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Solar pv in vietnam power sector benefits, costs and policy

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CPWF Mekong
CPWF Mekong

3rd Mekong Forum on Water, Food & Energy 2013. Presentation from Session 14: Alternative electricity sources and planning for the Mekong.

1 of 28
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 26.11.13 Seite 1 1 Page
Content 1. Solar PV for commercial buildings: power sector benefits 2. Potential of solar PV development in commercial buildings 3. Economics of building solar PV and the proposed supporting mechanism 4. Volatility of solar PV 5. Prospect for solar PV applications 6. Summary of policy options for solar PV 26.11.13 Seite 2 2 Page
Solar PV in commercial buildings: Power sector benefits 26.11.13 Seite 3 3 Page
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 26.11.13 Seite 4 4 Page
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 26.11.13 Seite 5 5 Page
National load curve in Viet Nam National: 2 peaks  Morning peak: 10-11am  Evening peak: 18-19 pm The South: 2 peaks  Morning peak: 10 am  Afternoon peak: 15 pm 14000 12000 10000 MW 8000 6000 4000 The South load curve contributes 50-55% to the national load. 2000 2009 Trung Ngày LV 2009 Nam Ngày LV 23:00 22:00 21:00 20:00 19:00 18:00 17:00 16:00 15:00 14:00 13:00 12:00 11:00 10:00 9:00 8:00 7:00 6:00 5:00 4:00 3:00 2:00 1:00 0:00 0 2009 Bắc Ngày LV 26.11.13 Seite 6 6 Page
Potential of solar PV development in commercial buildings in Viet Nam 26.11.13 Seite 7 7 Page
Potential of solar PV development for hotels in Ho Chi Minh city (demand side) • 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. MW 50.0 45.0 40.0 35.0 Typical load curve of hotels in HCM city 30.0 Installable capacity of solar PV in hotels in HCM city 25.0 20.0 Load curve of hotels in HCM city with solar PV 15.0 Solar PV potential (demand side): 47 MW 10.0 5.0 0.0 1 3 5 7 9 11 13 15 17 19 21 23 26.11.13 Seite 8 8 Page
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. 60.0 50.0 Typical load curve of office building in HCM city 40.0 30.0 Installable capacity of solar PV in office buildings in HCM city 20.0 Solar PV potential (demand side): 66 MW Load curve of office buildings in HCM city with solar PV 10.0 0.0 1 3 5 7 9 11 13 15 17 19 21 23 26.11.13 Seite 9 9 Page
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 Develop ground mounted Develop ground mounted solar PV solar PV Note: Metropolitan building, TP HCM Figure: ground mounted solar PV at Bangchak, Attuthaya, Thailand 26.11.13 Seite 1010 Page
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 • • Mainly concentrate in the southern region Total suitable area identified: 441 km2 , able to accommodate 22,000 MWp Ninh Thuan has the greatest potential of approx 4,600 MWp 26.11.13 Seite 1111 Page
Economics of solar PV and the proposed supporting mechanism 26.11.13 Seite 1212 Page
Economics of solar PV  Economics of solar PV are largely determined by 2 main variables:  Investment cost  Power output 26.11.13 Seite 1313 Page
Specific investment cost Source: http://www.solarserver.com/service/pvx-spotmarket-price-index-solar-pv-modules.html Source: http://www.solarwirtschaft.de/preisindex  Specific investment cost: 2,0 $/Wp  Solar module: 0,7 $/Wp  Inverter: 0,3 $/Wp  Others: 1,0 $/Wp 26.11.13 Seite 1414 Page
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 Reference values Full load hours: 1500 hours/year, or Capacity factor: 17% Cost: 17,65 $ cent/kWh or 3.795 đ/kWh 26.11.13 Seite 1515 Page
Value of solar PV: power system avoided cost versus user avoided cost Electrical selling price for commercial customers in 2012 (đ/kWh) Avoided cost tariff in 2012 Dry season Wet season Peak hour Norm al hour Off peak Peak hour Nor mal hour Off peak Leftov er power 619 589 638 596 583 629 554 551 596 596 549 583 557 538 574 538 533 559 269 267 279 Energy cost (đ/kWh) Northern region Central region Southern region Capacity cost (đ/kWh) + Peak 3,715 + Normal 2,177 + Off-peak 1,343 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 Average buying price: 928 đ/kWh << Average selling price: 2,563 đ/kWh << Levelized cost: 3,795 đ/kWh 26.11.13 Seite 1616 Page
Supporting mechanism for solar PV Supporting mechanism for solar PV in Europe • 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 26.11.13 Seite 1717 Page
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/kWh Equal to 4,193 đ/kWh 26.11.13 Seite 1818 Page
FIT estimate versus Thailand FIT tariff Estimated • FIT rate: 19.5 US cent/kWh, equal to 4,193 đ/kWh • Duration: 20 years FIT in Thailand Rooftop solar PV package Size 0-10kW FIT rate FIT rate (Baht/kWh) (đ/kWh) 6.96 4,628 10-250 kW 6.55 4,356 250 kW-1 MW 6.16 4,096 Quota 100 MW 100 MW 1 MW/1 commune package Year 1-3 FIT Rate FIT Rate (Baht/kWh) (đ/kWh) 9.75 6,484 4-10 6.50 4,323 11-25 4.50 2,993 Source: http://thaisolarpvroadmap.org/wordpress/?p=940 • Thailand solar PV target 3000 MW by 2025 26.11.13 Seite 1919 Page
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 26.11.13 Seite 2020 Page
Volatility of solar PV output 26.11.13 Seite 2121 Page
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 Source: Christy Herig, National Renewable Energy Laboratory, Using Photovoltaics to Preserve California's Electricity Capacity Reserves 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 enduse 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. 26.11.13 Seite 2222 Page
Prospect for solar PV 26.11.13 Seite 2323 Page
Climate Change increase numbers of hot day 26.11.13 Seite 2424 Page
Further investment cost improvement Prospect of global Solar PV market Price and cummulative production volume Source: Global market outlook for Photovoltaics 2013-2017 PV generation cost will approach grid parity once it reaches an investment cost of 1$/Wp 26.11.13 Seite 2525 Page
Summary of policy options 26.11.13 Seite 2626 Page
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 26.11.13 Seite 2727 Page
Thank you Mekong Forum | 19-21 November 2013 Nguyen Quoc Khanh (mail2knguyen@yahoo.com) 26.11.13 Seite 2828 Page

