The Hanoitimes - The Ministry of Industry and Trade is studying to issue new policies on the wind power development to make it more attractive as the current low feed-in-tariff (FIT) regulation is hindering investors from pouring capital into this industry.
The government has targeted to develop wind power so that the country can have an output of 800 MW of wind power by 2020, 2,000 MW by 2025 and 6,000 MW by 2030.
However, experts said that it will be very hard for the government to meet the target as the current FIT of 7.8 US cents per kWh applied for wind energy is too low to attract private investment in the industry.
Thuan Binh Wind Power JSC, which started the operation of the first phase of its Phu Lac wind farm in 2016 with a capacity of 30MW, said that with the current FIT, it will take the company 14 years to recover their investment of VND1.1 trillion (US$48.3 million).
At only 7.8 US cents per kWh, the regulated selling price of wind power in Vietnam is among the lowest in the world. The price is at 20 cents per kWh in Thailand, 29 cents per kWh in the Philippines and 30 cents per kWh in Japan.
With some 3,000 km of coastline, Vietnam has great potential to develop wind power
Nguyen Van Thanh, deputy head of the Electricity and Renewable Energy Department under the Ministry of Industry and Trade, admitted that the low feed-in-tariff (FIT) policy is a major cause hindering investors from pouring in the wind power industry.
While the wind power industry has grown strongly in other countries, it remains sluggish in Vietnam, which currently has only seven projects put into operation with a total output of some 190 MW, Thanh said.
According to Nguyen The Mich, a wind power expert from German GIZ’s project, Vietnam has some 60-70 wind power projects, but most of them are in the planning phase or in the first phase of construction as investors are still waiting for more suitable policies from the government.
High growth potentials
Vietnam has great potential to develop wind power as the country possesses around 3,000 km of coastline with excellent wind conditions. The highest potential areas are on the south central coast, central highlands and the Mekong Delta region with about 24GW.
The investment in wind power will boom if the government can build a suitable and effective support mechanism to trigger private investment in the industry, Mich said.
Besides, the government also needs to improve the transparency in some market and auction regulations, said Steve Sawyer, general secretary of the Global Wind Energy Council (GWEC). If it is resolved, Vietnam’s wind power industry will develop strongly, partly helping Vietnam become an attractive destination to foreign investors, he added.
Experts also said that a supportive and lean legal-administrative framework can reduce administrative risks and related costs for investors and financing institutions as the development of wind power projects in Vietnam and related approval process has remained complicated and vague.
Though there exist general guidelines about project development, they have been applied differently in different provinces, which makes the application process time-consuming, unclear and not as transparent as it should be, the experts said.
The country need a good strategy on energy development, particularly the utilization of traditional energy sources like hydro-power and thermo-power, in addition to the development of new sources like solar energy, wind energy and others. It is high time for Vietnam to focus more on the use of renewable energy, particularly wind energy, with advanced technology and its own human resources.