The issue of ‘thorough use’ and ‘effectiveness’ of Vietnam’s renewable energy

I. Pros and cons of Vietnam’s rapid development of renewable energy sources

The total capacity of Vietnam’s power sources in 2019 reached over 54,880 MW. In which, coal-fired power accounts for 36.8%; medium and large hydropower 30.7%; gas turbines 13.6%; oil thermal power 2.9% and other renewable energy sources (small hydroelectricity, solar power, wind power, biomass…) accounted for 16.4%.

Referenced from various sources, Vietnam has the highest proportion of renewable energy sources in ASEAN, with an average growth in electricity production of 5.1%/year in the last 5 years. Currently, the total capacity of ASEAN’s power sources is 262,794 MW in 2019, of which 5 countries account for 90.1% of the whole bloc, respectively Indonesia, Vietnam, Thailand, Malaysia and the Philippines. The figure below depicts the 2019 power generation structure of the 5 ASEAN countries.

Scale and structure of power capacity of the 5 ASEAN countries in 2019 (MW): The period 2013 – 2019 marks the rapid development of power sources from renewable energy in Vietnam.

On average, the total annual capacity of power sources increases by about 10.6%, but renewable energy sources increase at a rate of 31.4%/year. In which, wind power 42%/year, biomass power 54.5%/year and especially solar power (DMT): From 2018 to the end of 2019, the capacity of solar PV has increased over 53 times, from 86 MW to to over 4,600 MW (not including 350 MW of rooftop solar). Up to now, the proportion of power source capacity from RE (including medium and large hydroelectricity) in total power capacity is over 47%.

According to Power Planning 7 (adjusted) – PDP7-DC, it is expected that by 2020, our country will have a total of nearly 6,000 MW of renewable power sources (800 MW of wind power, 850 MW of solar power, 540 MW of biomass power, 3,800 MW of small hydroelectricity).

But the actual figure in 2019 of solar capacity has far exceeded the planning. According to the current preliminary calculation of the Institute of Energy (Ministry of Industry and Trade), wind power and solar power alone, is expected to reach 6,000 MW and over 14,000 MW by 2025, respectively; By 2030, it is expected to reach 10,000 MW of wind power and 20,000 MW of solar power.

Thus, it can be seen that with a rapid increase in speed, the capacity of RE sources will exceed the target of PDP7-CC by 2030 to reach 27,200 MW of capacity of all types of renewable energy sources (excluding medium and large hydropower). According to the report of the National Steering Committee on Electricity Development (Ministry of Industry and Trade), by the end of 2019, the total capacity of solar PV projects with additional planning has reached 10,300 MW.

According to the assessment, the rapid development of power sources from renewable energy has great significance in many aspects:

• First: Proving the practicality of the Politburo’s view on Vietnam’s energy development orientation in Resolution 55-NQ/TW: “Prioritising the exploitation, exhaustive and efficient use of renewable energy sources is a priority: creation, new energy, clean energy”.
• Second: Using the country’s rich natural resources, serving sustainable development.
• Third: Mobilize private and social capital, reduce the load on the State budget.
• Fourth: To gradually reduce dependence on traditional thermal power sources, reduce environmental pollution, reduce foreign currency spending on fuel imports, etc.

According to the assessment of the National Load Dispatch Center, with the ratio of small and medium-sized RE source capacity increasing 3 times in the past 6 years, and especially increasing by more than 2 times from 2018 alone, it shows a number of factors affecting Impact on current power supply system:
Advantages:

1. Although the electricity production is still low, because the centralized solar power plant was put into operation at the end of June 2019, and the estimated output from solar power to the end of 2019 is about 4.55 billion kWh, while wind power is about 670 million kWh. but is a significant addition to the power system (about 2.2% of the electricity generation needs).
2. Plays an important role, supporting significant power supply for the load at the time of the ‘bright peak’, which coincides with the time when solar radiation increases.
3. Fast loading and unloading speed, good voltage regulation ability.

About the cons:

1. The generating capacity of solar power sources depends on radiation, is unstable, and difficult to predict to mobilize other sources to keep the balance.
2. Power supply is not supported in the ‘afternoon peak’ due to falling during the solar radiation reduction period.
3. The grid overload occurred in some lines and substations, leading to the main reduction in the capacity of solar power plants.

II. Support policies for renewable energy sources

Not only recently, but for decades, the Party and State have had many policies to encourage and support renewable energy sources. Recently, Vietnam has been evaluated as the leading country in Southeast Asia in terms of growth and has the highest proportion of solar and wind power.

We would like to list some strategies and policies to encourage and support Vietnam’s renewable energy sources as follows:

1/ Avoided cost tariff and sample power purchase agreement applicable to small power plants using renewable energy (Decision No. 18/2008/QD-BCT, dated July 18, 2008 of the Ministry of Industry and Trade). Love).

2/ Mechanism to support the development of wind power projects in Vietnam (Decision No. 37/2011/QD-TTG, dated June 29, 2011 of the Prime Minister).

