世界发展银行-Vietnam-Solar-Competitive-Bidding-Strategy-and-Framework_44页_2mb

Summary of Vietnam Solar Competitive Bidding Strategy and Framework

Core Content

This report outlines the strategy and framework for implementing a competitive bidding mechanism for solar power generation in Vietnam, replacing the previous feed-in-tariff (FIT) policy. The initiative is supported by the World Bank and developed in collaboration with PricewaterhouseCoopers (PWC) and Baker McKenzie, with funding from ESMAP and the Global Infrastructure Facility (GIF). The goal is to scale up solar deployment in a sustainable and cost-effective manner, ensuring a clear regulatory and procedural path for private investors.

Main Objectives

• Transition from FIT to competitive bidding to reduce solar generation costs.
• Ensure long-term investment attractiveness and reduce perceived risks for independent power producers (IPPs).
• Align solar deployment with the revised Power Development Plan 8 (PDP 8) for the period 2021–2030.
• Address key challenges such as grid integration, land allocation, and legal framework gaps.

Key Targets and Timeline

• Revised PDP 7 (2016–2020): Set a target of 850 MW by 2020 and 4 GW by 2025.
• Actual Deployment (as of mid-2019): Around 4.5 GW of solar capacity had been built under FIT 1.
• FIT 2 Phase: Expected to develop an additional 1.5 GW by end of 2020.
• PDP 8 (2021–2030): Targets 18 GW of solar by 2030, with the remaining 12 GW to be developed through competitive bidding.
• Deployment Schemes:
  • 500 MW substation-based competitive bidding.
  • 200 MW floating solar parks.
  • 500 MW ground-mounted solar parks.
• Annual Deployment: After the pilot phase, 1–2 GW of solar capacity is expected to be installed annually using a mix of substation-based and solar park schemes.

Legal Framework

• Current Status: Vietnam lacks a comprehensive legal framework for competitive bidding of solar projects.
• Recommendation: Competitive bidding should be hosted under the Investment Law to ensure alignment with the national generation master plan and provincial investment plans.
• Key Legal Changes:
  • Clarification of roles and responsibilities among MOIT, EVN, and provincial authorities.
  • Need for a Prime Minister's Decision to guide the bidding process and establish a clear legal framework.
  • Legal protection for IPPs through a letter of support from the Government of Vietnam, especially with the introduction of the Vietnam wholesale electricity market (VWEM).

Bidding Framework

a. Bidding Mechanism

• Pilot Phase: A two-envelope process (RFQ/RFP) is recommended.
• Qualification Criteria: Test IPPs on technical and financial capabilities.
• Price Discovery: Sealed envelope bidding is recommended for the initial phase due to the need for market maturity.
• Winner Selection: Based on the lowest tariff submitted, ensuring cost-effectiveness.

b. Procurement Framework

• Payment Mechanism: Energy-based payments (MWh/kWh) are preferred over MW-based mechanisms.
• Tariff Structure:
  • Short-term: Fully indexed to USD and inflation.
  • Medium-term: Partial indexation or full VND payments depending on domestic lending conditions.
• Ceiling Tariff: FIT 1 can serve as the ceiling tariff for the pilot phase to ensure competitive bids are lower than FIT.

c. Contractual Framework

• PPA Term: 25 years to match the asset life and ensure long-term stability.
• Off-take Arrangement: Include provisions for deemed generation to reduce curtailment risks.
• Risk Mitigation: Provisions for termination due to default and international arbitration.
• Non-Recourse Financing: Encourage the development of local non-recourse financing options to attract more IPPs.

Deployment Schemes

• Substation-Based Competitive Bidding:
  • IPPs select the land, ensuring compliance with environmental and social regulations.
  • Coordination with provinces is necessary for environmental screening and grid integration.
• Solar Park Competitive Bidding:
  • Government selects the land, aiming to minimize environmental and social impact.
  • Includes ground-mounted and floating solar park options.
  • Floating solar parks can be collocated with hydro generation, reducing grid impact.

Roles and Responsibilities

Socio-Economic Benefits Strategy

• Employment: The 12 GW solar target is expected to create up to 25,000 full-time jobs annually through 2030, including:
  • 5,000 jobs in development, design, construction, and commissioning.
  • 20,000 full-time equivalents in manufacturing.
• Local Engagement:
  • Promote local participation through visibility and international communication.
  • Facilitate assessments of local opportunities for suppliers.
  • Support local players by mapping their skills and integrating them into the solar value chain.
• Community Impact:
  • Ensure local communities benefit from solar park development.
  • Implement yearly solar park fees for local development or compulsory hiring and training.
  • Conduct socio-economic studies to tailor programs to local needs.
  • Promote gender inclusivity in these initiatives.

Conclusion

The report recommends a comprehensive competitive bidding framework for Vietnam's solar sector, aligning with the revised PDP 8 and the transition from FIT to a more cost-effective and sustainable model. This framework includes legal, procedural, and financial mechanisms to support the development of solar projects, reduce risks for IPPs, and ensure the long-term success of the program. It also emphasizes the importance of socio-economic benefits and local engagement in the solar deployment process.

The strategy aims to position Vietnam as an attractive investment destination in the global solar market by ensuring clarity, transparency, and alignment with international best practices.