Foreign interest in Vietnam’s solar sector had surged after the Ministry of Industry and Trade (MoIT) announced a solar feed-in tariff (FiT) and a draft solar PPA earlier this year. Concerns over the bankability of the proposed agreement have done little to dampen enthusiasm, with a number of players eager to get a slice of a Southeast Asian success story.

In an effort to capitalise on Vietnam’s ever-growing energy needs, Ho Chi Minh City-based TTC Group is planning to spend around $1 billion on an ambitious solar power portfolio.

The sugar and real estate conglomerate is on the hunt for new investors in up to 20 solar parks expected to go live by 2018. TTC will put forward 30 percent of the investment and is in talks with potential partners for the remainder of the funds needed. The project is expected to have total capacity of around 1,000MW.

The group’s announcement came hot on the heels of the government’s own solar energy policy, including the FiT and PPA which were revealed earlier last month. Incentives supporting renewable energy will be in place until June 2019, and will be crucial in attracting the kind of investment needed and realising the country’s solar energy potential.

Though incomplete, the recent government decision is the first sign of a reasonable regulatory framework for the solar energy sector, and investors are already starting to show an interest. Coupled with low development costs and growing concern over coal-fired power sources, Vietnam’s expansion into clean energy looks promising.

Sun-soaked south

TTC’s move is hardly the first in Vietnam, which boasts fertile ground for solar power. Southern and central regions in particular are top of the list, thanks to abundant sunshine and relatively flat ground.

The country’s first significant on-grid solar energy investment came in 2015 with a 19.2MW plant in the province of Quang Ngai. The $40 million project was led by local Thien Tan Group, including investors from India and Thailand, and using solar photovoltaic technology from Thailand.

Thien Tan will likely remain at the forefront of Vietnam’s foray into solar power and is already planning to develop a further 2GW of capacity in the coastal province of Ninh Thuan. Located in south eastern Vietnam, Ninh Thuan is well connected, with both National Route 1A as well as the North–South Railway running through the province. It is also one of the country’s most arid corners, receiving less than 800mm of rain a year. For this reason, Ninh Thuan is a prime candidate for Electricity of Vietnam’s (EVN) diversification away from hydro-power.

As well as the Thien Tan Group, Canada’s CMX Renewable Energy is eyeing the region, having applied for a licence last year to build a 150MW project.

In total around 30 power projects, ranging from 20MW to 500MW, have registered for licences, mostly in central and southern Vietnam. Investors include groups from Germany, South Korea, and the United States.

In early June, Japan’s Fujiwara was approved for a 64MW solar plant and a 36MW wind power project in Binh Dinh Province, with combined investment of more than $65 million.

Hanwha Group, from South Korea, has signed on to a $100 million, 125 hectare, solar plant scheduled for 2019. The project, slated for the southern province of Long An, delivers yet more fresh foreign impetus into Vietnam’s fledgling solar sector.

Personal power

As part of the government’s policy package, a net metering scheme for residential PV installations may convince some previously sceptical households to get in on the action.

A fact-finding trip to Binh Thuan province in 2016 found that many households were still wary about installing solar cells on their roofs. However, with the new scheme, owners will be able to sell electricity back to the national grid at prices set by state management agencies.

Ho Chi Minh City alone has the ability to install solar systems on 300,000 roofs. Hypothetically, with two solar panels on every roof, the city will have total capacity of up to 78MW, equal to the output of the Can Don Hydropower Plant in Binh Phuoc. With the cost of the required technology plunging worldwide, the question will be one of pricing.

Words into action

The agreements certainly look promising, and it is undeniable that Vietnam has the opportunity to be a big player in the renewable scene, however, the government has a mountain to climb in reducing the country’s dependency on fossil fuels.

The actual development of solar power will rely on the ability to negotiate better terms, introduce more transparency and give investors good reason to pick Vietnam over regional competitors.

As things stand, the Vietnam Business Forum, comprising international Chambers of Commerce, is pessimistic. On the other hand, that hasn’t stopped the deals listed above, especially TTC’s billion-dollar project. The potential is there, but it may be that investors have to incorporate potential risks into the costs of their renewable energy projects to get a spot in the sun.