Unsynchronized and seriously overloaded power grid infrastructure
In recent years, a series of renewable energy has been deployed across the country, contributing to diversifying electricity supply and reducing greenhouse gas emissions. However, after a period of booming development, this sector is facing many difficulties and challenges that need to be addressed to be able to develop sustainably.
Talking to Lao Dong Newspaper, Dr. Nguyen Xuan Quang - Institute of Energy Technology (Hanoi University of Science and Technology) - said that currently the power grid infrastructure is not synchronized and seriously overloaded. Vietnam's power grid system is designed mainly for traditional centralized power sources, so it is not ready to receive distributed and highly volatile renewable energy sources. The progress of building new power grids is still slow due to difficulties in site clearance and capital sources.
According to Dr. Nguyen Xuan Quang, the initial success of the preferential electricity purchase price mechanism with the FIT price mechanism contributed to the explosion of solar and wind power. However, this too rapid development has revealed many inadequacies, accordingly, the electricity system has not been prepared in terms of power grid and regulation, so many projects have to reduce capacity despite completing investment. After the FIT mechanism ended, many transitional projects continued to face difficulties in determining electricity selling prices. The transition to bidding and new electricity purchase and sale contracts has created legal loopholes. Many projects are therefore in a state of suspension or slow progress.
Dr. Nguyen Xuan Quang analyzed that the energy transition process requires huge investment capital. Meanwhile, Vietnam's average retail electricity price is still lower than many countries in the region. If electricity prices do not fully reflect the investment and operation costs of the system, the ability to attract private investment in the energy sector will face many difficulties.
A profound technical difficulty pointed out by Dr. Nguyen Xuan Quang is the disruption of renewable sources, the challenge of balancing regulation and flexible source demand. When the proportion of renewable energy increases, the power system faces great difficulties in maintaining a real-time supply-demand balance, stabilizing frequency and voltage.
Regarding financial challenges, Dr. Nguyen Xuan Quang said that high domestic lending interest rates, exchange rate risks and production cuts make many projects less attractive. Foreign investors often require electricity purchase and sale contracts to ensure sufficient conditions to easily mobilize capital from international financial institutions.
Completing the mechanism for direct electricity purchase and sale, promoting investment in power grids
From the perspective of FDI enterprises, Ms. Tran Thuy Tien - Director of Market Development and External Relations of Constant Energy Vietnam - assessed that the biggest challenge for renewable energy today lies in the incomplete and unsynchronized legal framework. Although direct electricity purchase and sale (DPPA) is currently allowed, many contents are still unclear such as licensing procedures or implementation guidelines at the local level. To promote solar power and attract FDI, representatives of Constant Energy proposed to complete the DPPA legal framework in a clear, transparent and synchronous direction between localities for DPPA through the national grid.
Proposing solutions to promote the development of renewable energy, Mr. Luu Hoang Ha - Chairman of the Board of Directors of Nami Energy - suggested that priority should be given to investing in transmission grid projects in areas with high renewable energy potential. At the same time, study mechanisms to allow the private sector to participate in investing in some transmission infrastructure items in appropriate forms to reduce the pressure of public investment capital.
Representatives of Nami Energy also proposed that the State should build a long-term solar power development roadmap with consistent and predictable policies. It is necessary to continue to improve the bidding and competitive auction mechanism for new projects; simplify administrative procedures; shorten project appraisal and approval time. Promulgate full regulations related to energy storage, direct electricity purchase and sale (DPPA) and competitive electricity market.
Regarding green capital, Mr. Luu Hoang Ha proposed that it is necessary to build green credit programs, credit guarantee funds and interest rate support mechanisms for renewable energy projects.
The State needs to soon complete the price mechanism for storage batteries, creating conditions for BESS to become an important component of the electricity system. In addition, it is necessary to promote research, technology transfer and form a domestic supply chain for energy storage solutions, contributing to reducing investment costs and improving technological autonomy" - Mr. Ha said.
