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Potential for increasing the role of renewables in Mekong power supply

(MK14)

CPWF Mekong Forum – Session 12, 20 November 2013

Solar PV in Vietnam: Power sector benefits, costs and policy

Nguyen Quoc Khanh

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Content

1. Solar PV for commercial buildings: power sector benefits2. Potential of solar PV development in commercial buildings3. Economics of building solar PV and the proposed supporting

mechanism4. Volatility of solar PV5. Prospect for solar PV applications6. Summary of policy options for solar PV

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Solar PV in commercial buildings: Power sector benefits

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Correlation between solar PV output and building load demand

• High correlation between solar PV and building load demand which is characterized by cooling demand

• The difference happens after 5:00 pm when solar PV stops generating power while the building is still in operation

→ Solar PV could be installed on building rooftop to meet its demand

→ Highly relevant for the south where solar radiation is quite stable throughout the year

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Benefits to the power sector

• Save transmission and distribution cost

• Reduce transmission and distribution losses

• Avoid the need for high cost power generation

Power can be produced at the users using e.g., solar PV

Power can be produced at the users using e.g., solar PV

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National load curve in Viet Nam

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2009 Trung Ngày LV 2009 Nam Ngày LV 2009 Bắc Ngày LV

National: 2 peaks Morning peak: 10-11am Evening peak: 18-19 pm

The South: 2 peaks Morning peak: 10 am Afternoon peak: 15 pm

The South load curve contributes 50-55% to the national load.

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Potential of solar PV development in commercial buildings in Viet Nam

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Potential of solar PV development for hotels in Ho Chi Minh city (demand side)

Solar PV potential (demand side): 47 MW

• Overlay typical solar PV production curve to typical load curve of Hotels

• Adjust solar PV electrical generation capacity so that the peak load section of the hotel’s load curve is minimised.

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Typical load curve of hotels in HCM city

Installable capacity of solar PV in hotels in HCM city

Load curve of hotels in HCM city with solar PV

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Potential of solar PV development for office buildings in Ho Chi Minh city (demand side)

• Overlay typical solar PV production curve to typical load curve of office buildings

• Adjust solar PV electrical generation capacity so that the peak load section of the office buildings’ load curve is minimised.

Solar PV potential (demand side): 66 MW

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Typical load curve of office building in HCM city

Installable capacity of solar PV in office buildings in HCM city

Load curve of office buildings in HCM city with solar PV

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Available rooftop area for installing solar PV system sufficient?

• Total floor area: 29,000 m2

• Roof area: ~ 2000 m2

-> able to accommodate 250 kWp solar PV system

Less than “optimal” solar PV capacity: 1.5 MWp

Note: Metropolitan building, TP HCM

Develop ground mounted solar PV

Develop ground mounted solar PV

Figure: ground mounted solar PV at Bangchak, Attuthaya, Thailand

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Potential of ground mounted solar PV

Selection criteria• Solar radiation: ≥ 5 kWh/m2/day• Suitable areas:

• Waste land with flat topography and with road and grid, close to load centers

• Distance from road: ≤2 km• Distance from electrical grid: ≤ 5 km• Land slope: ≤ 5o

• GIS assisted approach

• Total suitable area identified: 441 km2 , able to

accommodate 22,000 MWp

• Mainly concentrate in the southern region

• Ninh Thuan has the greatest potential of approx 4,600 MWp

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Economics of solar PV and the proposed supporting mechanism

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Economics of solar PV

Economics of solar PV are largely determined by 2 main variables: Investment cost

Power output

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Specific investment cost

Specific investment cost: 2,0 $/Wp Solar module: 0,7 $/Wp Inverter: 0,3 $/Wp Others: 1,0 $/Wp

Source: http://www.solarserver.com/service/pvx-spot-market-price-index-solar-pv-modules.html

Source: http://www.solarwirtschaft.de/preisindex

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Power output and the levelized cost

Power output depends on solar radiation, solar PV types and the tilted angle and direction of the solar panel installation

Cost: 17,65 $ cent/kWh or 3.795 đ/kWh Cost: 17,65 $ cent/kWh or 3.795 đ/kWh

Full load hours: 1500 hours/year, or Capacity factor: 17%

Reference values

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Value of solar PV: power system avoided cost versus user avoided cost

