Scatec Solar inks strategic collaboration deal over 485 MW of solar in Vietnam

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Norwegian solar company Scatec Solar will expand its business in Southeast Asia and has signed a strategic collaboration agreement with Vietnamese firm MT Energy for the construction of 485 MW of solar in Vietnam. The deal concerns three projects, in Binh Phuoc, Quang Tri, and Nghe An provinces.

“With this partnership we take the first step in positioning Scatec Solar for the growing solar market in Vietnam,” said Raymond Carlsen, CEO of Scatec Solar. “As an affordable, fast and reliable source of energy, we believe solar energy has tremendous potential in Vietnam.”

Scatec will provide equity funding for the projects as well as offering turnkey engineering, procurement and construction services. After construction, the agreement foresees Scatec will carry out operation and maintenance as well as asset management services for the projects.

For Scatec, project capacity of almost half a gigawatt will account for a considerable chunk of its operations. In addition to 1 GW in operation and 1 GW under construction, Scatec said that it has a 4 GW pipeline of which 2 GW will be installed in Africa. The developer plans to build just over 800 MW of capacity in Latin America and another 800 MW in Southeast Asia in addition to 400 MW in Europe and expects to install 800-1,200 MW per year.

Vietnam energy transition plans

Vietnam has pledged to reduce greenhouse gas emissions by a quarter in 2030, and by 45% in 2050. That will be achieved in part by increasing the share of renewable power resources to 7% of its national energy mix next year and 10% in 2030, up from around 4% last year. PV deployment is expected to benefit in the years ahead. The Asian Development Bank predicts Vietnam’s installed solar generation capacity will rise from 368 MW at the end of 2017 to 850 MW – 0.5% of overall electricity generation – next year, to 4 GW in 2025 (1.6%) and 12 GW (3.3%) in 2030.

Having added just 8 MW of new solar capacity in 2017, Vietnam plugged in 106 MW last year and the nation is poised to take things to another level with IHS Markit analyst Josefin Berg projecting 2 GW will be installed in the utility scale sector alone this year. Around 40 large scale projects could come online, compared to just two in 2018.

The country is also revising a FIT regime due to expire next month. Under current proposals the tariffs for ground mount arrays would range from $0.0659-0.09, depending on location size and technology used. Floating PV projects – a key priority for a country in which barren land is scarce – would receive a higher tariff of $0.067-0.093.

With around 85% of Vietnam’s PV capacity in the south, the Ministry of Industry and Trade has also established three geographical zones and reduced the FIT available in the south to encourage development to be more evenly spread. Two of the three projects singed by Scatec are located in the north, with one project located in the far south of Vietnam.

“Overall, from July 2019 to June 2020, the southern region will get 25% less FIT, the central region 15% less and the FIT for the northern region remains approximately the same,” Rystad Energy analyst Minh Khoi Le told pv magazine in February. “The FIT will reduce by 5% across all regions for the same period in 2020-2021.”