Vietnam permits sales of excess self-use rooftop solar power to national grid
Systems installed on the roofs of houses, offices, industrial parks, production and commercial establishments are eligible for the new mechanism
[HO CHI MINH CITY] Vietnam has issued a new decree that allows excess rooftop solar power to be sold at up to 20 per cent of the installed capacity to the state-owned utility Vietnam Electricity (EVN).
The new rule is to promote the development of self-produced and self-consumed solar energy in the South-east Asian country, which aims to cover half of government and residential buildings with this renewable energy source by 2030.
However, despite Vietnam’s rooftop solar energy potential of 963 gigawatts (GW), such installations have barely increased since 2021 due to the lack of government incentives after the expiration of a feed-in tariff scheme.
“The 20 per cent offtake will shorten the payback period for investors and accelerate self-use rooftop solar power installations at a moderate level while avoiding policy abuse and overdevelopment,” said Do Quang Thinh, chief executive of The Sunergy, a Vietnam-based energy consultancy.
Under the latest mechanism, the electricity purchase price will be set at the average market electricity price from the preceding year, as announced by the power system operator and the electricity market.
Self-use rooftop solar power not connected to the national grid or with a capacity of less than 100 kilowatts (kW) can be developed without limit and exempted from the need for electricity operation licences.
Meanwhile, self-use systems with an installed capacity of 1,000 kW or more and which sell surplus electricity to the national power system must comply with registration requirements and the approved power planning, which stipulates that the total capacity increase of this source can be no more than 2,600 megawatts by 2030.
According to EVN, as at end-2023, over 103,000 rooftop solar projects with a combined installed capacity of more than 9.5 GW had entered power purchase contracts with the state-owned utility.
Last year, the amount of this energy fed into the national grid – mainly in southern and central regions of Vietnam – accounted for less than 4 per cent of the country’s total electricity output.
“The newly issued decree marks a significant step to resolve bottlenecks and boost investments in the rooftop solar power systems across the nation,” said Tran Tuan Anh, co-founder and chief executive of Vietnam-based smart power solutions provider Solano Energy.
“However, it has yet to eliminate all the challenges, especially the weather-dependent intermittency of rooftop solar power,” he added.
Previously, the Ministry of Industry and Trade noted that the trading of excess grid-connected rooftop solar power without capacity caps was not encouraged out of concerns over its weather-dependent nature, along with the ongoing limited use of costly battery energy storage systems.
Acquiring surplus output would also demand considerable investments in storage and transmission infrastructure, as well as incur large operational and maintenance expenses, the ministry said.
To ensure the sustainable development of the renewable energy market, Anh suggested further incentives to encourage the application of storage technologies alongside rooftop solar power systems. This could ease pressures on the national grid and load dispatching during peak periods.
Moreover, further guidance from regulators is essential to clarify the specifics of the excess electricity sales, including the grid-connected output and price calculation.
“I believe if we have the right incentives for homeowners, we can mobilise a larger amount of capital in the society for a faster and more efficient transition to clean energy,” Anh said.
In July, Vietnam also allowed renewable energy producers to sell electricity directly to large consumers via private transmission lines or the national power grid.
The move is expected to ease the investment burden on EVN for power generation and transmission, while also promoting private sector involvement in the power industry.