Dry season Wet season

Peak hour

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Peak hour

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Leftover

power

Energy cost (đ/kWh)

Northern region 619 596 554 596 557 538 269Central region 589 583 551 549 538 533 267Southern region 638 629 596 583 574 559 279

Capacity cost (đ/kWh) 1,805

Source: Decision No.06/QĐ-ĐTĐL dated 19/01/2012 Electricity Regulatory Authority of Vietnam

Wet Season: from July 1st to October 31st

Dry season: from Nov 1st to June 31st

Avoided cost tariff in 2012 Electrical selling price for commercial customers in 2012 (đ/kWh)

+ Peak 3,715

+ Normal 2,177

+ Off-peak 1,343

Average buying price: 928 đ/kWh Average selling price: 2,563 đ/kWh<< <<

Levelized cost: 3,795 đ/kWh

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Supporting mechanism for solar PV

• Feed-in tariff (FIT) is the most common mechanism

• Vietnam is applying FIT for renewable energies

• FIT has been applied for wind power

• FIT is being developed for biomass power

Source: EPIA

Supporting mechanism for solar PV in Europe

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FIT estimate for rooftop solar PV

Inputs• Generic solar PV system: 20 kWp• Specific investment cost: 2 $/Wp• O&M cost: 1.5% of total investment• Capacity factor: 17% • Full load hours: 1500 hours• Lifetime: 20 years

• Financing: 20% equity, 80% loans• Loan interest: 6% p.a , Loan term:

15 years• Corporation income tax: 10%• Depreciation: 20 years• Hurdling FIRR: 16%

→ FIT rate: 19.5 US cent/kWhEqual to 4,193 đ/kWh

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FIT estimate versus Thailand FIT tariff

• FIT rate: 19.5 US cent/kWh, equal to 4,193 đ/kWh

• Duration: 20 years

Estimated FIT in Thailand

SizeFIT rate

(Baht/kWh)FIT rate (đ/kWh)

Quota

0-10kW 6.96 4,628 100 MW 10-250 kW 6.55 4,356

100 MW 250 kW-1 MW 6.16 4,096

YearFIT Rate

(Baht/kWh)FIT Rate (đ/kWh)

1-3 9.75 6,484 4-10 6.50 4,323

11-25 4.50 2,993

1 MW/1 commune package

Source: http://thaisolarpvroadmap.org/wordpress/?p=940

Rooftop solar PV package

• Thailand solar PV target 3000 MW by 2025

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Other incentives

Financial incentives

• Tax: Preferential import tax and corporate income tax exist

• Investment: has been stated but not really in operation

Non-financial incentives

• Update existing grid code

Circular No.32/2010/TT-BCT dated 30 July 2010 applies all power generation technologies that are connected to power distribution network

It does not consider the presence of renewable energy technologies, especially those with large fluctuation output

• Develop a solar PV development plan

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Volatility of solar PV output

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Volatility of solar PV output

The correlation is high between building load demand and solar availability. So PV provides power when needed, thus displacing peak energy and reducing demand

The correlation between PV output and load demand is normally high. But localized demand reduction might be hindered by occasional clouds

The Solar Load Controller (SLC) reduces the load when needed by acting on end-use setting or scheduling. Because of the naturally high correlation between PV and load, the end-use inconvenience is minimal compared to the demand reduction enhancement

SLC installation is applied only when the incentives such as FIT is established, probably as a condition to receive incentive.

Source: Christy Herig, National Renewable Energy Laboratory, Using Photovoltaics to Preserve California's Electricity Capacity Reserves

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Prospect for solar PV

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Climate Change increase numbers of hot day

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Further investment cost improvement

Prospect of global Solar PV market

Source: Global market outlook for Photovoltaics 2013-2017

PV generation cost will approach grid parity once it

reaches an investment cost of 1$/Wp

Price and cummulative production volume

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Summary of policy options

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Summary of policy options

Option 1 – Business As Usual

No FIT

Market driven

Support Net Metering

Option 2 – Promotion

Price incentive (FIT)

SLC as a condition

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Mekong Forum | 19-21 November 2013

Nguyen Quoc Khanh (mail2knguyen@yahoo.com)

Thank you