Optimising the efficiency of solar power investment
Optimising the efficiency of solar power investment
To deliver a true picture of the current situation of the national power network, particularly with regards to solar power investment, the National Load Dispatch Centre (A0) has recently announced calculations centred on the proposed load dispatch capacity of solar power plants based on the power purchase agreements that were signed and are under negotiation. Nguyen Duc Cuong, director of A0, explained how this can help investors make the right decisions over project investment efficiency.
What is the target of A0’s recent load dispatch capacity announcement?
We aim to ensure transparency in information and provide a better outlook on the real state of the current power network. In fact, there are a multitude of solar power investors, but they mostly concentrate on geographical areas having a lot of sunlight which might lead to network overload.
Under current regulations, approved solar power projects are entitled to a feed-in-tariff (FiT) rate of 9.35 US cents per kilowatt-hour (kWh) for a duration of 20 years if they can finish construction and be put into operation before June 2019.
To ensure information transparency and impartiality in power purchases with the June 2019 benchmark looming, A0 has made calculations and announced the results, helping the investors understand the current power network situation, what areas might be threatened by capacity overload and why, based on the current database.
Some investors might still rush into solar power projects without paying attention to A0’s recent announced results, our work is to deliver a true picture of the power system, enabling state management agencies as well as investors to access up-to-date information when necessary.
Will this announcement trigger a rush to complete project approval procedures and sign power purchase agreements (PPAs)?
A slew of investors have rushed into renewable energy development, particularly solar power production, in recent years, pushing several power transmission lines towards a potential capacity overload.
Signing the PPA in the previous years was likened to lining up to buy tickets for a football match, as there are limited seats in a stadium. You can buy tickets if you come early, and go home empty handed if you’re late.
Therefore, to meet the aspirations of all solar power investors, including belated ones, it is crucial to invest in upgrading the network. However, investment into power lines and transformer stations is time-consuming as it involves the completion of many procedures before project execution, such as those related to planning, project establishment, and seeking approval.
Many power transmission lines in Ninh Thuan province and neighbouring areas are reported to be fully loaded or at risk of overload, and solar power projects in the province were approved to extend commercial operations to the end of 2020. This is instead of the June 2019 deadline applied to other locations to become eligible for the 9.35 US cents per kWh FiT. Could the policy threaten investor benefits?
Solar power has both advantages and disadvantages regarding A0’s load dispatch mobilising and operation practice. In our stance, having an additional power generation source is noteworthy as in the past two years, almost no major power production sources kicked off construction to be later added to the national system. Thereby, we are doing our utmost to balance power sources, but it is not a simple task given the current situation of the transmission network.
The transmission networks of Ninh Thuan and Binh Thuan provinces are not developed enough. There are warnings that if too many solar power projects are plugged into the system into the area, they could cause a network overload. A0 will step in to tackle the situation through forcing the plants to reduce their power generation capacity to a suitable level.
After making calculations, we came to the conclusion that when necessary, it is important to scale down the capacity of all existing solar power plants plugged into the network, not just several plants.
In doing so, all plants will face significant capacity reduction compared to their designed capacity, causing difficulties to investors as it will certainly affect investment efficiency.
Are there measures to tackle the issue of the network being fully loaded or threatened by overload in solar power production locations like Ninh Thuan and Binh Thuan in the central region?
This is a difficult question, as power sources and power networks are interconnected. Vietnam’s Power Development Master Plan VII (PDP 7) and the revised PDP 7 did not count on the presence of any concrete solar power plants, and only considered the possibility of mobilising this source of renewable energy in the system.
In fact, the wave of investment into solar power has intensified only after the enactment of a decision under which the solar FiT was set at 9.35 US cents per kWh from April 2017.
