1. As the new proposed FiT extention by the Ministry of Industry and Trade (MoIT) would reduce tariffs for onshore and intertidal wind power by 17.4 per cent and 13.6 per cent respectively, one of the most dramatic reductions seen for wind power globally. How would you comment on the impacts of this new Draft on Vietnam’s wind power market? How would this move affect wind power developers in the country and investment attraction in the local wind power market?
It can be seen that the Government has continuously encouraged the development of wind power projects. The new, attractive proposed FiT rate for wind power plants and extended the deadline of FiT rate for wind power projects are an indication that there are a lot of rooms for investors looking to participate in this sector of renewable energy development.
By the end of 2020, the total solar power capacity (including floating) put into operation was about 17 GW, concentrated in the southern provinces and the Central Highlands. Transmission grids are not enough in quantity, especially in Ninh Thuan and Binh Thuan provinces, to accommodate the increasing number of solar power projects and reduction in construction time of them due to advanced technology. As a result, most projects that have come into operation in such localities are being subjected to daily decrease in generating capacity to avoid overloading the regional grid.
To promote the development of wind energy sources is a feasible and effective solutions to counter the imminent power shortage issue because renewable energy projects can be constructed quickly and promptly for operation in the period of 2021-2023, while taking advantage of the country’s natural potential without relying on imported fuels and is eco-friendly.
2. As the Covid-19 pandemic has continued causing regulatory challenges and delays to many wind power projects in Vietnam, what are your proposals to the Government in extending tariff policies to support wind power developers in the country?
The need to extend the deadline for current FiT rate is essential because the projects waiting to be included in the National Power Development Planning is unlikely to have commercial operation date before November 2021, because:
– The supplement into PDP for new wind power sources was suspended for more than 1 year (from October 2018) because there were no guidelines to implement the Planning Law;
– The construction of wind power projects takes more time than that of solar power projects. For feasibility study reports, investors must carry out wind measurement for at least 12 months. Moreover, wind turbines are mostly imported from abroad, which costs investor extra time, especially there is unexpected delay of equipment delivery.
3. How would you forecast Vietnam’s wind power market in 2021?
On 22 February 2021, the Ministry of Industry and Trade (“MOIT”) has made available to the public the long-awaited draft Power Development Planning VIII (“PDP 8”). By 2030, the total installed capacity of Vietnam’s electricity sources is predicted to be at 137.2 GW, of which 29% is renewable energy (including wind, solar, and other types of energy). At a glance, the PDP 8 reinforces the Vietnam Government’s current view on prioritizing renewable energy sources to minimize negative impacts caused by electricity production on the environment. Moreover, by 2040, the North’s commercial electricity demand will start to exceed that of the South. Hence, investors may want to switch their focus to the Southern region or develop transmission grids connecting to thereof to accommodate the increasing power demand.
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For more information on the above, please do not hesitate to contact the author Dr. Oliver Massmann under omassmann@duanemorris.com. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC, Member to the Supervisory Board of PetroVietnam Insurance JSC and the only foreign lawyer presenting in Vietnamese language to members of the NATIONAL ASSEMBLY OF VIETNAM.