Policy and financial blips limit rooftop solar market

Low surplus electricity prices, inconsistent policy incentives, and cumbersome administrative procedures are continuing to hold back Vietnam's rooftop solar market, despite strong growth prospects.

- By Nguyen Thu

At last week’s seminar on ensuring energy supply in Vietnam held in Ho Chi Minh City, experts agreed that rooftop solar still possesses enormous development potential, particularly in urban and industrial centres such as Ho Chi Minh City. However, policy uncertainty and weak financial incentives continue to limit broader market participation.

According to renewable energy investor Nguyen Thanh Toan, only around one-fifth of rooftop potential within industrial parks in Ho Chi Minh City has been utilised, while household participation remains limited because the investment case is still unconvincing.

“The electricity generated during the daytime is often not fully consumed, while the selling price for surplus electricity fed back into the grid remains too low to compensate for electricity purchased from the grid at night,” Toan said.

Under current regulations, self-produced and self-consumed rooftop solar systems are allowed to sell only up to 20 per cent of installed capacity back to the grid at just above VND800 (3 US cents) per kWh.

This is significantly lower than the preferential feed-in tariff (FiT) applied during 2019-2020, when rooftop solar projects enjoyed purchase prices of around VND2,100 (8 US cents) per kWh excluding VAT.

Authorities are now considering increasing the permitted ratio of surplus electricity sales of 20-50 per cent. Although the proposal could create fresh opportunities for the renewable energy sector, experts say that the pricing structure remains insufficiently attractive.