“Floating solar photovoltaics (“FPV“) gains global momentum“ as the headline of several articles by news agencies and consultancies says (1). It backs with the fact that from 10 MW in 2014, total FPV capacity surged to 1.1 GW in 2018 and estimated to be 1.5 GW in 2019 (2, 3). Ten of the largest FPV installations in China already constitute more than 80 % share of the global installed capacity in 2018 (4). China does not only remain the largest market for FPV but also leading the FPV technology (5) to date. The rationale behind the trend from the perspective of FPV characteristics and the current FPV market development in two Southeast Asian (“SEA“) countries will be discussed in the following article.
Installing PV on a water surface unlocks synergies. For the application of an FPV installation on a hydroelectric dam, the intermittent solar electricity is coupled with the dispatchable hydropower or pump storage to smooth the output variability thus creating an enhanced renewable baseload. A very good example is a small-scale project in Portugal (6). A joint study by World Bank Group, ESMAP, and SERIS in 2019 (7) shows that large hydropower plants (“HPP“) could double their installed capacity without the need of further massive land acquisition, by using 3–4% of the reservoir area for FPV. Furthermore, the FPV potentially reduces the water loss of the reservoir by reducing the evaporation at certain area coverage, which is beneficial for the reservoirs that experience severe drought. Together, the use case is suitable for the FPV project intended to exploit the power system, project economics, and intersectoral synergies.
Another advantage in terms of project economics is that FPV is reportedly yielding 5–10 % more energy than the ground-mounted PV (“PV park“) installed at the same coordinate due to the better cooling effect from water evaporation (8) depending on the ambient and water surface temperature as well as the wind condition. However, even in the optimistic case, the levelized cost of electricity (“LCOE“) of FPV is up to 0.50 USD ct/kWh higher than PV park because of the estimated higher CAPEX of around 20 % (9). The CAPEX is expected to decrease following the lower prices for floaters and anchoring devices as demand and manufacturing scale increases. For benchmarking purposes, the 13 MWp FPV project in Dengkil, Malaysia, which had date of operation (“COD“) in Q4/2020, has an LCOE of 5.10 USD ct/kWh (10).
Specifically, in the zones surrounding the equator where solar irradiation is abundant for the whole year and most of its land is constituted by the rainforest, or “the lungs of the earth“, FPV becomes the alternative for the tropical countries to boost their renewable generation capacity without clearing the forest area. Nevertheless, the environmental synergy must be scrutinized when it comes to the FPV installation on natural water bodies or any water body with existing aquatic and terrestrial ecosystems. One of the plausible counterarguments is the fact that FPV blocks the sunlight used as the source of energy for phototropic organisms, which provides valuable nutrients to the organisms in the subsequent food chain (11). On top of that, the complex regulatory requirement and public resistance in repurposing conservation areas intensify the challenges to tap this synergy.
The following section will discuss the current FPV development in Indonesia and Vietnam. Other than leading in the ASEAN bloc in terms of FPV generating capacity (12), both countries have an ambitious renewable energy target and a similar electricity market structure to date, in which the transmission, distribution, and consumers sectors are single-handedly run by the government through the state-owned enterprise (“SOE“). This acts as the single offtaker for the power purchase agreement (“PPA“) with the independent power producers (“IPP“) in the generation sector. The terms and amount of the feed-in-tariff (“FiT“) are either set in government regulation or agreed upon through negotiation with the SOE. Soon, the electricity market structure on the generation level of both countries will look different as Vietnam is currently undergoing a reform towards a competitive wholesale electricity market (13, 14).
To achieve its pre-Covid-19 renewable target of 23 % from the 2025 energy mix, Indonesia needs to install an additional 10.4 GW of renewable generating capacity and 4 GW of the mix is expected to be fulfilled from wind and solar (15). As of June 2020, the archipelagic country only managed to realize 300 MW (16) from both intermittent sources. Zooming in to the FPV segment, according to the 2019-2028 planning (17) by PT Perusahaan Listrik Negara (Persero) (“PLN”), an Indonesian SOE responsible for the electricity sector, there will be around 0.8 – 1 GW additional FPV capacity and 90 % of which will be located in the Java-Bali system, home to 50 % of 269 million of Indonesia’s population. The Institute of Energy Economics and Financial Analysis (“IEEFA”) estimates (18) that Indonesia has a 3.90 GW potential capacity for FPV on hydroelectric dams, considering the applicable regulation (19) stipulating that only 5 % of the water surface area of an artificial reservoir is allowed to be utilized for FPV installation.
