World Bank proposal on bidding for solar power projects in Vietnam

In its report on "Strategy and competitive bidding framework for solar power projects in Vietnam", the World Bank (WB) has proposed two options for implementing the solar Power Projects: (1) Competitive bidding for solar parks and (2) Competitive bidding by transformer substations. According to the World Bank, these approaches will resolve the issue of "deflation", as well as improve sharing risks between the state and private investors.

This report is the result of technical cooperation between the World Bank and the Government of Vietnam in two recent years to expand and effectively manage the abundant solar energy source in Vietnam.

The report has been issued in the condition that Vietnam is considering to shift from the fixed preferential feed in tariff (FIT) to competitive bidding for solar power projects for reducing electricity production costs.

In recent years, FIT was successful in promoting rapid implementation of solar power projects in Vietnam. However, this success also made the new problems arose, including the risk of "deflation"-the phenomenon that solar power projects have to operate with a capacity less than their installed generation capacity.

According to the World Bank, Vietnam could increase its solar power capacity from the current 4.5 GW to tens of GW in the next 10 years, and create thousands more jobs (if applying a new approach in bidding to select and implement the solar power projects).

The report estimates that increasing solar PV capacity in Vietnam could generate about 25.000 new jobs per year for project development, services, operation and maintenance until 2030 and other 20.000 jobs in manufacturing sector (if Vietnam could maintain its current market share in the global solar PV equipment Market).

The development of new solar power projects is an important element to help the Government of Vietnam achieve climate change goals on reducing GHG emissions stated in the intended Nationally determined novel contributions (INDC) and reducing the need for developing new coal power projects.

The report also informed that the first pilot competitive bidding turn including 500 MW by transformer substations and 500 MW by solar PV parks with WB technical and financial support is expected to begin in the second half of 2020.

Besides, regarding the new approaches to competitive bidding, the WB also recommends Vietnam to set the targets for implementing solar projects in annual and medium term, and as well as to modify the legal framework related to regulations on competitive selecting the companies for independent power generation.