Vietnam currently has the most solar power capacity in Southeast Asia, with 16,500MW built by the end of 2020. Energy Investors from all over the world have shifted their focus to Vietnam as a result of this impressive change. In this article, we’ll look at how a foreign investor may profit from investing in Vietnam’s solar energy (renewable energy) industry.
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The landscape of Solar Energy in Vietnam
Vietnam has lately witnessed a spectacular solar photovoltaic (PV) boom, which is the first stage in the country’s massive and quick energy revolution away from Coal. Solar PV capacity in the nation rose from 86 MW in 2018 to 4,750 MW in 2019. As a result, Vietnam has surpassed Thailand as the ASEAN member with the most solar power production capacity installed. In 2020, solar PV systems produced around 10.6 TWh of power, accounting for nearly 4% of total output. By the end of 2020, rooftop solar would account for nearly half of Vietnam’s total solar capacity. With such a promising landscape of solar energy production in Vietnam, the prominent investment opportunities for foreign investors are hard to miss.
Solar Energy Opportunities in Vietnam
Vietnam went from being an energy exporter to an energy importer in the last decade. As a result, the country aims to capitalize on its renewable energy potential to change this. Bioenergy (10b m3 per year), small hydropower (more than 4 GW), and solar power (average daily radiation of 5kWh/m2 throughout the nation) projects in rural regions, for example, offer a substantial amount of potential.
An opportunity for investors to join Vietnam in its quest to regain energy independence through the development of local renewable energy projects is presented here. Since large commercial and industrial firms have strong economic circumstances and can develop sustainably in the long run, experts say that investors can gain from the growing trend of these companies switching to solar power.
By 2030, renewable energy sources (excluding hydropower) would account for approximately 30% of overall energy consumption, according to the PDP8 draft, which was presented in February 2021. All types of renewable energy will be encouraged, and there will be no turning back from clean energy. Vietnam’s renewable energy industry stands to benefit from the increased local and global investment as well as a boost to economic growth.
Drivers For Vietnam’s Solar PV Boom
The solar PV boom has been mostly driven by the availability of solar feed-in tariffs (FITs). Vietnam’s Prime Minister issued the first FIT in 2017. Before 30 June 2019, all solar power projects – utility-scale and rooftop – can sell their electricity to Vietnam Electricity and its subsidiaries for US$93.5/MWh for 20 years.
Other aspects of government policies have also had a significant impact. Utility-scale solar PV developers have been given the freedom to raise funds from any source, including international ones, and are exempt from paying income taxes for the first four years. After that, the income tax will be lowered by 50% for the next nine years, and then by 10% until the 15th year of operation. Imported equipment is no longer subject to import duties. Land-lease payment exemptions for solar PV projects have ranged from 14 years to the whole project life, depending on the region.
The transition to renewable energy is already underway. In 2014, Vietnam had a total solar capacity of 4 MW installed for electricity generation. Renewables had only 0.32% of the market share at the time. It is already approaching 9.5 GW, with over 6 GW set to be deployed in December 2020.
Currently, Vietnam is among the countries with the highest growth in investments in renewables, and the prospects for further investment from foreign sources are quite promising.
How Can Cekindo Help?
Investment in Vietnam consists of multiple procedures that are time-taking and overly official. Having company registration professionals, like Cekindo, by your side can save you a great deal of time as well as provide you a hassle-free experience. Cekindo provides a wide spectrum of ancillary services related to company registration, like legal consultancy, import license and other documents acquisition, tax and accounting, and HR services.