Vietnam slashes solar ceiling prices for PPAs to $0.0502/kWh – Policy

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Vietnam’s MIOT launched a brand new worth framework for photo voltaic and wind initiatives on Jan. 7.

The initiatives didn’t safe an electrical energy tariff throughout Vietnam’s first and second feed-in-tariff (FIT) rounds and must promote electrical energy to state-owned EVN by way of energy buy agreements, based on the brand new ceiling costs. EVN presently has a monopoly over the transmission, distribution, wholesale and retail of electrical energy, being the only real purchaser within the Vietnamese market.

The brand new resolution lowered the ceiling worth for ground-mounted photo voltaic initiatives from $0.0709/kWh to $0.0502/kWh, a 29% lower. The ceiling worth for onshore wind decreased by 21%, from $0.085/kWh to $0.0672/kWh.

“My interpretation can be that the low new ceiling is a strategy to kill off these initiatives as giant photo voltaic capability additions are undesirable for the time being,” Moritz Sticher, senior adviser at Berlin-based consulting agency Apricum, instructed pv journal. “Given the excessive growth and land prices, such tariffs make these initiatives financially unviable.”

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Based on a simulation model for a 100 MW ground-mounted photo voltaic plant, the brand new ceiling worth would lower the asset’s web current worth (NPV) from $160 billion to $503 billion. The interior fee of return (IRR) would lower from 10.7% to six.2%. The information was modeled by Mai Nguyen, funding banking senior affiliate at Saigon Hanoi Securities (SHS).

Vietnam has lengthy labored on a pilot scheme that may, for the primary time, open its electrical energy market to bilateral PPAs. It was formally set to run between 2022 and 2024, with expectations now pointing to the primary quarter of this 12 months. There was no official affirmation from the Vietnamese authorities to date. Based on Apricum’s newest knowledge, the nation has put in round 18.47 GW of photo voltaic capability.

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