The energy market in Vietnam offers “pioneering chances”

Trường Lăng

July 1, 2022


The energy market in Vietnam offers “pioneering chances”

Trường Lăng

July 1, 2022

According to Sebastien Prioux, CEO of French-invested GreenYellow Vietnam, while the energy market is significantly more consolidated in the Philippines, Indonesia, and Thailand, businesses in Vietnam have the opportunity to innovate and be the first players in several categories.

On-site solar energy production is being done by GreenYellow for businesses in Vietnam. Please tell us about your country’s projects.

In Vietnam, our attention has been on pursuing individual clients with rooftop solar projects, primarily for self-consumption, over the past 22 months. As of right now, our portfolio of private PPA (power purchase agreement) projects totals 65 MWp and includes deals with significant national and local businesses like Vinatex, Phong Phu, Megamarket, GO! Mall, Giavico, and Saigon Food.

We propose to clients with high electricity bills and a steady load profile to lower their rates by selling them electricity produced on-site by solar energy. Because we can provide savings of up to 50% on the business tariff, it is a really intriguing concept. The energy they require is generated locally, and the solar system is created to match their load profile.

Which regional energy markets, where GreenYellow has established a footprint, would you use to compare the Vietnamese market to?

Vietnam has a number of benefits over other markets. First of all, both domestic and foreign businesses have a very high demand for energy. Second, it is a very good time for businesses like GreenYellow to enter the market. We arrived when the government’s second feed-in-tariff (FiT) policy was being implemented, and as the Power Development Plan VIII (PDP8) is being finalized, we are currently working on larger projects in several segments.

Therefore, it is quite beneficial to sow our future investments’ seeds with important partners like local government. We aim to work on battery storage, energy efficiency, and renewable energy. The marketplaces in the Philippines, Indonesia, and Thailand, where we also do business, are already far more developed. There is space for innovation and being a pioneer in many sectors here in Vietnam.

We think that despite the difficulties we encountered a year ago, the fact that we are currently in Vietnam and have established a significant body of references gives us a distinct advantage.

What obstacles do you now face in this project’s implementation?

Local rules are the current biggest obstacle to the production of renewable energy. The rooftop solar restrictions that will be implemented in 2020 are too lax. There is a significant overcapacity on the grid as a result of many projects that were built incorrectly, not adhering to building standards or commissioning dates.

It is obvious that we are not investors advocating for the third FiT deployment (for rooftop solar at least). We recognize that it will be expensive for EVN and the state authorities, but there are many other ways to support them with more renewable energy and to balance the load on the grid, such as encouraging private sector self-consumption on-site and launching some pilot projects of battery storage to support the grid right away (backup power or frequency regulations on some distribution loops).

Since the laws in each province differ at the moment, we actively advocate for more stringent and transparent regulations that would apply to all of them. This continues to be a significant barrier for every project for a foreign investor with operations in more than 60 sites throughout Vietnam.

What should be included in the Power Development Plan VIII to encourage private power generation investments and create a more environmentally friendly energy mix?

It is a significant task, but we were glad to hear from the Prime Minister at the COP26 that PDP8 will reduce the amount of coal used in the production of electricity. More importantly, the aim of net-zero emissions by 2050 is highly encouraging. We firmly back this road map.

PDP8 must be viewed as a deal between private investors and government agencies in reality. Vietnam won’t achieve this goal unless there are strong promises from both parties to enhance the system, stabilize the grid, and manage the “intermittency” of renewable energy sources. This is only achievable if private operators agree to follow a few guidelines to assist the grid authorities. It is essential to forecast production from all major power producing sources. And I think there needs to be more communication between important divisions like the Dispatch Center, the Electricity Regulatory Authority of Vietnam (ERAV), and the Electricity & Renewable Energy Authority (EREA).

State authorities must also make it clear to all investors what will happen to the direct power purchase agreement (DPPA) pilot program, which sent a strong message to the international community, as well as what will happen to self-consumption, which is crucial for all factories that export goods outside of Vietnam. You are ineligible to sell your clients products if you don’t have access to green energy.

The safety of the grid and a properly balanced load, which is the top priority, remain the most crucial factors. Regarding these fundamentals is the only way to implement the green energy mix.

Source: BCG Land

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