Rooftop solar power is considered by many to be a sound option for industrial parks (IPs) to add to electricity supply and comply with environmental protection regulations, while also providing advantages in attracting both domestic and foreign investment. However, the installation and use of rooftop solar power at IPs in Vietnam continues to face a host of difficulties.

Addressing a recent conference on “Rooftop Solar Power at IPs: Demand and Solutions for Businesses”, Mr. Nguyen Quoc Viet, Deputy Head of the Vietnam Institute for Economic & Policy Research (VEPR), said the opportunity remains for the installation of rooftop solar power panels on top of production workshops at IPs. Many businesses are also keen to use and access this source of renewable energy to secure green certification for their exports.

Self-produced for self-use

As of December 31, 2023, Electricity of Vietnam (EVN) and its subsidiary power companies had signed contracts to purchase rooftop solar power with individuals and organizations owning 103,509 rooftop solar systems with a total capacity of 9,595,853 kWp, according to the Office of the State Steering Committee on Energy Projects. These rooftop solar systems were installed based on a mechanism encouraging the development of solar power projects in Vietnam under a decision from the Prime Minister.

Some 11.135 billion kWh had been supplied to the national grid as of the end of 2023, accounting for 3.97 per cent of the total volume of electricity Vietnam produces and imports.

These rooftop solar systems were installed and assessed and had purchase contracts signed with EVN or its representatives before the feed-in tariff (FIT) price mechanism expired on December 31, 2020.

Mr. La Hong Ky, a representative from the Office of the State Steering Committee for Energy Projects, said that although a new trading mechanism for solar power is yet to be issued, many rooftop solar power systems have been installed for self-use since 2021. As of July 2023, some 1,030 rooftop solar power systems had been installed for self-use by individuals and organizations, mostly IPs and limited companies, with a total capacity of 399.96 MWp.

Rooftop solar power systems with a capacity of 500kWp and higher account for 76 per cent of total rooftop solar power capacity. These rooftop systems are mainly concentrated in Vietnam’s southern region, with over 60 per cent, including 3.69 per cent in Ho Chi Minh City, and the central region, with 31.96 per cent. The northern region, meanwhile, accounts for only 6.07 per cent, with 0.35 per cent in Hanoi.

Electricity output from these systems managed by EVN’s Southern Power Corporation and Central Power Corporation sold back to the national grid accounts for 59 per cent and 33.78 per cent, respectively, of total annual rooftop solar power output.

Obstacles to address

Rooftop solar power offers many benefits for both the people and Vietnam’s national grid. However, Mr. Viet noted that one of the barriers discouraging businesses from becoming involved is the absence of clear mechanisms and policies to encourage and promote installation. There also remain barriers in procedures for securing investment licenses.

Ms. Tran To Loan, Deputy Director General of the Sao Do Group, said the development of rooftop solar power at IPs still faces obstacles regarding legal issues, mechanisms, and policies, hindering the transition at IPs to renewable energy. If the solar power generated at an IP cannot be sold back to the national grid, this would represent a huge waste of energy, she added.

The absence of mechanisms on electricity trading with IPs also makes developing rooftop solar power a problematic endeavor.

Mr. Nguyen Vu Chien, Deputy Head of the IP Management Board in northern Nam Dinh province, said the announcement from EVN’s Northern Power Corporation that power companies in the region have suspended the connection of solar power to the national grid troubled local enterprises that had invested in rooftop solar power.

Another issue is cost. Producing 1 MW of rooftop solar power requires investment of some VND13 billion ($520,000), raising concerns among many businesses about capital recovery in the future. The power generation time is also quite short, which eats into profits.

In assessing the role rooftop solar power plays in Vietnam’s energy supply, Mr. Tran Viet Nguyen, Deputy Head of the Trade Department at EVN, said its strong development in the 2017-2020 period helped the electricity sector and EVN cope with the pressure on power supply. There are currently over 103,000 rooftop solar power projects nationwide with a total capacity of over 9,500 MW, more than half of which are at IPs.

Apart from its benefits, the development of rooftop solar power has also posed certain challenges. Firstly, too much renewable energy being connected to the national grid, particularly rooftop solar power and wind power, can sometimes put pressure on the network’s operations. This challenge, however, has been addressed when required. Secondly, there have been difficulties relating to management, mechanisms, and policies. Since the FIT pricing mechanism ended in 2020, no new policies have been issued on the development of rooftop solar power. The Ministry of Industry and Trade is now drafting a decree encouraging rooftop solar power, while the EVN is actively proposing related mechanisms and policies.

Clear policies in need

In order to continue the development of rooftop solar power at IPs, Mr. Viet called for the adoption of clear policies on installation and output. It is also necessary to soon issue legal documents and guidelines on procedures relating to investment, planning, construction, environmental protection, and firefighting and prevention. Management also needs to be decentralized to appropriate local agencies to facilitate investment.

Businesses hope for more support from the government, international organizations, and banks in securing the necessary capital and accessing incentives and preferential tax policies if they are to develop rooftop solar power. The construction and operation of smart, flexible, and safe grid infrastructure to ensure connections between supply and demand at enterprises in IPs are also in need.

Mr. La Hong Ky from the Office of the State Steering Committee on Energy Projects recommended continuing with the installation of rooftop solar power, but also believes clear mechanisms are required to ensure equal development between regions and to prevent any massive overdevelopment.

The government should assign tasks to relevant ministries and agencies to quickly issue a set of technical standards for the development of rooftop solar power and the necessary criteria for assessments.

Mr. Phan Cong Tien, a renewable energy market researcher, proposed issuing policies on rooftop solar power based on existing rules setting retail prices and adjusting electricity calculation methods, while developing an electricity trading market under a self-balancing mechanism.

It is also necessary to produce annual independent assessments on connecting renewable energy to the national grid, which would help with the proactive development of renewable energy.