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RYSTAD ENERGY PRODUCT HIGHLIGHTS
Sustainable Energy Research Analytics (SERA)
•SERA Tracker: Up to date, detailed, and comprehensive database of solar, wind and storage assets in Australia
• SERA product updates:In November 2018, 15 assets operated by 12 companies were added to the SERA Tracker, accounting for 5 GW of capacity. Of the 15 new projects, 8 are solar, 4 are wind and 3 are storage. Data for a further 103 projects, covering 17.6 GW, was updated in the Tracker.
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Australia is experiencing a boom in utility-scale solar PV with the largest pipeline of solar PV projects (over 40 GWac) among countries in South East Asia Pacific, however its time on top could be limited due to aggressive developments in Vietnam.
The Vietnamese government introduced incentives in 2017 for attracting utility-scale PV investment. Solar plants were offered a feed in tariff (FiT) of VND 2086 per kWh (9.35 US cents per kWh) for 20 years if they were commercially operational by June 2019. This attracted a pipeline of 20 GWac of solar investment in Vietnam (about half of Australia’s total solar pipeline). What’s more, this has led to Vietnam’s potential commissioned PV capacity challenging Australia’s by 2021. Furthermore, the installed capacity in 2019 and 2020 alone is set to exceed Australia’s installed capacity in the same period by almost 1 GWac.
Ninh Thuan the Key Province for Vietnam’s Solar Development In Ninh Thuan, a province in the southeast corner of the country, the deadline for the commercial operation date for utility-scale PV plants was recently extended to the end of 2020. Ninh Thuan boasts a pipeline of over 3.5 GWac, with approximately 1 GWac already under construction (See Figure 1). The extension of the deadline as well as expertise being gained in Ninh Thuan will make the province the hub for solar development in Vietnam. There are several large-scale projects (>100MW) under construction in Ninh Thuan such as Bim Phase 2 and Trung Nam. However, the majority of projects under construction are 50 MWp or less in order to avoid federal approval.
Despite there being favourable short-term policy for solar developers, there is inherent risk in developing in Vietnam. For many developers it is their first time in Vietnam, as such there will be potential unforeseen delays, such as in the development application process, logistics supply chain, construction and commissioning. Furthermore, Vietnam has less than 100 MW operating at present; as such, Electricity Vietnam (EVN) will also be going up the learning curve in managing commissioning and local grid operation with solar for the first time. There is also the currency risk of the FiT being paid in Vietnamese Dong, as well as the legitimacy of the 20 year FiT rates being honoured.
Despite risk, investors are flooding in Nonetheless, these risks have not deterred investors and developers from entering Vietnam, but the forecasted pipeline of solar projects holds a significant level of uncertainty for the reasons stated above. The range of uncertainty is displayed in Figure 2. The commissioning of projects in Vietnam comes in two distinct phases, the first concentrated at the end of the FiT deadline in June 2019 for all provinces except Ninh Thuan. The second prior to the end of 2020 when the deadline for Ninh Thuan ends. The high-case scenario considers 1.5 GWac of operational projects in Ninh Thuan and an extension to the FiT deadline to the end of 2020 for the Binh Thuan province as well.
Next round of energy policy to determine who is PV King in Southeast Asia There is potential for greater upside in Vietnam if the FiT deadline is extended in other regions. Binh Thuan has already requested such an extension to allow developers in their province more time for construction. If such an extension was approved, it could unlock GWs of solar development in the province and the potential for Vietnam to overtake Australia’s installed capacity by 2021. It is worth noting that the government’s solar target of 850 MW by 2020 is in line with the low case, highlighting the success of the Vietnamese FiT for attracting investment. While there is upside in Vietnam, risks in Australia are becoming apparent, including political, construction, connection & commissioning. In both regions policy updates are required due to the end of FiTs (Vietnam 2019, 2020) and end of the RET (Australia, 2020). The next round of energy policy could determine which country is the PV king in South East Asia Pacific.