Speech by Mr. Bakhodir Burkhanov, UNDP Deputy Country Director at workshop on draft Prime Minister Decision on Support to Solar Photo-Voltaic Energy Projects in Viet Nam

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Date: Wednesday, 30 September 2015, 8:30am
Event: Workshop on draft Prime Minister Decision on Support to Solar Photo-Voltaic Energy Projects in Viet Nam
Venue: Sunway Hotel Ha Noi, 19 Pham Dinh Ho, Hai Ba Trung

Mr. Dang Huy Cuong, Director-General of the Energy Directorate in the Ministry of Industry and Trade

Mr. Pham Trong Thuc, Director of the Renewable Energy Department

Colleagues and friends:

I am pleased to join this consultation workshop at the invitation of the General Directorate of Energy to share some perspectives on the draft Government Decision regarding Solar Photo-Voltaic Energy projects in Viet Nam. UNDP is proud to have provided technical advice for the formulation of this draft decision over the past months.

Viet Nam’s economy is growing fast and it is energy-hungry. The Power Development Plan 7 predicts that, between the years 2011 and 2030, total electricity production will increase at least four-fold, or possibly up to 7 times over the baseline. The Plan also projects that, by 2030, about half of all electricity will be generated by coal. Viet Nam has done very well in terms of ensuring people’s access to electricity; it is expected that virtually all communities will be connected to the national grid by 2020. Viet Nam is also aiming to expand the deployment of renewable energy, with a target of 6% of the total power production reached by 2030, according to the same Plan.

In addition, Viet Nam has adopted the national Green Growth Strategy, with a strong component dealing with mitigation of greenhouse gas emissions. Viet Nam will soon submit its emission reduction plan, referred to as “Intended Nationally Determined Contribution” or “INDC”, to the Secretariat of the UN Framework Convention on Climate Change. This is a critical action by UN Member States as the world hopes to reach an ambitious agreement at the end of this year in Paris on reducing GHG emissions for the period after 2021.

But to reach its own renewable energy target, Viet Nam needs to double its efforts, as it lags behind similar developing countries in deploying and using solar PV energy, as well as other forms of non-hydro renewable energy. As the demand for energy continues to expand, it is becoming clear that Viet Nam needs to raise the level of ambition in terms of its renewable energy target. The current target may no longer be able to limit the expansion of power production from coal and other fossil fuels, and therefore contribute robustly to mitigating GHG emissions.

With this background, UNDP is happy that important work has been taking place in Viet Nam towards a new support policy on solar PV energy. Allow me to share with you UNDP’s most pertinent suggestions for this policy:

First, the UN Secretary-General’s initiative on Sustainable Energy For All (SE4ALL) set objectives in 2012 that are now reflected in the adopted Sustainable Development Goals, including universal access to modern energy services and doubling the share of renewable energy in the global energy mix. We hope that solar PV plays a key role in this respect in Viet Nam, and that the new Decision on solar PV will signal an appropriate ambition in providing all Vietnamese with electricity and a fast expansion of renewable energy.

Secondly, solar PV has the unique ability of generating electricity at the smallest and at the largest scales. It can be connected to the national grid, or produce off-grid power. These unique features are a great leverage, and we hope that the Decision will enable investment at different scales, including on- and off-grid community systems is remote areas and on islands. Community systems as well as rooftop solar PV systems on schools and hospitals, for example, should be the top priority for financial and technical support by the Government and international development partners.

Thirdly, in order to ensure rapid uptake of solar PV and yet to keep it affordable, we hope that international best practice will be reflected in the Decision. For instance, some countries have created “solar PV booms”, which became too expensive and ended up harming the emerging solar industry; Viet Nam can avoid this experience by controlling bids for pre-assessed power plant investments, setting the lowest possible price that markets can reach at any one time. Looking at more positive experiences, other countries have been highly successful in encouraging businesses and households to invest in rooftop solar PV systems for their own power consumption. The current UN office in Ha Noi is one such building. This requires a system of net-metering, so that excess power generation is rewarded, and simple administrative procedures apply to record it.

Finally, we are aware that there currently is a lot of public debate about the retail electricity tariffs in Viet Nam, and that some households believe they paid too much since the latest price adjustment. But electricity in Viet Nam is, on average, quite cheap by international comparison.

There still are indirect subsidies on electricity, as some investments in power infrastructure were supported by the State; domestic coal is being traded below international prices; and Viet Nam still has no significant carbon tax.

Our research demonstrates that phasing out fossil fuel subsidies completely, introducing a carbon tax, while ensuring that low-income groups can access affordable electricity through a tiered pricing structure, is indeed possible. Not only that – these measures are likely to increase GDP growth because of technological renewal. They will bring good environmental and health benefits, and will contribute strongly to reduced future emissions.

In the context of the Government Decision, this means assuming that certain retail tariffs will go up soon and, therefore, that solar PV on rooftops and net-metering will rapidly become a very attractive option for many households and businesses in Viet Nam.

Ladies and gentlemen:

I look forward to a lively and productive consultation today. Above all, I hope that it leads to a clear, future-oriented policy that recognizes the many economic benefits of solar PV and generates investment at different scales. Viet Nam must put in place these enabling policies and investments in the nearest future in order to remain competitive and to continue growing sustainably. UNDP stands ready to provide further support as necessary.

Xin cam on va chuc suc khoe.