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| A solar power project is installed by CME Solar Company at Hong Hai Foxconn Company in Bac Giang province. |
However, at this time, the current shortage of seasonal power supply, coupled with the increasing demand for electricity in commercial/residential areas, is putting direct pressure on the progress of production development in the FDI enterprise community.
The fear of FDI inflows fleeing may have a negative impact on the "eagles" in relocating the global supply chain to Vietnam as planned. This is a major and structural issue for Vietnam's economic development plan.
Developing renewable energy to overcome electricity shortage
Vietnam's electricity industry has experienced significant growth over the past few decades. Power system capacity and commercial electricity demand increased steadily, with an average annual growth rate of 10.5% of commercial electricity in the period 2011-2020.
Electricity production will increase from 93 billion kWh in 2011 to 215 billion kWh in 2020, with a growth rate of electricity in 2021 at 3.4%. This number is forecast to increase to 10% annually between 2021-2030, coupled with Vietnam's rapid urbanization and manufacturing-based economic growth model.
In the face of increasing demand for electricity for both production and living, in the context of many difficulties from power supply, electricity shortage has been warned of for many years. Although new production capacity from Utility-scale renewable sources in the past few years have increased to 25% of capacity, most are concentrated in the central and southern regions.
It is a remarkable fact that production from hydroelectricity is declining because Vietnam is one of the countries most affected by climate change, in the context of El Nino making the situation more difficult in the coming dry season.
Talking on the sidelines of the recent 5th meeting of the National Assembly, Chairman of the Economic Committee of the National Assembly Vu Hong Thanh said that currently, the hydroelectric power source has exploited up to 80% of its capacity and there is almost no room left for development.
Meanwhile, the development of coal-fired power sources must be placed in relation to Vietnam's commitments at the 26th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP26), because the current power structure is highly dependent on fossil fuels, especially coal-fired power, which accounts for about 45% of total electricity output.
In that context, Power Plan VIII was approved on May 15, after many delays. However, there is also need for more solutions to boost both production and transmission capacity nationwide, especially in the north.
Power Plan VIII places expectations on renewable energy as a quick solution to the current electricity shortage, as well as as the core power supply for the future plan.
The plan places more emphasis on renewable energy development than the previous plan. The goal is to achieve the share of renewable energy (excluding hydropower) at about 31-39% in the overall energy by 2030, equivalent to a capacity of 5,000-10,000MW.
In addition, through the Equitable Energy Transition Partnership with International Partners (JETP), Vietnam has the ability to raise the above ratio to 47%, towards 2050, renewable energy is expected to account for 67.5-71.5% of the entire energy system.
Along with focusing on renewable energy, Vietnam has set targets for rooftop solar adoption. Specifically, by 2050, the goal is that 80% of factories and 20% of homes and office buildings use rooftop solar energy for on-site consumption, instead of supplying excess electricity back to the grid.
What are the opportunities for rooftop solar energy in Vietnam?
According to experts and representatives of the business community in the field of renewable energy, Vietnam has been an attractive market for investors to develop rooftop solar energy.
Mr. Chung Dieu Tuan, CEO of Copper Mountain Energy Solar Investment Joint Stock Company (CME Solar - An FDI enterprise supported by the Oman Investment Authority), expressed his optimism about the market prospects. He also said that the main market driver is the increasing demand for rooftop solar installations in the manufacturing sectors of FDI companies in Vietnam, especially the electronics/semiconductor and textile industries. As part of a global effort to commit to net zero emissions, international brands and manufacturers in Vietnam need to meet the requirement of converting energy to renewable sources. This is also an opportunity for the distributed solar market to develop in Vietnam.
According to data from the Vietnam Energy Partnership Group (VEPG), as of June 2023, the total production capacity of solar energy system/ rooftop energy system has reached about 8GWp, compared with 1GW hours in December 2020.
The Savills report for 2022 also states that the total area of industrial and commercial roofs is about 80 thousand hectares and the estimated growth rate is 10%, while the total roof area is used for production. Solar energy accounts for only 8%.
Therefore, the rooftop solar market in Vietnam is assessed as one of the fastest growing segments in terms of new installed capacity over the next 10 years.
One of the examples can be mentioned is Foxconn, a leading manufacturer for Apple and other global brands that successfully operated a 19MWp rooftop solar project in Bac Giang province in June 2023. It also plans to test-operate the next batch of the rooftop solar system in July this year with a total capacity of 32 MWp, accounting for 20% of Foxconn's current factory roof area in Vietnam.
The company has expanded its operations in Vietnam thanks to favorable economic, political and social backgrounds, and made rooftop solar an important part of Foxconn's energy transition in factories in Vietnam at present and in the future. Foxconn's first project was licensed and implemented well within 3 months, including stages from procurement, installation to supervision by globally renowned technical consultants.
Other global electronics giants and manufacturers such as Samsung and LG are also following the path of Foxconn and intend to announce energy transition plans in Vietnam in 2023. In addition, other manufacturers for Adidas, Nike and other textile, fashion and footwear brands have also recently actively switched to rooftop solar.
However, because the rooftop solar system can only provide about 20%-30% of the actual energy consumption demand, FDI enterprises expect that the Vietnamese Government will have many solutions to realize the energy conversion plan. In particular, the FDI business community has also participated in a dialogue with the Government to promote the Direct Power Purchase Agreement (DPPA).
In addition, the Government also needs to focus on developing a more urgent response program to minimize damage caused by power shortages and outages, and ensure long-term solutions to the possibility of periodic power shortages to address the issue of stabilizing power supplies, in order to maintain business performance and overall economic resilience./.