Vietnam's short-term solar outlook hurt by regulatory uncertainty as well as network capacity, grid requires US$ 32.9 bn in investment by 2030

• Vietnam's near-term renewables outlook will certainly be weighed down by regulatory and functional unpredictabilities stemming from a lack of clear policy as well as an "underdeveloped grid capacity", according to Fitch Solutions' most current report on the marketplace.

The report, released the other day (3 March), comes after Vietnam's federal government said its scheduled 18.4 GW of solar capacity for the 2021-2030 duration is "too expensive" following issues with curtailment as well as grid links, which offer a major challenge to future development.

While it keeps its strong forecast for non-hydro renewables capacity in Vietnam to greater than double over the coming decade-- getting to over 50.3 GW by 2031-- Fitch Solutions anticipates growth to "slow dramatically over the near term" after the delivery of a backlog of projects due for completion over 2022 because of "a number of regulatory and operational unpredictabilities".

Fitch Solutions said details around the federal government's brand-new National Power Growth Strategy 2021-2030 (PDP8) continue to be vague and that "there seems continued differences in between different governmental bodies around the trajectory of Vietnam's power growth strategy", which has been changed 4 times since its initial draft in February last year.

These revisions have included "significant distinctions across each alteration in regards to the roadmap that government wants to take on for the industry," claimed Fitch Solutions, "Our team believe the lack of a clear policy instructions will certainly weigh on near-term financier view."

" We note that something comparable likewise happened in 2019/2020 around solar feed-in-tariff (FiTs), with disputes between the MOIT as well as the Prime Minister's office, triggering substantial unpredictabilities as well as multiple policy reversals," stated Fitch Solutions, adding that "this sets a negative precedence for the marketplace, as well as highlights the regulatory risk on the market, which may deteriorate capitalist belief."

In March last year, PV Tech reported that Vietnam was intending to slash FiTs offered for rooftop solar installations from next month by as much as 38% in a quote to deal with grid pressures in the nation.

After experiencing fast growth in solar release-- greater than 9GW of roof solar was mounted in Vietnam in 2020, around 6GW of which was installed in December alone-- Vietnam has been suffering from significant curtailment problems, with several projects likewise dealing with link problems.

The amount of solar capacity added plummeted in 2021, much overtaken by wind, and this pattern is anticipated to proceed this year, before solar takes the lead again in 2023, accord to Fitch Solutions forecasts (see chart).

One of the significant issues preventing greater solar capacity enhancements in Vietnam is the nation's "underdeveloped grid capacity", according to Fitch Solutions.

Fitch Solutions stated Vietnam's transmission infrastructure has not equaled its rapid capacity development and also provides significant danger of bottlenecks.

"The quick develop out of renewable projects have actually already created grid overload and renewables curtailment, with wind and also solar plants throughout lots of provinces, specifically in the southern areas, reportedly required to minimize their output to preserve grid stability in recent times," said Fitch.

As a result of the insufficient gird infrastructure, the federal government is thinking about permitting private financial investments into transmission lines as well as substations below 500kV, which is currently controlled specifically under state-owned EVNNPT.

"We believe that if the proposition is authorized, this will motivate even more development and opportunities for investors, in the middle of the government's commitment to establish and also enhance grid facilities," said Fitch Solutions.