3/ Vietnam’s renewable energy development strategy to 2050 (Decision No. 2068/QD-TTg dated November 25, 2015 of the Prime Minister).

4/ Mechanism to support the development of biomass (grid-connected) power projects in Vietnam (Decision No. 24/2014/QD-TTg dated March 24, 2014 of the Prime Minister, and recently Decision No. No. 08/2020/QD-TTg amending and supplementing Decision No. 24/2014/QD-TTg).

5/ Mechanism to support the development of solid waste incineration power projects (Decision No. 31/2014/QD-TTg dated May 5, 2014).

6/ Mechanism to encourage the development of solar power (Decision No. 11/2017/QD-TTg dated 11/4/2017).

7/ Mechanism to encourage wind power development (Decision No. 39/2018/QD-TTg dated September 10, 2018).

8/ Adjusted Power Planning 7 (Decision No. 428/QD-TTg).

And, 10/ Accompanied by many circulars and documents of the Ministry of Industry and Trade guiding the implementation of the above Decisions.

III. Obstacles in the development of renewable energy in Vietnam

It can be said that our RE development policy is correct, suitable for the people, and the development roadmap has had encouraging beginnings, but there are still ‘bottlenecks’, obstacles and great challenges ahead.

• Firstly: Technically: For many years, we have implemented the policy of renewable energy development, but only in 2017-2018 will we develop small hydropower potential. Besides, wind power is developing slowly, biomass power is developing quite fast, but the proportion is still low, generating insignificant grid power, while solar power only has a total capacity of 86 MW (in 2018). ).

During the preparation and approval of the PDP7-DC (at the end of 2015, early 2016), because there was no specific mechanism and appropriate support, very few solar and wind power projects were proposed. .

In fact, in the PDP7-GC, only a large part of the capacity of renewable energy sources is included in the estimate as a ‘space’ for the approval of such projects when proposed by the investors. Therefore, it is not possible to appear specific lines and substations for them from year to year.

Therefore, the power grid works for the transmission of renewable energy sources have no grounds to be approved and included in the list. After Decision 11/QD-TTg was issued in April 2017, with the electricity price mechanism really encouraging the development of solar PV, the number and total scale of solar projects proposed and implemented by investors new construction ‘boom’ as we know it. As a result, the grid is congested, many solar power plants have to reduce deflation from 10% to over 50% of capacity.

Even in November 2019, the National Power Dispatch Center also had to propose to deflate about over 440 MW from solar PV in Ninh Thuan and Binh Thuan provinces, although many measures to strengthen the grid and prevent overload have been implemented. .

To build and put into operation a solar, or wind power project, it usually takes only about 6 months to a year, while to carry out investment procedures and build a transmission line and substation. usually 2 to 3 years.

But if there are problems with compensation, land, etc., the time can be extended for another 1-2 years. Therefore, the lack of synchronization between the development of solar and wind power sources recently has caused “bottlenecks” in terms of transmission, having to deflate the capacity of renewable energy sources, even many projects cannot get an agreement. connected to the power grid.

This will reduce the ability of renewable energy sources to support electricity supply in the near future – when we are facing a serious shortage of resources in the southern region, then will reduce confidence and motivation for renewable energy sources. with renewable energy investors.

Although the Government and relevant ministries and sectors have fully understood the situation and have taken many practical actions to accelerate the construction of the power grid to release capacity and facilitate the development of renewable energy sources, the lack of copper The above set still needs a lot of time to fix. Our general opinion is that policies and next steps such as planning and action plans need to be synchronized and followed so that there are no ‘bottlenecks’ like the past from policy to reality.

To do so, the policy (to be concretized) needs to be issued before the relevant plans are approved.

• Second: The validity of the support mechanism with FIT prices for solar PV under Decision 11/QD-TTg ended after June 30, 2019 (except for Ninh Thuan province, which was extended by the Government until the end of 2020). Preparation for the next replacement mechanism has been prepared before, but so far, after 8 months, the policy ‘gap’ has not been ‘filled’.

In fact, there have been many plans submitted by the Ministry of Industry and Trade to the Government on the FIT Solar pricing mechanism applied by region, continuing to support prices for projects that have not been able to catch up, etc., but so far have not been decided.

Therefore, all solar projects that come into operation after June 30, 2019, or are under implementation are still eye straining waiting for a new Decision. Therefore, the amount of electricity generated from solar power sources has only been recorded without a payment tariff.

• Third: Of course, as we know, the FIT price is to encourage the development of renewable electricity, which is higher than the price of electricity from traditional thermal power sources, and if the more solar and wind power, the overall cost of electricity production. will increase significantly (because currently electricity prices are only calculated on the basis of financial costs, not taking into account the avoidable economic, social and environmental costs).

