Vietnam may cut FITs for large scale solar 20%

Vietnam’s Ministry of Industry and Trade has submitted a draft proposal to cut feed-in tariffs (FITs) for large scale solar projects by 20%, according to the Energy Conservation Center research institute in Ho Chi Minh City.

The draft measure proposes applying FIT levels for the whole nation rather than varying payments geographically to drive new capacity to under-served areas.

If the proposal is approved by the government, the FIT for ground-mounted large scale solar plants will be VND1,620/kWh ($0.0709). For utility scale floating solar, the payment would be VND1,758/kWh. The payment for rooftop systems would remain VND2,156/kWh, which under the previous regime applied to all PV projects.

New scheme to end by 2022

The proposed 20-year FIT rates would not include VAT, which is adjusted according to fluctuations in the exchange rate of the Vietnamese dong against the dollar. The new FITs would be applied to projects grid-connected between July 1 this year and December 31, 2021.

The old FIT of $0.0935, however, would still be applied until the end of 2021 to projects under development in Vietnam’s Ninh Thuan province, for which the Vietnamese government a year ago decided to extend the scheme, capped at 2 GW, by 12 months.

The country saw the deployment of around 5 GW of solar capacity thanks to the expired scheme, according to the authorities. Most of that capacity came online at the end of June, which was the deadline under the previous system for connecting a plant and securing a FIT contract.

With electricity demand growing at an annual rate of around 10%, Vietnam needs to add 3.5-4 GW of new power generation capacity per year.