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Solar industry shining bright

Vietnam Economic Times

Investors local and foreign are deciding to get into the solar power business in Vietnam.

Six years after announcing it was leaving Vietnam and then unsuccessfully tried to sell all the assets and facilities at its Ho Chi Minh City-based solar equipment manufacturing project, First Solar last year suddenly declared it planned to return to the country and the city. It set about recruiting large numbers of human resources in mid-January and then held a ceremony to take delivery of the initial equipment needed for producing its latest, high-tech Series 6 photovoltaic (PV) modules in the city’s Dong Nam Industrial Park, where it first operated.

Old stamping ground

First Solar was initially licensed in early 2011 to invest in a PV module manufacturing project with total investment of $1.2 billion at Dong Nam. Just a few months after getting the project underway, however, it then announced it was suspending operations due to an imbalance between global supply and demand for solar panels. It authorized Cushman & Wakefield to sell all of its facilities in Vietnam, including the 113,000 sq m factory and office space. Some investors expressed interest but no deal came to fruition.

It then announced last year it was coming back to Vietnam, almost as suddenly as it had left. Much was done in the media to expressed its renewed, ongoing, and long-term commitment to the country.

With its existing facility remaining in place, the company announced it would invest an additional $360 million in constructing its second 1.2 GW high-tech factory, bringing its total investment to $830 million. It then held a careers day in southern Binh Duong province as a means of recruiting new staff, bringing the total to nearly 1,000 in Vietnam. The latest event was the delivery of a primary component for a Vapor Transport Deposition (VTD) coater, the machine that applies semiconductor material to glass.

There are many reasons why the US’s leading PV technology manufacturer in Vietnam decided to return. “The reasons we came back to Vietnam include favorable business conditions, skilled workforce, valuable supply chains, stable politics, and competitive cost base, as well as the growing needs of high technology in Southeast Asia, which are all advantageous for First Solar’s long-term development,” said Mr. Mike Koralewski, Senior Vice President of Global Module Manufacturing. The most important reason, however, is apparently its successful research on the transformative Series 6 module, in 2016.

First Solar Vietnam’s Managing Director, Mr. Chan See Chong, emphasized the Dong Nam facility’s role in the company’s future plans. “As First Solar launches its new Series 6 module, we are proud to have the two newest manufacturing facilities here in Vietnam,” he said. “We have strong customer demand for our new Series 6 product and our investment in Vietnam is a critical component of our future success.” The two factories will produce 2.4 GW of Series 6 modules annually when fully operational, which in combination with its manufacturing facilities in the US and Malaysia will give it a total global manufacturing capacity of such modules of approximately 5.4 GW by 2020.

Potential rising

Global demand for solar energy sources has increased since 2016, according to experts, while installation and manufacturing costs continue to decline. Vietnam has major potential for solar energy production given its favorable geographical conditions, with 1,600-2,700 sunlight hours per year and an average direct normal irradiance of 4-5 kWh per sq m per day.

Moreover, in the context of both local and international investors becoming excited about the implementation of solar energy projects in Vietnam following a recent Circular on the new Power Purchase Agreement (PPA) for projects, “all these factors will help boost solar growth in order to meet the country’s energy demand, with the appearance of a lot of both local and foreign investment projects,” Mr. Paul English, Executive at GE Power Conversion Asia, told VET. “Based on Vietnam’s high potential for solar energy production and also in the context of the world joining hands to address climate change, solar developers and suppliers are well-positioned to seize opportunities from the boom in a way that is unlikely to abate anytime soon.”

General Electric (GE), the leading US renewable energy technology and solutions provider, has been keen on Vietnam since 2007. It was the first company to bring a 1,500 V solar inverter solution to the market, which can reduce systems costs by up to 3 per cent and save up to 15 per cent on operating costs, “embodying significant savings that go towards making solar energy farms far more competitive and profitable compared to the existing 1,000 V peers,” Mr. English said.

Building on the sizeable experience gained from shipping more than 4 GW of solar inverters to various destinations around the world, GE enables a simplified and more-efficient solar farm infrastructure layout while reducing investment requirements for construction, according to Mr. English. “In many respects, we see this as a ripe time to consolidate GE’s position in Vietnam,” he added. “With current trends, the solar sector promises bright prospects, and investors will benefit as GE actively participates in the installation and application of hardware and software solutions in the solar power sector.”

Some local companies are also interested in the sector. The Bach Khoa Solar Energy Group (SolarBK) is a pioneer in providing comprehensive solutions in the renewable energy, in which its subsidiary, IREX Energy JSC, produces and distributes solar panels, while another member, Solar ESCO, evaluates the feasibility of investing in solar power systems and provides financial services to enterprises.

Mr. Mai Van Trung, Business Development Director at SolarBK, told VET that the company’s IREX plant will operate at full capacity until the second quarter of 2018, with output for SolarBK projects in Vietnam and for export. “This year, when the IREX high-tech renewable energy equipment manufacturing complex in southern Ba Ria Vung Tau province comes into operation, we will expand our solar panel supply to domestic and foreign partners,” he said.

Vietnam’s first green logistics center using solar power, the ICD Tan Cang - Song Than logistics center in southern Binh Duong province, last year completed Phase I under the ESCO model and recently began Phase II of 1,155 MWp. SolarBK provided 1,616 IREX solar panels to the center in Phase I with a total system capacity of 500.96 kWp. ICD Tan Cang - Song Than therefore saved 4.5 per cent on its electricity costs each month during the contract term and 30 per cent after termination, corresponding to a saving of nearly $620,000 in Phase I. The system generates over 784,000 kWh each year and meets 30 per cent of the center’s electricity needs. It is also an important test for SolarBK in ensuring output at its solar panel manufacturing project.

Hot competition

Vietnam’s solar energy equipment manufacturing industry has also seen substantial competition from Chinese investors, who account for the majority of companies and record the highest sales due to cheaper prices. While some projects from local and US investors are concentrated in southern cities and provinces, Chinese and Taiwanese firms have focused on the north. In Bac Giang are eight projects belonging to Chinese and Taiwanese investors and which will form the largest solar energy equipment manufacturing chain in the country, with a total capacity of 5,200 MW per year.

Most notable is China’s JA Solar Group’s project with investment of more than $1 billion, of which the first phase will involve some $300 million. Most products will be exported to the US. With low costs and a favorable geographic location, JA Solar said the Vietnam plant will open up a dual market in order to both complete supply chains and expand its global market share.

Also in Bac Giang is a solar panel manufacturing project belonging to Trina Solar Vietnam, a subsidiary of China’s Trinasolar Group, which has operated since early last year. The factory has total investment capital of $100 million and a designed capacity of 1GW per year, producing monocrystalline and polycrystalline solar panels for export.

The big difference between Chinese and US investors relates to technology and the risk of environmental pollution. According to experts, making one panel requires a lot of energy from the very beginning of the process and a very large amount of carbon is created. A number of studies have shown that one panel made in China generates nearly twice as much emissions as one made in Europe, as China relies heavily on fossil fuels in its energy mix.

Meanwhile, US investors lead the way in terms of technology. For First Solar Vietnam, “the Series 6 product is exciting for us as it helps reduce our cost profile by 40 per cent over the technology of Series 4, providing us with a tremendous opportunity to price aggressively against our competitors, which are predominantly Chinese crystalline silicone,” said Mr. Koralewski. “We are confident that with the Series 6’s advantages, we can compete aggressively in markets around the world.”

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