In Decision 37/QD-TTg, there is a mechanism by the State to compensate 1 UScent for 7.8 UScent/kWh of wind power (taken from the Vietnam Environmental Protection Fund), but in Decision 39/QD-TTg it is not mentioned. Which fund compensates the price while the FIT price is up to 8.5 UScent/kWh of wind power onshore and 9.8 UScent/kWh of wind power at sea.

So EVN has to factor in the input cost of electricity production, increasing the overall cost. For countries that have taken the lead in renewable energy development, after the initial phase of using FIT to support development, they will switch to a project bidding mechanism to reduce costs and enhance effective competition.

We are also following that route (Article 13 of Decision No. 11/2017/QD-TTg on FIT mechanism for Solar PV has stated the task of the Ministry of Industry and Trade): “Study on the bidding process for Solar projects. and an appropriate roadmap to improve investment efficiency and reduce costs of solar projects”.

Or in Decision No. 39/2018/QD-TTg on FIT mechanism for wind power (Article 14) also stated: “The Ministry of Industry and Trade is responsible for proposing and submitting to the Prime Minister for consideration and decision on the auction mechanism. wind power development price, wind power purchase price applied from November 1, 2021”.

In our opinion, with the rapid increase in capacity of solar and wind power sources, if the bidding mechanism for renewable energy projects is slow, consumers will continue to have to bear high electricity prices.

• Fourth: It will be difficult to justify the economic efficiency of a grid project to absorb and transmit renewable energy, according to current regulations (because the equipment capacity utilization coefficient is many times lower than that of a transmission project). electricity from traditional sources), slow investment return, low efficiency, difficult to get loans from commercial banks. If there is no specific investment mechanism for renewable energy transmission grid projects, responsible units such as the National Power Transmission Corporation (NPT), regional transmission companies will be delayed. implementation, slow progress, as a result, there is a lack of electricity grid for renewable energy sources.
• Fifth: Localities with potential for renewable energy development are still passive in supporting the development of wind power and solar power; There is no land use planning for this new type, so it takes time and procedures to supplement the planning.

On the other hand, there is no process on project information disclosure for investors, so investors have to find places to apply for investment licenses by themselves, leading to overlapping planning and difficulty in project implementation. . In addition, there are a number of other challenging issues such as: The project investment implementation procedure is still complicated, there is a lack of data on the potential at the location; lack of resources, or difficult to access financial sources, loan interest rates are still high; The newly formed RE equipment market, mostly imported equipment, has many quality risks; The technical consulting team to develop the project is still lacking and weak…

If the above obstacles and obstacles are not overcome soon, the development of renewable energy sources will not be effective, wasting social resources and discouraging investors.

IV. Proposing solutions

According to the main tasks and solutions in Resolution 55/NQ-TW: “Building breakthrough mechanisms and policies to encourage and promote the strong development of renewable energy sources in order to maximize the replacement of renewable energy sources. fossil energy sources. Prioritize the use of wind and solar energy for power generation”, we would like to suggest some solutions (maybe not enough, but will contribute to overcoming the ‘bottlenecks’, creating conditions for renewable energy sources to develop. rapid and sustainable development):

1. It is necessary to carry out synchronously the planning of power sources and the attached power grid, including calculating the maximum demand for energy transmission from renewable energy sources, calculating solutions to stabilize the system to have a scientific – legal basis. implementation and support of renewable energy sources. (This can be done right in the planning of Power 8).
2. The Government will soon issue a new, suitable FIT pricing mechanism for Solar Energy to avoid disruption of the investment mobilization circuit and regain investors’ confidence.
3. Learning from the previous countries, it is necessary to soon complete the bidding mechanism for renewable energy projects to apply immediately after the expiration of the application period of FIT, in line with the electricity market roadmap after 2020.
4. It is necessary to strengthen and maintain the Environmental Protection Fund to add funds to support RE projects.
5. It is necessary to consider a specific financial mechanism for grid projects that are synchronized with RE sources to accelerate the progress of these grid projects and increase the ability to highly integrate RE sources into the system.
6. Localities with RE potential need to organize land use planning taking into account the priority of RE development, proactively arrange locations and proactively provide project location information to investors; supporting investors in project implementation.
7. It is necessary to strongly encourage rooftop solar – because this type of electricity has many advantages (decentralized power generation source, located at the point of load demand, no need to invest in transmission grid, no land loss, etc.) appropriate scale to mobilize broad social capital).
8. With the characteristics of renewable energy sources are intermittent, unstable. Therefore, in order to effectively use this type of source on a large scale, in addition to the development of stored hydroelectricity, it is necessary to install a power storage device (storage battery).

The storage battery allows to store energy generated from solar power and wind power when the load demand is low, and will be re-transmitted to the grid at high load, or at night (when there is no radiation). Accordingly, management agencies need to soon conduct in-depth research on the cost – effectiveness of storage batteries as a source of on-site storage and backup for the development of large-scale solar and wind power sources.

NGUYEN ANH TUAN – VIETNAM ENERGY MAGAZINE SPECIALIST