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Solar pv in vietnam power sector benefits, costs and policy

  • 1. 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 26.11.13 Seite 1 1 Page
  • 2. Content 1. Solar PV for commercial buildings: power sector benefits 2. Potential of solar PV development in commercial buildings 3. Economics of building solar PV and the proposed supporting mechanism 4. Volatility of solar PV 5. Prospect for solar PV applications 6. Summary of policy options for solar PV 26.11.13 Seite 2 2 Page
  • 3. Solar PV in commercial buildings: Power sector benefits 26.11.13 Seite 3 3 Page
  • 4. 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 26.11.13 Seite 4 4 Page
  • 5. 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 26.11.13 Seite 5 5 Page
  • 6. National load curve in Viet Nam National: 2 peaks  Morning peak: 10-11am  Evening peak: 18-19 pm The South: 2 peaks  Morning peak: 10 am  Afternoon peak: 15 pm 14000 12000 10000 MW 8000 6000 4000 The South load curve contributes 50-55% to the national load. 2000 2009 Trung Ngày LV 2009 Nam Ngày LV 23:00 22:00 21:00 20:00 19:00 18:00 17:00 16:00 15:00 14:00 13:00 12:00 11:00 10:00 9:00 8:00 7:00 6:00 5:00 4:00 3:00 2:00 1:00 0:00 0 2009 Bắc Ngày LV 26.11.13 Seite 6 6 Page
  • 7. Potential of solar PV development in commercial buildings in Viet Nam 26.11.13 Seite 7 7 Page
  • 8. Potential of solar PV development for hotels in Ho Chi Minh city (demand side) • 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. MW 50.0 45.0 40.0 35.0 Typical load curve of hotels in HCM city 30.0 Installable capacity of solar PV in hotels in HCM city 25.0 20.0 Load curve of hotels in HCM city with solar PV 15.0 Solar PV potential (demand side): 47 MW 10.0 5.0 0.0 1 3 5 7 9 11 13 15 17 19 21 23 26.11.13 Seite 8 8 Page
  • 9. 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. 60.0 50.0 Typical load curve of office building in HCM city 40.0 30.0 Installable capacity of solar PV in office buildings in HCM city 20.0 Solar PV potential (demand side): 66 MW Load curve of office buildings in HCM city with solar PV 10.0 0.0 1 3 5 7 9 11 13 15 17 19 21 23 26.11.13 Seite 9 9 Page
  • 10. 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 Develop ground mounted Develop ground mounted solar PV solar PV Note: Metropolitan building, TP HCM Figure: ground mounted solar PV at Bangchak, Attuthaya, Thailand 26.11.13 Seite 1010 Page
  • 11. 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 • • Mainly concentrate in the southern region Total suitable area identified: 441 km2 , able to accommodate 22,000 MWp Ninh Thuan has the greatest potential of approx 4,600 MWp 26.11.13 Seite 1111 Page
  • 12. Economics of solar PV and the proposed supporting mechanism 26.11.13 Seite 1212 Page
  • 13. Economics of solar PV  Economics of solar PV are largely determined by 2 main variables:  Investment cost  Power output 26.11.13 Seite 1313 Page
