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Vietnam outpaces Indonesia in solar energy growth
The key to Vietnam’s success has been its Feed-in-Tariff (FIT) program, which was introduced by its ministry of industry.
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Solar panel installations and a wind turbine are seen at the Phu Lac wind farm in southern Vietnam’s Binh Thuan province in this photo taken on April 23. (AFP/Manan Vatsyayana)
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ttractive regulations have pushed an eightfold increase in solar energy adoption in Vietnam in the past two years, leaving Indonesia in the dust, even though the latter issued similar regulations six months earlier.
While Indonesia’s installed solar photovoltaic (PV) capacity declined by 37 percent between 2017 and 2018, Vietnam’s capacity skyrocketed by 803 percent in the same period, according to BP’s latest annual Statistical Review of World Energy.
Solar analyst Rishab Shrestha, a researcher with energy consultancy Wood Mackenzie, said the key to Vietnam’s success was its Feed-in-Tariff (FIT) program, which was introduced by its Ministry of Industry and Trade (MoIT) in 2017.
The program, stipulated under MoIT Decision No. 11/2017, promised investors that solar-generated electricity would be bought at 9.35 US cents per kilowatt hour (KWh), given that solar facilities were operational, at the latest, by June 2019.
Wood Mackenzie wrote in a statement on Friday that “while bankability concerns existed, the project economics were attractive, delivering equity internal rate of returns in the mid-teens”.
As a result of the FIT program, Wood Mackenzie projects Vietnam’s installed solar PV capacity to hit 5.5 gigawatts (GW) this year, making up 44 percent of Southeast Asia’s total capacity. The country’s installed capacity was only 0.134 GW last year.
“Regional and local IPPs [independent power producers] and developers felt comfortable taking on the risk, and the projects received financing from regional and local banks. FITs have proven to be an effective policy tool to induce rapid growth in renewables, and Vietnam’s build is another example of that,” said Shrestha.
