Vietnam grapples with an unexpected surge in solar power

SOLAR POWER played almost no part in Vietnam’s energy mix in 2017. To speed the technology’s adoption, the government offered that year to pay suppliers a generous $0.09 for every kilowatt-hour produced by big solar farms, but only if they started operations within the following two years. It expected some 850MW of capacity to be installed. Instead, by the end of 2019 the country found itself with 5 gigawatts—more than Australia, with an economy almost six times the size.

The surge is all the more surprising given the terms on offer from Vietnam Electricity (EVN), the cash-strapped state-owned enterprise that runs the national grid. Although the government’s “feed-in tariff” was tempting given that costs typically amount to $0.05-0.07 a kilowatt-hour, EVN only promised to pay for the power it needed on any given day. Developers worried that potential investors would balk at that. As it turned out, they leapt at the chance to cash in on Vietnam’s hunger for power.

The Vietnamese economy has been growing by 5-7% a year for the past two decades. The government has plans to double power generation by 2030, but estimates that supply may run short as soon as next year. It needs to find new sources of power as soon as possible.

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