Pioneered by Masdar, a renewable energy and urban development company owned by Abu Dhabi’s Mubadala Investment, the first FPV in Indonesia is currently under construction on an existing Cirata HPP and scheduled to reach COD in August or November 2022, revised from Q1/2021. The financial close is scheduled in May 2021 and the project had signed a PPA with PLN, for 20 years FiT of 5.82 USD ct/kWh. Once completed, FPV Cirata will be the biggest single FPV installation in the SEA with an installed capacity of 145 MWac with a total investment of USD 129 million (20, 21). Last year, PLN is reported to have received a FiT bid price of 3.75 USD ct/kWh for 60 MWac FPV Saguling and 3.68 USD ct/kWh for 90 MWac FPV Singkarak (22). Saguling is an artificial hydroelectric dam in Java and Singkarak is a natural lake in Sumatra with an existing HPP.
Rapid growth in the installed renewable generation capacity signals Vietnam’s strong commitment in the implementation of its renewable energy target. From 109 MW or 0.3 % from the total generating capacity in 2015 (23), the non-hydro renewable generating capacity has sky-rocketed to 3.5 GW or 7.2 % in 2018 (24) and 5.7 GW or 10 % in 2019 (25). The 2019 figure is almost meeting the 2025 renewable target laid out in Vietnam’s revised Power Development Plan (“PDP“) 7. Out of 75 GW additional generating capacity by 2030, 46 GW is envisaged to come from renewable sources. It is broken down into 12 GW solar, 6 GW wind, and 28 GW hydropower (26). The PDP 8, containing the new 2020 – 2030 power master plan with the 2045 vision, is anticipated to be released this year.
The Indochinese peninsular country is continuously improving its market mechanism as it strives for competitive Vietnam Wholesale Electricity Market. On 16 December 2019, the government issued Directive No. 9608/BCT-DL to suspend the incoming proposal and approval for the grid-connected solar plant after it received approximately 135 solar projects totaling 8.9 GW. Around half of them are feeding electricity into the grid and the rest must have reached COD by the end of 2020 to remain eligible for the generous 20-year FiT of 9.35 USD ct/kWh (“FiT-1“). The subsequent regulation (27) trims the solar FiT amount and classifies it based on the application segment, namely 7.69 USD ct/kWh for FPV, 7.09 USD ct/kWh for PV Park, and 8.38 USD ct/kWh for rooftop PV (“FiT-2“). Unlike Indonesia, which imposes the local content requirement as one of the PPA terms, Vietnam focuses on the minimum performance of the solar PV installation.
Vietnam has successfully brought its 47.5 MWp FPV Da Mi, the first commercial FPV in the country and SEA, into operation in June 2019. The USD 51.5 million project built on an existing hydroelectric dam is supported by the USD 37 million loan package from Asian Development Bank (“ADB“) and was entitled to the FiT-1 (28). The second is the twin FPVs 35 MWp Ho Tam Bo and 35 MWp Ho Gia Hoet, which was developed by Vietnamese developer TOJI Group in two separate reservoirs next to each other and had COD on 12 December 2020 (29) and obtained the right for the FiT-2. For the outlook, around 100 + 300 MWp FPVs on the same location as FPV Da Mi are set to be auctioned in an ADB-backed pilot tender in 2020 and 2021. In Q3/2019, the ministry was reviewing the 5.4 GW FPV project proposed by the authorities of the Dong Nai province. The project will be split into 8 packages and situated on the existing hydroelectric dam to store the water for 400 MW Tri An HPP (30).
