April 25, 2024 | 15:59 GMT+7

Vietnam’s Rooftop Solar Goes Non-Commercial, Explains Minister of Trade and Industry

Dinh Phan -

Authorities aim to close loopholes in a rapidly growing sector

Vietnam's Minister of Trade and Industry Nguyen Hong Dien. (Photo source: VGP)
Vietnam's Minister of Trade and Industry Nguyen Hong Dien. (Photo source: VGP)

Vietnam's Minister of Industry and Trade Nguyen Hong Dien revealed on April 24th that a key provision in the draft decree stipulates no compensation for the sale of excess rooftop solar power back to the grid as the Vietnamese government is cracking down on what it sees as policy arbitrage in the market, which has seen explosive growth in recent years.

A new draft decree by the Ministry of Industry and Trade a couple of weeks ago aims to prevent homeowners from profiting by selling excess electricity generated by rooftop solar power back into the grid.

For household and office installations, the state utility will not buy excess energy generated by rooftop solar panels. Instead, it will record the output for grid management purposes. The ministry says this is crucial to prevent grid overloads and misuse of the preferential policies meant to encourage greener energy sources.

The draft decree has sparked public outcry, with many experts arguing that it contradicts the government's stated support for green energy growth and a sustainable economy.

"Who will supply additional power to the national grid without receiving compensation?" inquired an independent energy expert. "Given the severity of the power shortage in Vietnam, we require an increase, not a decrease, in the supply to the national grid."

Explosive Growth Strains the Grid

Vietnam has become a hot spot for solar energy development in Southeast Asia. Ample sunlight and government incentives have fueled interest in rooftop solar installations.

By 2022, about 9,000 MW of capacity had been installed nationwide under a scheme allowing solar power producers to sell electricity back to the grid at 8.38 cents per kWh for 20 years.

However, that scheme, known as Decision 13/2020, led to planning violations and loopholes. Regulators found instances of large solar systems built on agricultural land while still enjoying preferential policies. Vietnam's grid became strained, particularly in central and southern regions of the country.

Balancing Growth and Stability

The new draft decree outlines capacity limits for rooftop solar connected to the grid to ease pressure on the electricity network and improve system stability. The target is to install an additional 2,600 MW of rooftop solar by 2030—far less than the current capacity.

Minister Dien further explained the policy shift: “This is to not add pressure to the transmission and distribution system, contributing to reducing electricity supply stress.”

In theory, consumers with rooftop systems can still generate electricity for their own use even if they are not connected to the grid. This option will be attractive to those wanting more control over their energy sources and to avoid restrictions on capacity.

Lessons for Green Development

Vietnam’s experience offers valuable lessons for other developing countries. Even well-intentioned policies promoting renewables can lead to unintended consequences if they are not coupled with careful planning and safeguards. As green energy transitions continue worldwide, governments will need to balance incentives for adoption with the need to manage grid capacity and stability. The challenge will be in finding a regulatory framework that encourages the deployment of renewable energy sources like rooftop solar while ensuring the security of essential energy infrastructure.

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