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Modest transmission capacity disillusions solar power investors

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Solar power investors have poured big money into 332 solar power projects with total capacity of 26,000 MW, but they have been told that up to 90 percent of capacity may be dismissed because of limited transmission capacity.

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Investors pour money into solar power projects


“We want to sell a solar electricity farm in Binh Thuan province, 50 MWp, VND220,000 per MWp. Land use rights would be for 50 years. PPA (power purchase agreement) is ready,” an ad posted on business forum said.

The developer of a small-scale solar power project told reporters that he decided to invest in the sector in April 2017. At that time, the government released Decision 11 allowing Electricity of Vietnam (EVN) to purchase solar power at 9.35 cent per kwh for 20 years, an attractive price compared with other power sources. 

By that time, the total capacity of solar power projects registered was 5 MWp only, which meant that the market was promising.

He received a license to develop a 50 MW solar power plant and signed a PPA with EVN. However, despite the PPA and the commitment to put the plant into operation prior to June 30, 2019, he is not sure if the electricity from the plant can be used by EVN. 

The problem lies in the limited capacity of the electricity transmission network.

A report shows that 121 solar power projects with total capacity of 7,234 MWp have been added into the national Electricity Development Program, while another 211 projects with total capacity of 13,069 MWp are lining up for approval. 

As such, there are 332 solar power projects with designed capacity of 26,290 MWp awaiting to connect to the national grid.

Meanwhile, sources said the financial situation of solar power projects is ‘not optimistic’. A lot of investors signed a PPA with the provision that EVN has the right to dismiss additional charges in case of overloading. With the provision, the responsibility of EVN is eased, but the risks for investors increases. 

Bankers are worried about the provision because it puts solar power developers, or their clients, at high risk, and the loans provided to developers may be irrecoverable.

“Investors just need to show the PPA to be able to borrow capital from banks to implement their projects,” a banker explained.

Nguyen Duc Cuong from the National Electricity Regulatory Center, noted that the efficiency of solar power projects depends on solar radiation capacity. Most projects are located in Ninh Thuan and Binh Thuan provinces, which are not big electricity consumers. 



Source: VietNamNet

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