Solar Energy in Vietnam - A Change Needed

Solar Energy in Vietnam - A Change Needed

By Thai Son Do, Research Associate, Energy & Power Systems Practice

Recently, the Vietnamese Government has been strongly calling for investment in renewable energy projects after realizing that severe, nationwide electricity shortages are adversely affecting the nation and traditional energies such as coal and crude oil Solar energy is an ideal source to meet the off-grid needs, especially in the more diffuse pollution areas where mini-grids are not feasible. Off-grid stand-alone installations for industrial and rural infrastructure application dominate the Vietnamese solar photo voltaic (PV) market. Vietnam has more than 800 kW of installed solar PV systems used for generating electricity in small home systems, telecommunications, hospitals, and schools. Most of these installations are found in the southern provinces of Vietnam because of high solar radiation. Located in the subequatorial region, Vietnam has good solar resources with solar radiation from 3 to 4.5 kilowatts per hour, per square meter, per day (kwh/m2/day) in winter and to around 4.5 to 6.5 kWh/m2/day in summer. According to research data, the number of hours of sunshine ranges between 1,800 and 2,700 per year.

Market Development

Over the past five years, the Vietnamese Government has invested in building 100 household solar power-generating systems, 200 residential systems in northeastern islands, and 400 household solar battery systems in the Mekong Delta province of Tien Giang and Tra Vinh. However, the proportion of solar power to the total electricity output is negligible mainly because domestic and foreign investors remain at a distance from renewable energy projects. Lack of awareness on available technologies and installation of sub-standard solar PV component are turning off investors. Imported equipment is pushing investment cost higher and investors are in trouble in accessing finance while the government has no support to get credit from the banks. Lack of specific policies still remains as a major barrier for implementing renewable projects in Vietnam. The current policy and regulatory framework for encouraging the use of renewable energy is inadequate to provide the necessary drivers to accelerate the development of Vietnam's renewable energy industry.

Market Opportunities

The Vietnamese Government had recently launched a five-year national program to call for public participation to utilize solar energy. It is estimated that the program would need to put 30,000 solar-powered water heaters each with a 180-liter capacity on the market by 2013. The program also aims to propagate the benefits of solar energy among the public and indigenize the technology to make solar-powered water heaters. At present, Vietnam imports thousands of such units and accessories every year. The planned installation of solar heaters could help save 57 million kWh of electricity power and cut greenhouse gas emissions by 23,541 tons every year.

In effort to make renewable energy contribution to reach 3.0 percent of total electricity output by 2010, the government has assigned the Energy Conservation Centre of Ho Chi Minh City to begin constructing the first solar panel manufacturing plant in Vietnam with a total investment of $10 million in mid 2008. In the first phase, the project will focus on building and assembling solar panels from solar cells imported mainly from Germany and France, with a capacity of 3 MWp per year. In the second phase, the factory will produce solar cells from silicon bars and raise its capacity of assembling panels to 5 MWp per year.

To ensure a sustainable energy security in the context of increasing energy demand for socio economic development, which is estimated to be about 15.0 percent every year, the country had started to focus investment on new energy sources such as solar energy. However, the development of the solar market depends on polices to be framed by the government to bring in more specific incentives aimed at encouraging investors to get involved in the renewable projects in the country. In the scene of global economic recession recently, the foreign capital and ODA expand into renewable energy are likely to be certainly limited; this requires the Vietnamese Government to investment more in this sector.