Solar Power Development in Vietnam - what you must know:

Solar Power Development in Vietnam - what you must know:

1. What can you tell me about the policies Vietnam now has in place to
support solar development?

The legal framework is almost complete. I expect the solar PPA template will
be issued within this year so that the investors have full guidance to
develop projects in Vietnam. However, as I see from the recent draft solar
PPA, it repeats the same mistakes in other renewable PPAs that make projects
not bankable. This issue needs to be sorted out soon so that solar
development will be on fast track in near future.

2.Total PV installations in Vietnam are still quite low - what has been
holding back development?

Because the latest Prime Minister's Decision promulgating solar FIT was only
issued on 11 April 2017. In addition, solar energy is still expensive and
less stable throughout the year compared with other sources of energy.
Bankability of the PPA is also a worth-noting issue.

Bankability of PPAs has been achieved for other power projects in the past
in Vietnam. We are now working on solutions for the solar power sector. It
can be done.

3. How do you see the solar market evolving through the end of this decade,
both in terms of manufacturing and project development?

I foresee a rapid development in the sector. This is due to the Government's
change of focus on clean energy and environment protection policies. I can
see many foreign investors visiting Vietnam recently to look for investment
opportunities and many of them have managed to reach a deal with local
partners.

4. Where are the opportunities in Vietnamese PV and how should prospective
investors and developers approach the market?

Vietnam is an untapped market for solar. The Government offers many good
incentives to attract foreign investment, for example, exemption of land
rental within 3 years from the operation date, CIT 10%, etc. Investors and
developers should first establish close contact with local authorities and
conduct careful due diligence on local partners. BOT is the most recommended
investment form. In addition, investors and developers may consider taking
part in different segments such as equipment supply, solar panels
manufacturing, or assembling, etc.

5. What can you tell me about the availability of financing?

IFC and ADB are the most active financiers. Local banks are also more and
more interested in lending to renewable projects in general and solar
projects in particular. However, due to poor performance and credit of EVN,
the financing resources are still limited. We recommend MIGA (Multilateral
Investment Guarantee Agency) support for on-grid utility scale solar power
projects (above 50 MW).

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com