energy generationhad already significantly increased.

Mai Van Trung, business development director at SolarBK, said the country hasfavourable conditions to develop solar energy and that commercial andindustrial solar PV rooftop applications have great development potential.

Samresh Kumar of VinaCapital said that solar rooftop power is an effectivesolution which provides a commercially viable option, especially for commercialand industrial segments.

John Rockhold, head of the power and energy sub-working group under the VietnamBusiness Forum, said rooftop solar panels were key to reducing pressure on thenational grid, and that modest annual price increases and a road map forefficient energy were both needed. — VNS/VNA