To: Prime Minister

Pursuant to Document No.174/TB-VPCP dated May 10, 2018 of the Government’s Office on conclusion of the Deputy Prime Minister Trinh Dinh Dung drawn at the meeting about proposed addition of solar power projects to the adjusted VII electricity planning as requested by the Ministry of Industry and Trade (Document No.174/TB-VPCP) and requirements for comprehensive review of the adjusted VII electricity planning, especially about scale of solar power development according to the planning period which is specified in Document No.530/TB-VPCP dated November 13, 2017 of the Government’s Office;

The Ministry of Industry and Trade send the Prime Minister a report on the following issues:

I. Planning objectives and solar power development policies

Objectives specified in the adjusted VII electricity planning: Increase the installed solar power capacity to 850MW by 2020, 4000 MW by 2025, and 12,000 MW by 2030.

With regard to the development policy: The Prime Minister promulgated Decision No.11/2017/QD-TTg dated April 11, 2017 on regime for encouragement to Vietnam solar power project development. The Ministry of Industry and Trade promulgated Circular No.16/2017/TT-BCT dated September 12, 2017 providing for sample power projects and sale contracts which apply to solar power projects which comes into force from October 26, 2017.

II. Criteria for appraisal and approval of additional solar power projects

According to encouragement policies applied to solar power projects and for the purpose of ensuring the equity and transparency, the following basic criteria are used to appraise and approve additional solar power projects:

- Intensity of solar irradiance measured at the location of the additional project

- Conformity of the proposed project with the local land use plan, especially prevention of use of forest land (natural land), mineral extraction and reserving area (like titan)

- Land use efficiency of the proposed project

- Financial capacity and experience [uncountable] of the investor

- Advantages of the grid connection plan

III. Comprehensive review of the adjusted VII electricity planning, especially the scale of solar power source development according to the planning period specified in Document No.530/TB-VPCP

Update on power supply progress according to the adjusted VII electricity planning has shown that most of thermal power plants delay power supply for 1 to 2 years in compared with the schedule specified in the planning, especially southern coal power plants expected to operate in 2018-2021 such as Long Phu I, Song Hau I and Song Hau II; Long Phu II thermal power plant that do not have a feasibility study and another investor which could replace PetroVietnam, O Mon III and IV thermal power plants and thermal power plants using gases from Ca Voi Xanh mine that is vulnerable to power supply delay as the time for receiving gases from Ca Voi Xanh mine and Block B cannot be determined.  Moreover, Vietnam has decided to stop investment in Ninh Thuan nuclear power plant by 2030. Measurement to balance the supply and demand has shown that the South may face a power shortage; therefore; new power sources must be provided to supply power nationwide.

Many proposes of power source development have been brought out by investors to replace nuclear power plants and balance the supply and demand in the next period such as development of renewable energy sources (especially solar power), power export from neighboring countries, early use of thermal power sources or provision of additional thermal power sources.

The recent report prepared by the Institute of Energy has indicated the supply and demand balancing and propose of types of power sources to be increased by years, including the scenario for provision of additional renewable energy sources to ensure nationwide power supply (update on operating progress of thermal power plants recorded on the day this reported is made and no early use of thermal power sources).

Accordingly, the installed solar power capacity is expected to increase to 6,500 MW by 2020, 10,000 MW by 2021, 11,600 MW by 2025 and 18,700 MW by 2030 which are much more greater than targets specified in the approved planning (860 MW by 2020, 400 MW by 2025 and 12,000 MW by 2030).

This scenario will cost 0.6% higher than the value of the scenario for early use of thermal power sources, power purchase from neighboring countries and provision of additional thermal power plants.  However, carbon emission will reduce by 2% - 4%, which lend a hand to fulfill Vietnam’s objective for carbon emission reduction which is specified in the 2015 United Nations Climate Change Conference.

IV. Update on additional solar power projects

By June 10, 2018, the Ministry of Industry and Trade has received amendments to the planning proposed by provincial People's Committee, including 285 additional solar power projects with total capacity of 22,723.42 MWp (equivalent to around 19,300 MW), in which 100 additional projects with total capacity of 7,634.01 MWp (equivalent to 6,490 MW) have been approved by the Prime Minister. To be specific:

- Total proposed increase in capacity before 2020 is 17,090.42 MWp (equivalent to 14,500 MW), 5,548.01 MWp (equivalent to 4,720 MW) has been approved by the Prime Minister/Ministry of Industry and Trade. To be specific:

+ The Prime Minister has granted approval for an increase in total capacity of 1,661 MWp (equivalent to 1,410 MW).

