Vietnam introduces auction scheme for large-scale PV

With the publication of Notification No. 402/TB-VPCP on Nov. 22, the Vietnamese government has cemented its transition from feed-in tariffs to auctions, in a clear step away from earlier promises to revive the FIT scheme.

December 5, 2019 Emiliano Bellini

Image: Arctech Solar

The Vietnamese government has announced plans to switch from subsidizing PV deployment through feed-in tariffs in favor of a new auction mechanism.

With Notification No. 402/TB-VPCP, Vietnam’s Ministry of Industry and Trade (MOIT) has decided to support large-scale solar deployment via procurement exercises from next year, marking a clear shift away from earlier promises to reboot its FIT scheme.

The MOIT might still grant some FIT contracts to certain projects, including installations with signed power purchase agreements that are set to come online next year, in addition to rooftop solar projects, according to Lexology. Special rules to extend the scheme in Ninh Thuan province by 12 months, with a 2 GW cap, will also remain in place, but in modified form.

According to Vietnam briefing, two kind of auctions will be held by the MOIT. One in which developers will have to compete to sell electricity to local power distributors and one where they will have to compete for acquiring land.

Vietnam deployed around 5 GW of solar under the first phase of the FIT scheme, according to the government. Most of that PV capacity came online at the end of June, which was the deadline under the previous system for connecting projects and securing FIT contracts.

With electricity demand growing at an annual rate of around 10%, Vietnam needs to add about 3.5-4 GW of new generating capacity per year.

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