HCMC – State utility Vietnam Electricity Group (EVN) is required to buy all output from solar power projects connected to the national grid at VND2,086 per kWh (9.35 U.S. cents), excluding value-added tax, according to a new decision of the Prime Minister.
The price might be changed based on the exchange rate, says the Prime Minister’s Decision 11/2017/QD-TTg which encourages development of solar power projects and takes effect from June 1, 2017 to June 30, 2019. Due to the lack of a pricing mechanism, investors have been reluctant to get involved in solar power generation projects. Investors said the solar power price should be set at 10 U.S. cents per kWh or higher to guarantee profitability for them.
Diep Bao Canh, general director of Red Sun Solar Energy JSC, told the Daily that 9.35 cents a kWh would allow investors to earn some profit as the solar power generation cost had declined. “In the past, about US$1.2 million was needed to invest in each megawatt of solar power but the cost has now edged down to US$1 million. Therefore, there are many projects in the pipeline,” said Canh.
The decision also mentions other incentives relating to capital, land, import tax and corporate income tax. For instance, solar power projects are exempt from duties on goods imported to create fixed assets.
These projects, along with power lines and transformer stations for transmitting electricity to the national grid, shall also enjoy exemptions or reductions of land use fees, land rent and water surface rent.
At a seminar on attraction of investment into solar energy in
HCMC late last year, Huynh Kim Tuoc, director of the HCMC Energy Conservation Center, said 2017 would see a surge in solar power development as many domestic and foreign investors are getting involved in solar energy projects with each having capacity of 30 to 100 MW.
Regarding the solar power price, energy experts said that in Southeast Asia, Vietnam cannot compete with Thailand or the Philippines. Solar power in Thailand costs 16 U.S. cents per kWh, so it is very attractive to investors. Indonesia, Malaysia and Bangladesh also offer higher solar energy prices.
Vietnam holds huge potential for solar energy development but the sector has remained underdeveloped.
(Source: The Saigon Times)