VietNamNet Bridge – Vietnam’s green prospects look set to grow as investment in renewable energy is on the rise. However, the country needs to overcome a slew of hurdles to reach its full potential.  

As Vietnam’s energy demand rises parallel to its development, promoting green energy has become an urgent issue

This was the general concensus among experts and investors from Vietnam and the US during a clean energy conference themed “Smart Solutions for Vietnam”, held on May 14 in Ho Chi Minh City.

The conference, part of the continuing celebration for the 20-year anniversary of the normalisation of Vietnam – US bilateral relations, was co-organised by the US Consulate General in Ho Chi Minh City and VIR and sponsored by General Electric.

 “The focus of this conference is the discussion of challenges for clean energy development in Vietnam, as well as opportunities for investors in this area. These are hot issues in the context that the energy demand is growing rapidly to meet Vietnam’s rapid socio-economic development,” said Dr. Nguyen Anh Tuan, editor-in-chief of VIR.

The conference drew the attendance of over 200 participants from various governmental agencies, financial organisations and investors from both countries. The attendees actively joined the discussion and shared ideas on policy changes, technologies, and project financing schemes in Vietnam to promote fresh investment and trade in the clean energy sector.

At the conference, Deputy Minister of Planning and Investment Nguyen The Phuong said: “Searching for smart solutions to promote green energy sustainability is a key content of Vietnam’s National Green Growth Strategy, which was issued three years ago.”

“Lessons, experiences, suggestions and recommendations at the conference will be useful for the government to construct and improve policies that promote the development of renewable energy,” he added.

Indeed, attendees noted that Vietnam was well-endowed with excellent renewable energy resources. For instance, the 3,400 kilometres of coastline provides abundant wind energy at 500-1,000kWh/m2 per year. Solar energy is also plentiful with an average solar radiation at 5kWh/m2 per day across Vietnam. The potential of small hydropower (which is less than 30 megawatts) is larger than 4,000MW in total.

However, despite these ample resources, Vietnam has yet to fully develop its clean energy potential. The majority of wind and solar projects are small-scale, while biomass and waste-to-energy power sources are overlooked.  According to Nguyen Hoang Dung from Power Engineering Constructing JSC, there are various reasons for this shortage of green energy projects in Vietnam.

“The capital needed for setting up renewable energy sources is huge, yet they haven’t proven to be highly profitable. The wind power price in Vietnam is based on obsolete rates for coal power. Moreover, the price for biomass energy isn’t high enough to attract investors, and official rates for solar energy haven’t been set up,” Dung said.

Secondly, there have been no detailed regulations for renewable energy. There are little support and a few tax incentives for firms using solar power and no policy on connecting small-scale renewable energy to the national power grid. Thirdly, Vietnamese firms still lack skilled staff, investment capital, highly-developed technologies and supporting industries to adopt clean energy.

However, some firms in Vietnam have managed to overcome these challenges. One notable example is Cong Ly Co.,Ltd, a private firm that pioneered wind energy projects in the Mekong Delta province of Bac Lieu. Being the first to implement this programme in the province, Cong Ly faced initial challenges on human resources, experience, capital and technology.

“After a period of struggle, we were lucky to receive assistance from the Vietnamese government, the People’s Committee of Bac Lieu, the US Trade and Development Agency and the US – Vietnam Trade Commercials,” said To Hoai Dan, director of Cong Ly.

Then in 2011, Cong Ly was among companies to benefit from a credit package of $1 billion signed by the Vietnam Development Bank and the US Eximbank for Vietnam’s green power development. In March 2015, the firm was granted another $1 million by the US Trade and Development Agency for a feasibility study of the third phase of its project.

“So far, we’ve effectively operated 10 wind turbines supplied by General Electric (GE), at the capacity of 16MW. These grants have motivated American investors and consultants to collaborate with Cong Ly, and hopefully in the future, clean energy projects like ours will attract more overseas collaboration,” Dan said.

GE, which is an example of a highly-committed foreign investor in assisting the Vietnamese clean energy sector, has provided in total 62 wind turbines for two phases of the Bac Lieu wind farm project and was recently chosen as the provider of 14 turbines in the first phase of the Tay Nguyen wind farm project in the Central Highlands’ province of Daklak.

CEO of GE Vietnam & Cambodia Nguyen My Lan said: “GE is well-positioned to play a supporting role with the increasing demand for sustainable and cost-effective energy solutions in Vietnam. We can bring our global experience, our resources, research and development, and through developing stronger partnerships with local customers, bring more benefits to the country in a sustainable way.”

VIR