Indonesia, Vietnam look to blaze trail for solar in Southeast Asia

Solar Energy

Indonesia and Vietnam are looking to join Thailand in blazing a trail for solar power in Southeast Asia, introducing targets to fire up green energy generation as a landmark global agreement to curb pollution is set to take effect.

Countries around the world are coming under increasing pressure to crack down on carbon emissions from sectors such as coal-fired power stations, with the historic Paris climate accord coming into force this Friday after it was signed last year.

Indonesia and Vietnam aim to each have annual solar power capacity of at least 5 gigawatts (GW) from 2020, up from close to nothing now, officials from both governments told Reuters.

That level of output would have placed the countries among the top 15 solar producers in the world in 2015 data from the International Renewable Energy Agency (IRENA), and would account for close to 9 percent of expected power generation in Indonesia and Vietnam at the turn of the next decade.

The regional push towards solar will add momentum to global growth in the technology and could benefit companies such as Canada’s CMX Renewable Energy Inc, as well as South Korea’s Shinsung Solar Energy and Hanwha Q Cells Korea Corp.

“It will come very quickly as it takes a short time for construction,” Hoang Quoc Vuong, Vietnam’s Vice Minister of Industry and Trade, said on the sidelines of an industry conference last week.

However, with initial costs traditionally seen as a big deterrent to solar projects, both Indonesia and Vietnam will be offering opportunities for subsidies via so-called feed-in tariffs (FIT), allowing producers to lock in sales of renewable energy at fixed prices for a few years.

“If we promote solar, there has to be subsidy,” said the Vietnam official.

“Feed-in tariffs have been issued so that the (5 GW) target can be achieved,” said Maritje Hutapea, director of various kinds of energy at the Renewable Energy Directorate General under Indonesia’s Energy Ministry.

France’s Engie (ENGIE.PA) is in talks with state power company PLN for two solar projects of 200 MW.