“Pathway to Net Zero Vietnam” is the conference about renewable energy and sustainable development, which was hosted by USAID on June 9th-10th. With the participation of government officials, it created an excellent opportunity to exchange insights and experiences with other key players in the renewable industry. Indochina Energy Partners managing director Mr. Thomas Jakobsen had the chance to join Mr. Tam Nguyen, Adidas’s director of operations, and Mr. Thanh Nguyen, Deputy CEO of Vinbus, in a panel discussion moderated by Marc Forni, Lead Urban Resilience Specialist from World Bank.
During the panel, Thomas gave his opinions on the current state of rooftop solar, the Direct Power Purchase Agreement (DPPA), and the Battery Energy Storage System (BESS). Moreover, he suggested that future Feed in Tariff (FiT) for rooftop solar models should be reduced to around 4-5 cents instead of no FiT at the moment. Because future projects that are built with the intent of solely selling to the grid would no longer be viable with such a low FiT. On the other hand, for future projects that are planned around self-consumption, a small FIT would help minimize the financial risk in case the off-takers could not use a small portion of the power produced.
BESS and DPPA are no new concepts to the industry, but we have yet to see them implemented in the Vietnamese market due to awaiting regulatory advancements from the Ministry of Industry and Trade (MOIT). The new DPPA mechanism is expected to be announced very soon as a virtual PPA based on a contract-for-difference. According to Thomas, that would be the path of least resistance in Vietnam.
The main benefit of DPPA compared to Rooftop Solar (RTS) is the flexibility in which factories can be moved. Many factories in for example Ho Chi Minh city have been moving to attract more labor and reduce operating costs. Furthermore, DPPA can cover a more significant part of off-takers consumption needs without being limited by roof sizes or regulations like RTS. It is also more adaptive to any consumption curve and can be used at any time of the day, whether the sun is shining or not.
While DPPA is very close to being launched, much work must be done before the Battery Energy Storage System model can see the light of day. USAID is currently working with Indochina Energy Partners and PwC on the legality and applicability of the model in the Vietnam market.
