Introduction
The geothermal energy in Vietnam has great potential, up to date, the researched have showed that Vietnam has more than 200 sources of hot water at temperatures of 40-100 degrees centigrade that provides this Southeast Asian country necessary basis for developing prospective geothermal energy projects. However the geothermal energy industry of Vietnam is still under-developed, and mostly remains at the researching stage.
Huge potential but largely untapped
Compared with other south-east Asian countries like Indonesia or the Philippines, Vietnam has limited potential for geothermal energy and Vietnam has so far not been on the map for geothermal development. However, geothermal energy has potential throughout Vietnam and the this energy sources particularly focus in Phu Tho, Quang Binh and Quang Tri, etc… Vietnam is estimated to have a geothermal potential of up to 400 MW power generation.
While the geothermal energy resources are being effectively used in many countries, Vietnam still lacks the science and technology resources to perform an entire assessment on the potential of this energy.
Until now, only leading US geothermal group, Ormat Technologies who is widely known having been actively spending large efforts in research and coordination with the state bodies in Vietnam to plan for the geothermal energy plant projects. Ormat has applied for a license to build five geothermal energy plants in Le Thuy (Quang Binh), Mo Duc, Nghia Thang (Quang Ngai), Hoi Van (Binh Dinh), and Tu Bong (Khanh Hoa) with the proposed capacity of these plants of 150-200MW and in April 2012, it is reported that Vietnam Geothermal energy Corp. has chosen Ormat as the main technical partner for two projects in Mo Duck and Tu Nghia district, Quang Ngai province with a designed capacity of each 18.7 MW.
In 2013, Quang Tri Province granted investment certificate and construction permit for a geothermal energy plant with a capacity of 25MW at Dakrong and according to press, the project’s price tag has been stated as US$46.3 million. This will be the first geothermal energy plant project and a stepping stone for future development of geothermal energy projects in Vietnam
No specific regulatory framework for geothermal energy projects
Even though Vietnam has potentials in geothermal energy industry but the growth of this industry still remains limited due to many reasons, in which the lack of specific regulatory framework for renewable energy plays a significant part. At present, the main regulatory frameworks on geothermal energy are the laws governing renewable energy, e.g the Law on Electricity and Law on the Economical and Effective Use of Energy and their guiding documents. In term of the feed-in tariff, until now, Vietnam has only promulgated one decision No. 31/2011/QD-TTG regulate on the mechanism supporting the development of wind power projects, however this supporting tariff is still much lower than what the investors expect.
Also with the lack of legal framework, pricing mechanism in Vietnam’ electricity market is also a big hindrance for the foreign firms investing in the geothermal energy projects. Currently, the Electricity of Vietnam (EVN) is the sole off-taker and buys electricity at very low prices, and the competitiveness in this market is not yet realizable.
Conclusion
Even though having not yet had specific legal framework for geothermal project development and the hindrances in the electricity market, with the largely untapped remain of geothermal resources, Vietnam has necessary ground for developing power investment projects.
Recently, Vietnam has issued many regulations and policies for facilitating and promoting the investment into the renewable energy sector, especially, under the national master plan for power development, Vietnam prioritize the development of renewable energy sources for electricity production, raising the rate of electricity produced from these energy sources.
Moreover, the investment regulatory framework of Vietnam is now in process of amendment and improvement. With current general rules on investment, as well as power projects, it is believed that the investors who is interested in geothermal energy projects, could succeed in accessing into this sector in Vietnam.
Should you have any question, please contact
omassmann@duanemorris.com; Oliver Massmann is the General Director of Duane Morris Vietnam LLC.