Solar Power Incentives in HCM

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HCM City has called for more investment in solar power in the city due to the vast potential of the sector.

The city has the opportunity to develop solar power as it is located in an area with strong solar radiation, ranging from 4.3KWh/m2 per day to 6.6KWh/m2 per day, according to statistics from city authorities. The HCM City Power Corporation, a pioneer in installing solar power systems, has installed four solar power plants in four locations in the city with total installed capacity of 226KWp.

The corporation plans to install grid solar power connected to the roofs of 15 offices of the corporation with a total installed capacity of about 800KWp by the end of this year. They will also add solar power connected to the grid at other units belonging to the corporation and more 220/110KV power stations in the future.

Phạm Quốc Bảo, deputy general director of the HCM City Power Corporation, said the installation of the solar power systems would meet part of the power demand of the buildings, thus saving the operating costs of the buildings.

“Since 2011, the corporation has invested in solar systems to supply electricity to 172 households in Thiềng Liềng Hamlet in Cần Giờ District’s Thạnh An Commune with a monthly electricity output of 11,500KWh,” he said.

According to Bảo, businesses and investors used to be hesitant about investing in solar power. However, since 2013, the installed capacity of solar power in the city has increased rapidly, from 200KWp in 2013 to 1MWp in 2015 and 3MWp in July this year.

To promote use of solar power, the HCM City Power Corporation has asked the city to continue running programs or campaigns to encourage residents to use solar water heaters and install solar power systems connected to the grid. The city should also direct export processing zones, industrial zones, hi-tech parks, State agencies, among others, to prepare for the installation of solar power equipment in the buildings, and issue policies and incentives to support residents and enterprises to install solar power systems.

More businesses are expected to invest in the solar energy sector in the future due to a recent decision to encourage the development of solar power projects which took effect in June. Under the decision, all output produced by solar power projects will be purchased for VNĐ2,086 (9.3 US cents) per kWh (excluding VAT) – a profitable rate for investors.

The price will be adjusted in line with the VNĐ/USD exchange rate, and only applied to power grid-connected projects with the cell efficiency above 16 percent or productivity module over 15 percent. Investors involved in solar power projects in Việt Nam will be eligible for various incentives related to land, investment capital and corporate income and import tax rates. The decision aims to draw funds to the field, with many investors interested in the industry.

According to the Foreign Investment Agency under the Ministry of Planning and Investment, only 16 foreign-invested green energy projects were operating in Việt Nam as of the end of last year, with total registered capital of $778 million, and only 18 per cent were invested in solar power.

The decision is expected to pave the way for investors, especially foreign investors, to expand their operations in the solar power industry. Last year, HCM City consumed about 3,575 MW of electricity, of which renewable energy accounted for 3.96MW, or 0.1 percent.

The city has set a target of increasing its use of renewable energy to 1.74 percent, equivalent to 96MW, by 2020.

Since 2015, HCM has encouraged residents and businesses to invest in solar power systems by granting a subsidy of VNĐ2,000 (10 US cents) per kWh used for domestic purposes or sold to the national electricity grid.

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