Vietnam’s policy on wind power
The wind power industry has been heavily affected by the Covid-19 pandemic, and many countries have been taking measures to help the industry overcome difficulties.
However, wind power projects in Vietnam have nearly reached a dead end.
The supply chain of the UK wind power industry has faced huge challenges from lockdown measures due to the Covid-19 pandemic. A "titan" of the wind power industry, Siemens Gamesa, had to temporarily stop turbine manufacturing. To solve problems of businesses in this industry, on March 30, 2020, the British Government issued a directive on the revised FIT (feed-in tariff), thereby allowing small-scale renewable energy projects with a capacity of less than 5MW to have an additional six months to apply for the FIT pricing mechanism.
In September 2020, the directive on the revised FIT pricing was issued. Accordingly, the British Government extended the time to apply the FIT pricing mechanism from six months to 12 months for all projects under construction with an initial COD (Commercial Operation Date) term from March 1 to September 30, 2020. Large-scale wind power projects that are under installation will enjoy an extension of 24 months to complete this process, if the deadline for these projects falls on March 31, 2021 or earlier.
In Germany, in mid-May 2020, the Government issued legal measures to support the renewable energy industry. On May 15, 2020, the German Parliament passed the Planning Protection Act, under which renewable energy projects with COD deadlines by June 30, 2020 are entitled to a grace period of six months.
In the US, the Government has promptly adjusted tax incentives to remove obstacles from the wind power industry. In early May 2020, the US Department of Finance issued guidelines to extend the tax credit period for onshore wind and solar power projects. Onshore wind power projects that kicked off in 2016 and 2017 will have 5 years instead of 4 years as before to complete the project and enjoy incentives from the production tax credit (PTC).
Meanwhile, in India, the Ministry of New and Renewable Energy (MNRE) issued a directive to apply COD extension for all renewable projects. In mid-August 2020, MNRE issued another directive, stipulating that all projects that are under construction at the time of lockdown, ie March 25, 2020, would be entitled to an additional 5 months to complete and put into commercial operation.
According to experts from the Global Wind Energy Council, timely adjustments by the governments of some countries on the deadline for submitting applications for the FIT price not only reduces pressure on the progress of wind power projects but also brings certainty to the planning and decision-making process of enterprises.
Vietnamese wind power investors have not received any support from the Government. According to the Electricity of Vietnam Group (EVN), from October 1-15, 2021, only five more wind power plants with a total capacity of 170MW were recognized for commercial operation (COD).
Thus, out of 106 wind power plants with a total capacity of more than 5,655 MW registered for COD testing, by October 15, only 11 wind power plants with a total capacity of 443 MW were recognized for COD.
This is a very low number compared to the number of registered projects, while there are only several days left until the expiration of the preferential price for wind power projects (before November 1, 2021) according to Decision 39 of the Prime Minister.
The pandemic has hit the implementation of wind power projects across Vietnam. Some projects cannot import sufficient equipment while others lack foreign experts who have not been able to enter the country.
Wind power investors asked the Government and the Ministry of Industry and Trade for a delay in applying FIT prices from three months to one year.
Dr. Mai Duy Thien, Chairman of the Vietnam Clean Energy Association, said that it is necessary to delay the application of the wind power FIT price for a while.
“If the deadline is not delayed, many projects will face difficulties in terms of capital as well as the selling price of electricity after the expiration of the FIT price mechanism,” Dr. Thien said.
Wind power investors are still waiting for the Government’s decision on this issue to help them overcome the impact of the pandemic.
Forty-two wind power plants put into commercial operation
Under the Prime Minister’s Decision dated September 10, 2018 amending and supplementing several regulations on incentives for wind power projects in Vietnam, fixed preferential price of offshore wind power is 2,223 VND (9.8 US cents) while that of inland wind power is around 1.927 VND (8.5 US cents), excluding VAT.
The above prices are applied to wind power projects with a part or the whole plant having commercial operation date before November 1, 2021 and applied for 20 years from the date of commercial operation.
According to the Ministry of Industry and Trade’s Circular dated January 15, 2019 on the development of wind power projects and sample contracts for wind power purchase, sellers must send the draft document on trial operation process to buyers, thus setting the date of commercial operation and calculating power output during trial run.
With the regulation, tens of wind power projects are at the risk of failing to start operations as schedule./. VNA
Coal-fired power developers find it increasingly difficult to find capital amid the growing support of renewable energy globally.
The number of wind power projects recognized for Commercial Operation Date (COD) is still small, which is a warning sign for wind power investors in Vietnam.