As Vietnam looks to expand its renewables capacity, the country is emerging as one of the largest markets for wind power development worldwide, with approximately 7GW of net capacity increase by 2029, from an installed 750 MW in 2020, according to Fitch Solutions, a subsidiary of Fitch Group.
| Vietnam is wind power market-to-watch. |
The Vietnamese government recently has increased its attention on the wind sector, and proposed several policies to boost its development, with a strong focus for offshore wind, noted Fitch Solutions.
Due to the significant offshore potential in Vietnam, Fitch Solutions expected ongoing investment support to be found in the wind sub sector.
A study released by the Danish Energy Agency and the World Bank in September 2020 has noted that Vietnam has an estimated offshore wind potential of 160GW, due to favorable conditions of a long coastline and high wind speeds.
Prime Minister Nguyen Xuan Phuc in March 2020 issued a resolution for a five-year plan to 2025 to develop renewable energy sources ‘off the coast’, with specific mechanisms and policies to attract both foreign and local developers to invest in the sector.
| Vietnam - Wind Power Capacity & % y-o-y Growth. |
In particular, Binh Thuan, Bac Lieu and Ca Mau were highlighted as prioritized provinces for offshore wind development. The government is also in process of amending seabed lease and licensing requirements for large-scale offshore wind farms, alongside the Ministry of Natural Resource and Environment of Vietnam (MONRE).
In a latest move, the PM has urged the Ministry of Industry and Trade (MOIT) to speed up its approval of wind power projects in June to be included in the upcoming Power Development Plant 8 (PDP8).
“As a result of these favorable policies, Vietnam has seen a surge in investor activity over recent months bolstering the project pipeline,” stated Fitch Solutions in a report.
Across the first half of 2020, the government approved an additional 91 wind projects, onshore and offshore, to be developed, with a total capacity of over 7GW.
Most of these projects are located in the central and southern regions of the country. In fact, since October 2020, the MOIT has instructed all provinces and cities nationwide to stop approving wind project proposals temporarily due to an increasing threat of excess capacity.
According to MOIT, the ministry received proposal requests for nearly 50GW of wind projects.
Fitch Solutions noted over 2GW of wind developments currently under construction, and approximately another 14GW in the pipeline, while expecting that many wind developers will also seek to accelerate project delivery over the coming months to meet the commercial operation deadline of November 1, 2021, and benefit from the existing feed in tariffs (FiT) rates (USD0.085/kWh for onshore projects and USD0.098/kWh for offshore projects).
