While solar development has boomed under Feed-in Tariff (FiT) support in Vietnam, there now needs to be equal investment into mature asset management processes and technologies in order to retain investor confidence in the emerging markets. This is according to Alectris, a global operations and maintenance (O&M) provider for the solar industry and developer of renewable energy ERP software, ACTIS.
Vietnam has recently become a hotspot for solar projects in Asia, with 2019 seeing an unprecedented boom of 4.5GW added to the grid, driven by favourable FiT rates. However, with the uplift in demand leading to grid congestion challenges, some projects have been subject to long curtailment periods, leading to lower levels of bankability than originally forecast.
And, as a consequence of developing solar farms under a fixed timeline of tariff support, some projects have subsequently found to be underperforming during operations. Compounding the challenge, there is currently limited adoption of performance monitoring processes or software that would provide owners, operators and investors with a true picture of why there may be shortfalls in production.
In order, therefore, for momentum in Vietnam and other emerging markets to be sustained in the long term, Alectris is calling for further investment to help develop a domestic O&M industry to support both existing and new projects.
Alectris believes that in order to encourage asset management best practice from the earliest stage, developers and investors should foster early stage collaboration between EPC partners traditionally awarded two-year warranty contracts for O&M activities, and third party asset managers. This would enable an early adoption of asset management best practice, alongside protecting the warranty commitments of EPCs.
In the longer term, with the shift by the Vietnamese government to PV auctions, there is a wider opportunity for the market to offer a blueprint for solar development under two different models.
Constantinos Peonides, director of business development at Alectris, said: “Though the shift to an auction system will help remove pressure on developers and EPCs in building projects with long term viability, there is concern that underperformance from existing projects may cause investors to think twice about investing in the market in future.”
“It is crucial that solar project development under FiT schemes maintain high levels of quality during construction and across operation and maintenance activities to instill confidence in investors through enhanced project offerings.”
Vietnam is due to release 1GW of solar PV auction contracts in 2020, equally split between projects at pre-selected sites and capacity earmarked for specific substations, with the World Bank set to play a central role in shaping the market’s solar policies. Working with experienced O&M providers will support these new projects while bringing the expertise needed to the region to bolster existing plants.