Are the Barriers to Private Solar/Wind Investment in Vietnam Mainly Those That Limit Network Capacity Expansion?

Abstract

This study addresses whether the main barrier to private solar/wind investment is the network side instead of the generation side, as a hypothesis, and how the network-related barrier could be reduced to encourage a more extensive range of private investment. It mainly employs a review of the literature and semi-structured interviews with relevant stakeholders. The result showed weak grid capacity is a critical barrier in solar power projects’ congested areas. Another critical barrier is policy uncertainty in that the government has not issued any alternative mechanisms for developers who failed to meet the Commercial Operation Date for approximately two years after the FITs ended. This is likely due to the fact that the Power Development Plan 8 (PDP8) for 2021-30 had been slow to be approved by the Prime Minister. In the absence of policies, the government committed to net-zero emission toward 2050 at COP26 and concluded the Just Energy Transition Partnership agreement in December 2022. These might lead the government to set its ambitious RE targets in the power mix of PDP8 approved in May 2023. In addition, amendments of the Law on Electricity which allows private firms to invest in the grid may contribute to improving quality and capacity of the grid.