|Raymond Carlsen, CEO of Scatec Solar.
Raymond Carlsen, CEO of Scatec Solar, made the statement during his talks with VOV Online which took place on the sidelines of his working visit to Vietnam last week.
Carlsen met with representatives of the Ministry of Planning and Investment and Vietnam Electricity group to brief the hosts on his firm’s business and investment plans in the country as well as update changes in the legal framework for domestic renewable energy development, especially those in relation to solar power.
The CEO voiced his belief that his firm can become a valuable partner to Vietnam due to the company’s ability to quickly create significant amounts of clean and affordable solar energy.
Scatec has partnered with domestic firm MT Energy in order to develop and operate several large-scale solar projects in the country. This strategic partnership covers three projects located in the central provinces of Quang Tri and Nghe An, and Binh Phuoc in the southern region.
“These projects, worth a combined US$500 million, are aiming for a total of 485 MW and will be realized under a new feed-in tariff (FiT) regime that is expected to be launched later this year. We are awaiting clarity on the new FiT regulation.”
Most notably, Scatec has recently signed an agreement with local partner ECotech to develop a 1,000 MW floating solar power project within the Tri An hydropower plant in the southern province of Dong Nai. This project will be executed alongside auxiliary items such as a transforming station and a 500kV transmission line system.
The project is estimated to be worth US$1 billion in capital, including grid investments, the CEO noted, declaring this could be the largest floating solar project in the world.
The Norwegian firm also plans to set up a production line for floating devices in order to further ensure that the project could create substantial benefits for the country in terms of job generation and technology development.
In fact, the pre-feasibility study of the floating solar project has already been completed. Scatec is also cooperating with Norwegian risk management and quality assurance services provider DNV GL to carry out a technical design study and work on solutions for the project.
The project received in-principle approval from the Dong Nai provincial People's Committee in June. Following this, the province submitted the project file to the Ministry of Industry and Trade as well as other relevant agencies for consideration along with the addition to the national power development plan.
If the addition is given the green light, construction on the project will begin between 2020 and 2021. The project is expected to greatly supplement the power supply for production and business activities throughout the southern region, especially in industrial hubs such as Dong Nai, Binh Duong, and Ho Chi Minh City. In addition, it is also hoped to ease pressure on the transmission grid.
Risks and payback period
As per financial risks and the payback of pending solar projects, the Scatec CEO affirmed that large-scale projects naturally carry risks. Given this, Scatec is uniquely positioned to manage any such risks that occur as it is among the leading emerging solar market players globally with 1,800 MWs of solar projects under construction or in operation across 12 countries. These projects have enabled the firm to gain a unique insight into managing all aspects of large-scale power projects.
Regarding the proposed FiT rates for solar power ranging from 6.67 to 8.38 US cents per kWh which rely on the solar irradiance of each zone, the Scatec representative noted that the Vietnamese Government would take a wise decision in allowing for differentiated tariffs based on solar irradiation. By incentivizing companies to develop projects in broader parts of the country, the Government looks to ensure that more communities are able to enjoy the benefits of affordable and clean energy as well as local job creation.
Key player in energy mix
Solar power has been emerging as a significant part of the national energy mix over the past few years, amid a vast number of difficulties seen in expanding other power generation sources.
Fitch Solutions, a macro-research subsidiary of Fitch Group, said in a recently released outlook for the country’s power sector, that Vietnam’s electricity generation is set to increase to 236 terawatt hours (TWh) by 2023 and further still to 318 TWh by 2028.
The Government eyes an increase in renewables usage to lower greenhouse gas emissions, reduce air pollution, and achieve sustainable growth in light of challenges posed by climate change.
Local efforts have been increased to promote the usage of renewable energy, including wind and solar, along with technological advancements in renewable and grid technology that would further drive down the cost of implementation.
Fitch Solutions has high hopes that an increase in the launch of wind and solar power projects will boost the Government’s renewable push via FiT adjustments.
It also expects additional investment in grid infrastructure in tandem with the rising demand for electricity as the current network which transmits electricity from the north and central regions to the south is currently overloaded and under strain. This often results in instances of power outages and large power losses.
As such, the Scatec CEO noted that enhancements to the national power grid is naturally important as a means of ensuring that Vietnam can continue to enjoy its current strong growth in renewable energy. He believes that it is important to work closely with central and local authorities to develop Scatec projects in localities where the grid can absorb the produced power.
In addition, the Norwegian energy developer is looking forward to batteries being included in the pending FiT regime as batteries to solar projects will enable the current grid to absorb more renewable power.
In light of the revised national power development plant VII, Vietnam is seeking to achieve a total solar power capacity of 850 MW by 2020 and lift the figure to 4,000 MW by 2025 and 12,000 MW by 2030.