+ The Ministry of Industry and Trade has granted approval for an increase in capacity of 3.887,01 MWp (equivalent to 3,310 MW).

- Total proposed increase in capacity after 2020 is 5,633 MWp (equivalent to 4,790 MW), 2,086 MWp (equivalent to 1,770 MW) has been approved by the Prime Minister/Ministry of Industry and Trade. To be specific:

+ The Prime Minister has granted approval for an increase in capacity of 2,086 MWp (equivalent to 1,770 MW).

+ The Ministry of Industry and Trade has granted approval for an increase of 0 MWp.

Details on capacity of solar power projects measured in various provinces and periods are provided in Appendix 1, the list of approved solar power projects can be found in the Appendix 2 and the list of additional solar power projects pending approval is provided in Appendix 3 issued thereto.

V. Major increase in capacity of some provinces

1. In Ninh Thuan province: 46 proposed projects with a total capacity of 2,887 MWp (equivalent to 2,450 MW), 26 of which have been approved with a total capacity of 1,753.9 MWp (equivalent to 1,490 MW).

2. In Binh Thuan province: 67 proposed projects with a total capacity of 4,122.74 MWp (equivalent to 3,500 MW), 21 of which have been approved with a total capacity of 1,218.21 MWp (equivalent to 1,030 MW).

3. In Dak Lak province: 15 proposed projects with a total capacity of 4,128 MWp (equivalent to 3,510 MW), 4 of which have been approved with a total capacity of 180 MWp (equivalent to 150 MW).

4. In Tay Ninh province: 16 proposed projects with a total capacity of 2,604 MWp (equivalent to 2,210 MW), 8 of which have been approved with a total capacity of 2,304 MWp (equivalent to 1,960 MW).

VI. Capacity of existing power supply infrastructure in provinces with large increase in solar power capacity

The result of brief measurement of capacity of provincial power infrastructure (especially Ninh Thuan and Binh Thuan provinces) by 2025 has shown that:

- In Ninh Thuan and Binh Thuan provinces: The electrical grids are unable to deliver more electricity generated by additional projects, including power generated from additional wind power projects.  In addition, the provincial 110kV grid delivers electricity at small capacity despite the fact that most of solar power projects are connected to such grid which leads to partial overload.

- In Dak Lak province: In case additional power projects are approved by the Prime Minister such as Xuan Thien EaSup and Rung Xanh projects, the provincial electrical grid will be incapable to deliver electricity generated from the aforementioned projects (which may lead to grid overload if project investment is not logically arranged).

- In Phu Yen province: It is incapable for the provincial 220 and 110 kV grids to deliver more power as they are weak in electricity transmission.  In Tay Ninh and Gia La province: The 110 kV grid may face the risk of partial overload if additional solar power projects are approved.

- Provinces in which electrical grids are able to deliver more power generated from solar power projects include Ba Ria Vung Tau, Long An, An Giang, Binh Phuoc, etc.

VII. Conformity of additional independent solar power projects (which are added to the national and provincial electricity development planning) with national solar power development planning

This is one of the content of Document No.174/TB-VPCP, which is the Ministry of Industry and Trade shall review solar power projects undergoing appraisal to decide whether to add such projects to the national solar power development planning for synchronous implementation in case the national planning is still in progress.

However, the national solar power development planning mainly focuses on finding areas with potential for developing solar power and anticipating the connection possibility. Connection to the electrical grid for maximizing capacity of solar power projects and calculations affecting the power system (stability, safety and power supply quality) must be carefully considered in line with national and provincial electricity development planning.

VIII. Ongoing tasks related to solar power planning

1. In respect of the scheme called “National solar power development planning”: The Institute of Energy is preparing the scheme.  The Institute of Energy will propose its draft scheme once in July 2018 to ask for opinions from other organizations and submit such scheme to the Prime Minister for consideration and approval in November 2018.

2. The Ministry of Industry and Trade has published a number of reports and guidelines regarding solar power development, including the following documents:

- Document No.8822/BCT-DL dated September 21, 2017 sent to the Prime Minister regarding adding of solar power projects to the electricity development planning, which propose changes in the objective for solar power development specified in the VII power planning that is adjusted with the aim of increasing total installed solar power capacity by 2020 in consistent with the policy on encouragement to solar power development and real conditions of additional power projects.

