Vietnam is accelerating the construction of solar power plants to make up for an anticipated power shortfall due to the recent cancellation of several nuclear power projects.
Thien Tan Group plans to build five large solar power plants in the southern province of Ninh Thuan at a cost of $2 billion by 2020. A 50-megawatt plant will start operating this year, followed by four plants generating 200-300MW each, according to Nikkei Asian Review.
TTC Group, a sugar, energy, real estate and tourism conglomerate, also plans to spend up to $1 billion on solar projects to meet the increasing domestic demand for power.
“Vietnam always needs more power every year for its expanding economy,” CEO Thai Van Chuyen told Bloomberg in a report.
“The recent pricing set by the government is reasonable, development costs are much cheaper and coal-fired power plants have caused so many concerns,” he said.
The Ho Chi Minh City-based company wants to build 10 to 20 solar parks that are expected to start operation next year and generate as much as 1,000MW annually.
Thailand’s Superblock also plans to embark on a joint venture with a Vietnamese company to build six wind farms generating 700MW in the southern part of the country by 2019.
The government is trying to nurture solar energy as the country’s main source of electrical output. Currently solar power only accounts for 0.01 percent of the country’s total power output, but the government plans to increase the ratio to 3.3 percent by 2030 and 20 percent by 2050.
The cost of solar panels is falling, and the government is expected to introduce a system of buying excess solar power, solar will likely rapidly spread to households in general.
The Vietnamese government had planned to build two nuclear power plants with Russia and Japan, but the plan was cancelled in November 2016 due to the hefty up-front costs of several billion dollars for each reactor.
Investing in renewable energy is an emerging trend in Vietnam, and projects worth billions of dollars in total have been registered across the country.
An increasing demand for energy and limited reserves of fossil fuel are the first reasons for this new investment trend in Vietnam, said Nguyen Anh Tuan, a senior energy official at the industry and trade ministry.
With the development of new technologies, the cost of producing clean energy has dropped from VND3,500 to VND2,200-2,500 per kilowatt-hour (kWh), Tuan said.
He added that government incentives for solar power projects are another reason for this trend. The government has raised its buying price from 7.8 to 9.35 U.S. cents/kWh, while offering investors tax breaks and cutting land use fees.
Vietnam is aiming to produce 10.7 percent of its total electricity through renewable energy by 2030, mainly through solar and wind energy, up from the 6 percent as previously planned.