VietNamNet Bridge – Wind power is a potential source of renewable energy in Vietnam, but few projects have succeeded in tapping into it. Chris Beaufait, President of Vestas Asia Pacific & China, recalls that he was amazed at the immense potential for wind power development in Vietnam when he visited this country a few years back. Aware of the energy shortfall engendered by industrialization and the average energy consumption growth of over 15% per annum in Vietnam, Vestas has decided to seize the opportunity.

Wind power leader sees potential in Viet Nam

(From L): Chris Beaufait, President of Vestas Asia Pacific & China; Ambassador of Denmark John Nielsen; and Le Tuan Phong, Deputy Director General, General Directorate of Energy, Ministry of Industry and Trade, at a wind energy seminar in Hanoi

In 2011, Vestas set up one of the first commercial wind power plants in Vietnam on Phu Quy Island, Binh Thuan Province. The plant started operation in 2012, boasting three turbines with a total output of 6MW. However, Vestas’ success is an exception, rather than the norm. Tran Viet Ngai, chairman of the Vietnam Energy Association, says that while Vietnam’s wind power potential is huge, substantial investment costs and low electricity prices mean that many are reluctant to channel funds into this field. “Vietnam has yet to affirm its commitment to developing wind power,” Ngai says. “The only incentive is that the Government allows wind power to be purchased at 8 cents per kWh, higher than the average electricity price, but this still falls short of the investment cost.”

Denmark is the country that has offered the most generous support to Vietnam in terms of eco-friendly development, with over US$70 million worth of non-refundable aid. John Nielsen, Danish ambassador to Vietnam, says that his country experienced an energy crisis in the 1970s sparked by escalating oil prices and had no choice but to strive for sustainable development and reduce its reliance on fossil fuels.

Vietnam’s shift to eco-friendly economic development commenced just a few years ago. The country fleshed out a national program on combating climate change in 2009 and decided to embrace eco-friendly economic growth in 2012.

More cooperation required

Vestas was set up in 1979 in Denmark and has emerged as a leading market player with a combined wind power turbine capacity of 64GW installed, accounting for about 19% of the global output. This is 55% higher than the output of its closest competitor.

Despite its success in Vietnam, Chris Beaufait says that Vestas encountered various challenges when it first embarked on its wind power project on Phu Quy Island such that limited experience in integrating wind power into the national supply and largely undeveloped capabilities in the construction, operation and maintenance of wind power plants. Financial support for investors is also far from abundant.

With experience in 73 countries worldwide, Vestas always provides technical support to its partners through such measures as ensuring that the wind power plants can operate at full throttle and installing equipment at the lowest possible costs.

Enterprises pouring money into wind power development yearn for support to reduce risks. Vestas has therefore joined forces with renowned financial institutions in Denmark and some international organizations to provide suitable financial solutions packages for investors, says Chris Beaufait.

Denmark’s EKF, a partner of Vestas, is an example. Lena Lykke Zweidorff Jokobsen, a representative of EKF, says that this fund has implemented two policies to support wind power developers. First, it will provide support to help enterprises tap into up to 95% of commercial loans. Second, it will allow investors to borrow 50-80% of the investment needed for a project.

She says that the fund will analyze the clients and the countries they are from. Market analysis and information on the reputation of the partners will help to determine the volume of loans offered.

However, Lena Lykke Zweidorff Jokobsen says that Vietnam’s buying prices for power, especially that generated by wind, are among the world’s lowest. Only when these prices increase can the country hope to encourage investors to enter this field.

Le Tuan Phong, Deputy Director General, General Directorate of Energy, Ministry of Industry and Trade, says that the Prime Minister issued Decision 37 on June 21, 2011, on the mechanism for wind power development in Vietnam, which spells out its price and guarantees that the output will all be channeled into the national supply.

SGT/VNN