return icon Vietnamnet.vn

High tariffs deliver a blow to wind energy

 VietNamNet Bridge – Foreign investors have shown a large appetite for wind power projects in Vietnam. However, in order to spur investment in the sector, there must be a more attractive tariff regime.

VietNamNet Bridge – Foreign investors have shown a large appetite for wind power projects in Vietnam. However, in order to spur investment in the sector, there must be a more attractive tariff regime. Peter Cattelaens, project manager for GIZ/MoIT Up-Scaling of Wind Power in Vietnam, told VIR’s Thanh Van about his insight into the market and updates on the new feed-in-tariff (FiT).

Can you update us on the progress in redesigning the FiT support scheme?

{keywords}

 

The German Agency for International Co-operation (GIZ) now supports the Ministry of Industry and Trade (MoIT) to further improve the framework conditions. Last year, a proposed increase in the wind power price from 7.8 to 10.4 UScents per kilowatt hour failed to be approved by the government. The MoIT has requested the GIZ to study whether the current FiT is attractive to investors and which FiT would be more reasonable.

In the scope of the energy support programme, GIZ is currently assessing two large existing wind farms in the Mekong Delta province of Bac Lieu and the south-central province of Binh Thuan, as well as the coming plant in Phu Lac, to establish the real costs of electricity production. This is an extensive assessment of all investment contracts and data, operational and maintenance contracts, as well as the tax situation of the respective company.

Once finalised, the MoIT will have a tool in hand with which it can make a new proposal to the office of the government. Early indications show that the costs are notably higher than the current FiT, an indication that this tariff is not sufficient for investors.

What can the Vietnamese government do to kick-start the wind energy market?

If the government wants to produce cleaner electricity and alleviate the environmental strains that Vietnam is already facing, it should raise the current FiT and help to develop the market at the early stages. Rather than wondering which tariff is more attractive, it is important for the government to make a decision on an increased tariff and then issue a maximum cap of 1,000 megawattts. As we approach the target in a few years time, the government could reassess the tariff at that stage and lower it by 1 or 2 UScents per kWh. By that time, with the improved infrastructure in the wind power sector, we can adjust the learning curve appropriately.

Establishing any new market, whether wind power or any other industry, initially incurs high costs, which fall over time. In the medium-term, wind power can be the cheapest and cleanest source of electricity production in Vietnam. However, this is only possible after the first few hundred megawatts have been produced, which first requires the revision of the tariff.

In your opinion, when investing in Vietnam, what obstacles do wind energy developers have to overcome?

There are plenty of very capable and willing foreign investors from Korea, Europe, the US and elsewhere, that would like to contribute to Vietnam’s wind energy market. At the same time, a number of local equity investors and commercial banks have expressed interest in financing wind power.  However, the investors face many challenges due to a number of regulatory and market barriers.

Besides low FiT, one problem is the absence of a state guarantee. Vietnam’s Ministry of Finance currently cannot guarantee that if Electricity of Vietnam (EVN) does not purchase electricity, payment to the project will still be made. This problem will increase the price and the risk for wind farm operators.

Another issue is that at all stages of the project, investors need to obtain licences. This includes the developers, on the basic design and construction of the project. The development of wind power projects in Vietnam and the related approval process is complex and lacks clarity.

In addition, financial institutions in Vietnam have limited experience in wind power financing, so the options available on the Vietnamese market to finance these projects are limited.

GIZ will soon release investment guidelines to help investors, as well as provincial and national authorities, gain clarity on the process of ‘how to license, authorise, develop, and invest in a wind farm in Vietnam.

        
related news

Vietnam needs clearer windpower laws: experts

German helps study wind energy in Vietnam

New regulation set to unbutton wind energy

VIR

MORE NEWS

Michelin Guide to announce first Vietnamese restaurant selections

Hanoi and Ho Chi Minh City have been selected by Michelin as the latest destinations joining the international selection, as compiled by the Michelin Guide.

Ministry to crack down on Internet ads violations

The Ministry of Information and Communications held a conference in Hanoi on November 30 to roll out Internet advertising management measures.

Seven-day Tet holiday fixed for State employees

Officials, civil servants, public employees and workers of State administrative and socio-political organisations will enjoy a seven-day Lunar New Year (Tet) and four-day National Day holidays next year.

Vietnam has opportunity for energy transition towards green growth

Vietnam boasts substantial potential for wind power, particularly offshore wind power, providing an opportunity for the country to fulfill its energy transition target towards green growth.

PM requests combined efforts to combat IUU fishing

Prime Minister Pham Minh Chinh called for concerted efforts to fight illegal, unreported and unregulated (IUU) fishing while chairing a teleconference with 28 coastal provinces and cities on December 1.

Disciplinary measures against a number of leading officials, Party organisations

The Party Central Committee’s Inspection Commission held its 23rd session in Hanoi on November 29-30, during which it proposed disciplinary actions be taken against some leading officials and party organisations.

Big bosses lose billions of dollars

Several businessmen have built a fortune over the last decade, but their ambition of obtaining growth at lightening speed has caused their assets to drop dramatically.

Vietnam Airlines operates special flight on first anniversary of VN-US direct flight

On the occasion of the first anniversary of the non-stop flight between Vietnam and the US, Vietnam Airlines  provided a special flight with surprises for passengers on the evening of November 26.

Industry in need of strategic links

With not everyone in Vietnam’s industrial landscape yet recovering from 2021’s troubles, many groups have no choice but to move from low-cost production to manufacturing higher-value products.

Cherry blossoms attract tourists to Sapa

Cherry blossoms have been in full bloom in the tourist town of Sapa, attracting lots of visitors.

President to pay State visit to RoK next week

President Nguyen Xuan Phuc and his spouse will pay a state visit to the Republic of Korea from December 4-6.

Fansipan among five top destinations for mountain trekking at year-end

Renowned tourism website Women's Weekly of Singapore has named Fansipan among the leading five destinations to visit for mountain trekking at the end of the year, with the website noting the Vietnamese mountain’s impressive views.

Dortmund chiefs predict bright future for VN football

Although this was only a friendly game with many of the German stars absent from the starting eleven due to the Qatar World Cup, the victory gave the Bundesliga team food for thought about Vietnamese players.

International designers dazzle fashion fans in Hanoi

International designers left a deep impression on fans of fashion in Hanoi with hundreds of fascinating designs presented at the Aquafina VN International Fashion Week (AVIFW) Fall/Winter 2022.

Monthly Government meeting focuses on year-end key tasks

The Government has established working groups on liquidity and currency, the real estate market and corporate bonds led by deputy prime ministers to stabilise these markets.
back_to_top