Japanese firm hopes sun will shine on new solar power plant in Vietnam
The 50-megawatt plant will cost nearly $50 million in Vietnam’s Gia Lai Province.
A Vietnamese electricity company has signed a deal with Japanese engineering company JGC to design and build a 50-megawatt solar power plant.
The deal, signed by Gia Lai Electricity, is estimated to be worth over 5 billion yen ($47.4 million), with the facility to be set up in Gia Lai Province by November, according to the Nikkei Asian Review.
It's the second deal to be signed with Vietnam since the government introduced a feed-in tariff program in March 2017.
Vietnam is accelerating the construction of solar power plants to make up for an anticipated power shortfall due to the recent cancellation of several nuclear power projects.
The government is trying to nurture solar energy as the country's main source of electrical output. Solar power currently accounts for 0.01 percent of the country's total power output, but the government plans to increase the ratio to 3.3 percent by 2030 and 20 percent by 2050.
The cost of solar panels is falling, and the government is expected to introduce a system of buying excess solar power.
The Vietnamese government had planned to build two nuclear power plants with Russia and Japan, but the plan was cancelled in November 2016 due to the hefty up-front costs of several billion dollars for each reactor.
Investing in renewable energy is an emerging trend in Vietnam, and projects worth billions of dollars have been registered across the country.
An increasing demand for energy and limited reserves of fossil fuels are the first reasons for this new investment trend in Vietnam, said Nguyen Anh Tuan, a senior energy official at the industry and trade ministry.
With the development of new technologies, the cost of producing clean energy has dropped from VND3,500 to VND2,200-2,500 per kilowatt-hour (kWh), Tuan said.
He added that government incentives for solar power projects are another reason for this trend. The government has raised its buying price from 7.8 to 9.35 U.S. cents/kWh, while offering investors tax breaks and cutting land use fees.
Vietnam currently relies mainly on coal and hydroelectric power generation. The country is aiming to produce 10.7 percent of its total electricity through renewable energy by 2030, mainly through solar and wind energy, up from the 6 percent as previously planned.