Being one of Asia’s
fastest growing economies, Vietnam’s electricity demand has increased at a very
rapid pace – on average 10% per year for the last 5 years. The total installed
capacity is more than 100 GW, dominated by coal and hydro sources with approximately
35% each in the energy mix. Electricity prices have been slightly increasing in
the last many years. Average retail prices for the commercial sector are in the
range of 125 USD/MWh and for industrial consumers in the range of 81 USD/MWh as
of 2020 in the daytime and lower if the facility is operating at night also.
The electricity market
is dominated by EVN, which is a state-owned vertical integrated utility. Until
recently, EVN owned all transmission and distribution assets and provided
electricity to local retailers consisting of five State-owned Power Companies
(PCs) based on a bulk supply tariff. The PCs then supply electricity to end
users based on a regulated uniform tariff set by the government.
Until 2020, EVN was the
sole off-taker for all renewable energy projects. Significant progress has been
made in terms of legislation regarding solar power, as in April 2020 “Decision
13” was announced. The Decision outlines the mechanisms for encouraging the
development of solar energy projects in Vietnam, as well as a new
feed-in-tariff (FiT).
The Decision also
specifies that corporate PPAs between generators and non-EVN off-takers are now
allowed, stated to apply only to rooftop solar projects with an output up to 1.25
MWp. Both the tariff and form of corporate PPA are open to free negotiation
which marks a key milestone in the renewables market and shows Vietnam’s
preference for rooftop solar.
The decisions from 2018
and 2020 haver allowed a total of 20 GW to be built in Vietnam, making it one
of the countries with the highest proportion of solar power in the world.
