The country has seen a boom of foreign investments in the green energy industry over the past months. In October alone, the Ministry of Planning and Investment, cities and provinces announced memoranda of understanding on investment co-operation, investment certificates, and investment agreements for many renewable projects with the total registered investment capital of more than US$6 billion.
Vietnam has a great potential to develop green energy
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Vietnam currently relies largely on hydropower and thermal power plants for its electricity demands, but the situation will alter soon as the projects reflect the country’s future strategy to promote renewable and environmentally friendly energy.
It is also advantageous for the country to promote green energy as it has a great potential to develop solar and wind power.
According to the Vietnam Clean Energy Association (VCEA), Vietnam is one of the nations with the most sunlight in the world’s solar radiation charts. In Central Highlands provinces and South Central coast, the number of sunny hours ranges from 2,000 to 2,600 hours per year. The average solar radiation is 150 kcal per square meter, which is about 2,000 to 5,000 hours per year.
The country also 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.
Future priority industry
Under a government master plan, the total designed capacity of solar power generation must amount to 850MW in 2020 and 4,000MW by 2025. Meanwhile, the total capacity of solar and wind power set for 2030 are 12,000MW and 6,000MW, respectively.
To meet the targets, the government has so far issued incentive policies to boost up the industry’s development, which has helped it attract a large amount of foreign investments.
Under the current regulations, the feed-in tariff (FIT) for solar power is set at 9.35 cents per kWh while the rates for onshore and offshore wind power projects are 8.5 US cents and 9.8 US cents per kWh, respectively.
With such prices, renewable power projects will make significant profits as the power retail price currently averages at only 7.54 US cents.
The government also plans to continue encouraging foreign investors to pour in the renewable energy as it is among priority industries put under the country’s FDI attraction strategy in the next decade.
However, to attract the inflow, Vu Chi Mai, senior project officer of the ‘Support to the Up-Scaling of Wind Power in Vietnam’ project under the GIZ Energy Support Programme, said that the government should issue a more holistic and longer-term development plan for the industry.
According to Mai, the biggest challenge for the industry is the grid connection issue. Investors, while putting a considerable amount of investment into the project, want to get a clear confirmed grid connection agreement.
Besides, clear and transparent policies on wind and renewable energy will maintain investors’ trust and motivation, Mai suggested, adding in the long run, to achieve the government’s goals on renewable energy development, adjustments to the power purchase agreement should be considered to meet the requirements of international financial institutions.
