September 2018

Vietnam’s large-scale solar pipeline at 20 GW

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• SERA product updates: In August 2018, 27 assets operated by 16 companies were added to the SERA Tracker, accounting for 3.5 GW of capacity. Of the 27 new projects, 18 are solar, 9 are storage. Data for a further 48 projects, covering 4.9 GW, was updated in the Tracker.

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Government incentives introduced in Vietnam in 2017 have successfully attracted 20 GW of large-scale solar developments in the pipeline. For perspective, this is half the size of the country’s installed power generation capacity. However, delivering this pipeline will be challenging. 

Projects must be commissioned by June 2019 in order to benefit from the government incentives. While it’s likely some projects will make this deadline, grid connection and commissioning for many likely won’t happen until after. Furthermore, there is little experience or technical expertise in Vietnam to deliver projects of this scale on such a short timeline. 

The deadline is likely to be extended, however the government is keen to fast track projects and has yet to announce an updated timeline or policy either on a federal or provincial level. The Vietnam Power Development Plan has a more modest – and in our view more realistic – forecast for large-scale solar. The plan aims to increase the installed capacity of solar power to 850 MW by 2020 and 12 GW by 2030.

The most common asset capacity of the proposed projects is 50 MW as this is the maximum size before requiring federal approval. Below this, projects fall under provincial jurisdiction. While 50 MW is the most common size, the average among projects is 110 MW. 

Dak Lak province holds the largest share of the capacity pipeline at over 4.5 GW. However, much of this is due to the 2GW Xuan Thien solar park. The average project size in the province is 500 MW, making it the clear winner for mega-projects. Xuan Thien solar park is being developed by the Xuan Thien Company, a Vietnamese investment house which to date has only invested in hydro generation. The project received approval in 2017 but has yet to break ground.

Ninh Thuan province has the most projects in the pipeline: 40 projects with a total generation potential of 3.3GW. Both Dak Lak and Ninh Thuan provinces are in southern Vietnam, boasting high solar irradiance and good proximity to energy demand centers. 

When the Vietnamese government introduced the feed in tariff (FiT), only one large-scale grid connected solar plant was operational, Sao Mai with a 1 MW capacity. Vietnam has less than 10MW of installed solar power capacity from both commercial and residential installations. The program established a feed in tariff (FiT) for large-scale solar at 9.35 US cents per kilowatt hour together with a number of tax benefits for solar energy investors. 

The increased support for solar projects is just a part a larger revolution of Vietnam’s energy mix. Power shortages are feared in the short-medium term The country is currently reliant on coal and hydro power, but wants to increase its renewable energy capacity amid rising demand, limited coal reserves and environmental concerns. Hydropower development is reaching saturation, and nuclear power was explored but has since been abandoned. The country has also said it will begin importing LNG in 2020 to diversify its power mix away from coal. 

Coal demand for power generation in 2018 is forecast at 63.5 million tonnes, but of which domestic supply can only meet 70%. Import coal costs are significantly higher than domestic supply incentivizing alternative sources. Approximately 55% of Vietnam’s installed capacity is fossil fuel-fired, with 38% from hydropower and the remaining balance from other renewables.

Contact us for more information on our new SERA Tracker Asia Pacific coverage, tracking large-scale solar, wind and energy storage across the region.