- Document No.6201/BCT-TCNL dated July 11, 2017 sent to the Electricity Vietnam (EVN) which provides for research on measurement of solar power projects' impacts on the national power system (impact on voltage, frequency, electricity quality and power supply stability) and solutions for safety of power systems in case solar power projects are connected to the national power system.  The EVN has hired foreign consultants for studying purpose and expected to achieve the measurement result as well as solutions in July 2018.

- Document No.3970/BCT-DL dated May 21, 2018 sent to People's Committees of provinces and centrally-affiliated cities (hereinafter referred to as “provinces”), which requests reports on execution of projects added to the electricity development planning as approved by competent authorities and review of provincial projects which have been submitted to superior authorities for appraisal and approval purpose, and suspension of appraisal of independent solar power projects under the guidance provided in Document No.174/TB-VPCP as well as waits for the next guidelines of the Prime Minister.

- The Ministry of Industry and Trade has worked with a number of foreign organizations such as the World Bank, Asian Development Bank, EU, GIZ and USAID in order to give some technical assistances in demonstration of the ability to deliver solar power of the electrical grid and ability to expand the grid for the purpose of maximizing capacity of solar power projects and technical assistance in pilot establishment of the regime for bidding, construction and investment in solar power projects connected to the national power system. These technical assistances will provide help in analysis, assessment, orientation and development of policies on renewable energy development in the next period (after June 30, 2019). And the research result will lay a foundation for considering whether to apply such research to establishment of VIII electricity planning.

IX. Recommendations

Pursuant to the contents mentioned above and for the purpose of ensuring the publicity, transparency and efficiency in the Government’s policy on encouragement to renewable energy development (especially solar power) which contribute to national power generation and help to achieve Vietnam's objective for carbon emission reduction which is specified in 2015 United Nations Climate Change Conference as June 30, 2019 - the date on which solar power projects are entitled to policies prescribed in Decision No.11/QD-TTg is coming, below are recommendations to the Prime Minister by the Ministry of Industry and Trade:  

1.  People’s Committees of provinces with additional solar power projects shall immediately review the land use plan/project and other plans as authorized in order to convert the land use purpose for additional renewable energy projects which have been approved and prioritize the land with low economic value and high potential for renewable energy development.

2. The Ministry of Industry and Trade shall:

a) continue to appraise additional independent solar power projects submitted to provincial People's Committees to ensure conformity with contents mentioned in Decision No.11/2017/QD-TTg and Circular No.16/2017/TT- BCT. To be specific:

(i) The Ministry of Industry and Trade is allowed to grant approval for appraised power projects with total capacity of at least 50 MWp and submit projects with total capacity of more than 50 MWp to the Prime Minister for approval purpose.

(ii) The Ministry of Industry and Trade is allowed to continue to appraise and approve power projects in provinces with power development potential but few additional projects and favorable for grid connection as well as assistance in power supply to the South such as Binh Phuoc, Long An, Ba Ria Vung Tau or submit the aforesaid projects to the Prime Minister for approval purpose.

(iii) The Ministry of Industry and Trade is allowed to appraise and approve power projects that are hard to be connected to the electrical grid and run in 2019 from 2020 onwards in case the number of electrical substations increases and the grid is capable to deliver all electricity generated.

(b) cooperate with provincial People's Committees in boosting inspection and supervision of additional renewable energy projects, especially solar power projects that have been approved. In case such projects fail to be run as approved, the Ministry of Industry and Trade shall ask for project withdrawal in order not to affect other additional projects under consideration and those connected to the national power system.

c) assign the EVN to cooperate with the Institute of Energy and the Ministry of Industry and Trade in working out the method for maximizing capacity of additional projects and assessing impacts of renewable energy on the power system, and proposing equivalent solutions.

APPENDIX 1

TOTAL CAPACITY OF PROPOSED ADDITIONAL SOLAR POWER PROJECTS OF PROVINCES AND CITIES

APPENDIX 2

LIST OF APPROVED ADDITIONAL SOLAR POWER PROJECTS

APPENDIX 3

LIST OF SOLAR POWER PROJECTS PENDING APPROVAL