  • 14. Specific investment cost Source: http://www.solarserver.com/service/pvx-spotmarket-price-index-solar-pv-modules.html Source: http://www.solarwirtschaft.de/preisindex  Specific investment cost: 2,0 $/Wp  Solar module: 0,7 $/Wp  Inverter: 0,3 $/Wp  Others: 1,0 $/Wp 26.11.13 Seite 1414 Page
  • 15. 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 Reference values Full load hours: 1500 hours/year, or Capacity factor: 17% Cost: 17,65 $ cent/kWh or 3.795 đ/kWh 26.11.13 Seite 1515 Page
  • 16. Value of solar PV: power system avoided cost versus user avoided cost Electrical selling price for commercial customers in 2012 (đ/kWh) Avoided cost tariff in 2012 Dry season Wet season Peak hour Norm al hour Off peak Peak hour Nor mal hour Off peak Leftov er power 619 589 638 596 583 629 554 551 596 596 549 583 557 538 574 538 533 559 269 267 279 Energy cost (đ/kWh) Northern region Central region Southern region Capacity cost (đ/kWh) + Peak 3,715 + Normal 2,177 + Off-peak 1,343 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 Average buying price: 928 đ/kWh << Average selling price: 2,563 đ/kWh << Levelized cost: 3,795 đ/kWh 26.11.13 Seite 1616 Page
  • 17. Supporting mechanism for solar PV Supporting mechanism for solar PV in Europe • 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 26.11.13 Seite 1717 Page
  • 18. 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/kWh Equal to 4,193 đ/kWh 26.11.13 Seite 1818 Page
  • 19. FIT estimate versus Thailand FIT tariff Estimated • FIT rate: 19.5 US cent/kWh, equal to 4,193 đ/kWh • Duration: 20 years FIT in Thailand Rooftop solar PV package Size 0-10kW FIT rate FIT rate (Baht/kWh) (đ/kWh) 6.96 4,628 10-250 kW 6.55 4,356 250 kW-1 MW 6.16 4,096 Quota 100 MW 100 MW 1 MW/1 commune package Year 1-3 FIT Rate FIT Rate (Baht/kWh) (đ/kWh) 9.75 6,484 4-10 6.50 4,323 11-25 4.50 2,993 Source: http://thaisolarpvroadmap.org/wordpress/?p=940 • Thailand solar PV target 3000 MW by 2025 26.11.13 Seite 1919 Page
  • 20. 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 26.11.13 Seite 2020 Page
  • 21. Volatility of solar PV output 26.11.13 Seite 2121 Page
  • 22. 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 Source: Christy Herig, National Renewable Energy Laboratory, Using Photovoltaics to Preserve California's Electricity Capacity Reserves 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 enduse 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. 26.11.13 Seite 2222 Page
  • 23. Prospect for solar PV 26.11.13 Seite 2323 Page
  • 24. Climate Change increase numbers of hot day 26.11.13 Seite 2424 Page
  • 25. Further investment cost improvement Prospect of global Solar PV market Price and cummulative production volume Source: Global market outlook for Photovoltaics 2013-2017 PV generation cost will approach grid parity once it reaches an investment cost of 1$/Wp 26.11.13 Seite 2525 Page
  • 26. Summary of policy options 26.11.13 Seite 2626 Page
  • 27. 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 26.11.13 Seite 2727 Page
  • 28. Thank you Mekong Forum | 19-21 November 2013 Nguyen Quoc Khanh (mail2knguyen@yahoo.com) 26.11.13 Seite 2828 Page