Given the enormous untapped potential, the number of FPV installations will continue to surge in SEA as the region struggles to meet the energy demand with affordable and clean sources, which in line with the UN SDG number 7. Aside from the technological innovation and manufacturing scale, the affordability component can also be achieved through the efficient and correct energy policy that governs the market mechanism. From the single offtaker perspective, the auction mechanism is undisputedly the most cost-effective way to procure electricity produced by IPPs.
A diverging outcome can be observed from two countries with similar electricity market structures yet implementing different PPA/FiT strategies (31). FPV was entering Indonesia when the market worked under the auction scheme. The result is that the country will spend lower on the delivered energy and the ongoing auction shows that the lowest bid is less than half of Vietnam’s FiT-2. However, the development in the installed capacity is slow since the barrier is already set by big players with economies of scale. On the other hand, Vietnam opened the FPV market with FiT-1 and continued to lower the incentive with FiT-2 before it pilots its first auction. The unprecedented growth within the last 5 years shows that the multi-phase market creation strategy works, although the country must now fix the problem of the overwhelmed grid and is betting that the economic growth exceeds the energy expenditure.
Author: Adhi Baskoro
- (1) Apricum (09.2020): Floating solar PV gains global momentum.
- (2) IHS Markit (05.2020): Asia region to drive floating solar installation growth in next five years
- (3) WBG (06.2019): Where Sun Meets Water.
- (4) Solarplaza (07.2020): Floating solar in Asia.
- (5) Sungrow (CN) and Ciel-et-Terre (FR) are two globally renowned floating device OEMs.
- (6) NREL – Lee, N. et al. (12.2020): Hybrid floating solar photovoltaics-hydropower systems: Benefits and global assessment of technical potential.
- (7) See 2
- (8) See 2
- (9) See 2
- (10) PV Magazine (21.10.2020): Floating solar plant with LCOE of $0.051/kWh comes online in Malaysia.
- (11) Researchgate discussion (02.2019): https://www.researchgate.net/post/What-are-the-negative-impacts-of-putting-larg-scale-floating-solar-panels-over-any-water-body-like-river-or-canal
- (12) Existing and under construction
- (13) Hogan Lovells (03.2020): Renewable energy projects in Vietnam – 2019 in review and the horizon for 2020.
- (14) EVN presentation (09.2019): Vietnam Wholesale Electricity Market (VWEM) Overview.
- (15) Own calculation from Indonesia’s 20 years national energy planning, version 2019.
- (16) IESR (12.2019): Indonesia Clean Energy Outlook.
- (17) Minister of Energy and Mineral Resource Decree no. 39/2019. The 10-year planning is updated annually, and the 2020/2021 version is not yet released.
- (18) IEEFA (07.2020): Volts from the Blue—Is Combined Floating Solar and Hydro the Energy Solution for ASEAN?
- (19) Minister of Public Works and Public Housing Regulation no. 6/2020.
- (20) IESR (01.2021): Indonesia Energy Transition Outlook 2021.
- (21) Kumparan (25.11.2020): PLN: Pembangunan PLTS Cirata Siap Dimulai 17 Desember 2020.
- (22) IESR (01.2021): Indonesia Energy Transition Outlook 2021.
- (23) EVN Annual Report 2015
- (24) EVN Annual Report 2018
- (25) EVN press release (09.2020): Removing obstacles for IPP investors to develop power sources in Vietnam.
- (26) Decision No. 428/QD-TTg and its summary by GIZ (2016): Highlights of the PDP 7 Revised.
- (27) Decision No. 13/2020/QD-TTg of 2020
- (28) The original cost is VND 1.2 trillion. Source: VIR news (25.09.2019): Hydro-floating solar farms: new opportunity for VN’s renewable energy and Decision No.11/2017/QĐ-TTg.
- (29) PVTech (05.01.2021): Vietnamese floating solar duo totaling 70MWp complete.
- (30) Viet Nam News (09.2019): Ministry to review floating solar-power projects on the lake in Đồng Nai.
- (31) It is noted that the PPA/FiT strategy is not the exhaustive factor that determines the outcome.