Rooftop solar power investment in industrial zones in Vietnam

1. Rooftop solar power investment in industrial zones is still attractive?

The Management Board of Industrial Parks - Export Processing Zones of Ho Chi Minh City (HEPZA) calculated that when reaching the target of 1,000 MWp of rooftop solar power for more than 1,000 enterprises in the period 2020-2024, electricity consumption will be reduce 10-15%, equivalent to 23 million tons of CO2. Moreover, according to a study by the University of California - San Diego, solar panels also help reduce heat absorption by 38%.

That means enterprises in industrial zones can make buildings ambiance cooler and contribute to reducing environmental pollution. In addition, it can ensure urban energy security - important criteria for enterprises to achieve Green Certificate. When exporting to difficult markets, Green Certificate is a competitive advantage for sure. Even some industries such as wood, furniture, food and building materials are required to have Green Certificate before exporting to Japan, the US, and Europe.

This is probably the reason that not only industrial zones in Ho Chi Minh City, many provinces with many industrial parks near Ho Chi Minh such as Dong Nai, Binh Duong, Binh Phuoc, Ninh Thuan, Binh Thuan, Ba Ria - Vung Tau, An Giang, Long An from the South; Quang Ninh, Bac Ninh, Hai Duong, Hai Phong, Hung Yen, Ha Nam from the North all want to invest in rooftop solar power.

2. Many drawbacks

However, like Dong Nai province, although there are 32 industrial parks in operation and 36 industrial clusters, only few industrial parks can attract investment into renewable energy.

The first obstacle comes from legal problems. Last year, Dong Nai province proposed to the Ministry of Natural Resources and Environment not to carry out an environmental assessment of the rooftop solar power generation industry in some industrial parks locally. However, the Ministry disagreed because there is not any basis to apply the exemption and to carry out the environmental impact assessment either.

Another difficulty is that the solar power boom in 2019-2020 has made transmission line overloaded. The leader of the Electricity of Vietnam (EVN) said that in 2021, about 1.3 billion kWh of renewable energy will be cut of which more than 500 million kWh of solar power.

Solar power plants were not exploited at full capacity, but were cut off alternately. For example, the factory of Solar Electric Vietnam (SEV) in Binh Duong, Long An had to cut 100% of its capacity one day. As a result, in just 3 days of cutting, the revenue dropped by 10% in February 2021. This is also happening in many factories in the Southern industrial zones. According to the director of SEV, if the capacity is reduced by 30% for continuous period, then the investor will lose 1 year of revenue every 3 years. The project's payback period instead of 6 years will be extended to 8 years.

Managers of industrial zones are also nervous because the new pricing policy for rooftop solar power is unknown, while this is the basis for calculating investment efficiency. Previously, the fixed supporting electricity price (FIT price) was an attractive factor for rooftop solar power projects. Moreover, this is also the main reason many investors entered this field. Now, according to the Ministry of Industry and Trade, the price of solar power will depend on the bidding project.

3. Solutions for rooftop solar power in industrial zones

These changes have puzzled many solar power investors in industrial parks. However, the Ministry of Industry and Trade said that rooftop solar power investment has little influence on the power system planning. Although rooftop solar power has achieved an installed capacity of nearly 9,731 MWp, generating nearly 1,187 million kWh of electricity to the grid (according to EVN's data), solar power is still a distributed source which is only connecting to the power system from 35 kV. Therefore, in the coming years, according to the Ministry of Industry and Trade, rooftop solar power will be encouraged to develop but will be based on electricity demand and production costs.

Another way to reduce risk is to use an ESCO solution. This is a model that combines 3 parties to invest in solar power: an enterprise/industrial park management board (roof), an energy company (investor) and a bank/investment fund (capital). The company/industrial park management side does not have to invest capital but can buy electricity at a cheaper price with stable, clean power source, can own a solar power system after the contract term and can achieved Green Certificates (LEED, Lotus, Edge, Green Mark). In some cooperation, investors also shares ownership of CO2.

SolarBK, for example, has shared CO2 ownership with Tong Hong Tannery Vietnam (Ba Ria - Vung Tau province) in a solar power project completed in 2019, with a capacity of 460 kWp. General Director Mr. Chen Chun Chi said that the project has helped the plant's carbon reduction plan take a solid step forward and Tong Hong Tannery Vietnam will continue to expand these renewable energy projects.

Normally, for an ESCO model to be effective, it needs to be deployed on an area of ​​more than 5,000 m2, with an installed capacity of 500 kWp or more. In particular, in cooperation, the investor's capacity (knowledge of technical characteristics, experience in the industry) and the ability to perform documents (safety inspection paper for electricity quality, etc.) are very important. Because the local power enterprises (under EVN) will base on here to conduct the acceptance test.

However, in order to cooperate without being "in the middle of a broken road", according to Solar ESCO's operation expert, the most important thing is that enterprises must use electricity at a balanced level (80-90% of capacity). This requires solar power investors to select partners to cooperate with. It must be an enterprise using stable or balanced electricity, with a green mindset, towards sustainable development and long-term companionship.

Investors now have more motivation when the Ministry of Industry and Trade have been collecting opinions of renewable electricity trading (wind power, solar power) directly with customers (industrial production, voltage from 22 kV and above) not through EVN, creating a fair competitive position in Vietnam's electricity market.

Source: Nhip Cau Dau Tu Journal

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