In recent years, the Government has applied mechanisms for power generation projects using renewable energy (RE) resources such as a mechanism to encourage wind power development according to FIT price in Decision No. 37/2011 /QD-TTg dated 29th of June, 2011 and Decision No. 39/2018/QD-TTg dated 10th of September, 2018; solar power according to Decision No. 11/2017/QD-TTg dated 11th of April, 2017, or for biomass under Decision No. 24/2014/QD-TTg as amended by Decision No. 08/2020/QD – TTg dated 5th of March, 2020. Thanks to the incentive mechanisms of the Government, RE in Vietnam has made great progress, the total installed capacity of RE resources is up to 21,549 MW, accounting for 28% of the total installed capacity of the entire power system (77,982 MW). In which, the installed capacity of solar power is 8,872 MW, rooftop solar power is 7,755 MW and wind power is 4,596 MW. The FIT price mechanism applied to RE development projects has created a driving force for the market to have rapid and strong development steps. However, the practice also reveals a number of problems as follows:
- Investors of power generation projects using RE shall be selected through direct assignment by a competent authority which is (i) the Prime Minister or (ii) the People’s Committee of the province, depending on their competence. Most of the projects are approved by the local government, leading to the current situation of imbalance in power generation in the regions.
- The lack of synchronization between the power source and the transmission grid, the operation and regulation of the power market face many difficulties, requiring the upgrade of the smart grid system in real-time. Along with the disadvantages of the COVID-19 pandemic, the demand for power decreased, leading to sometimes installed capacity of power plants haves to be cut down to ensure system security and safety.
- Feed-in tariff price (FIT price) for renewable energy projects “has not yet promoted the development of a competitive energy market” as stated in Resolution 55 of the Politburo on the strategic orientation of national energy development of Vietnam to 2030, with a vision to 2045 (“Resolution 55”).