Developing Wind Power In Vietnam

By VOV, July 15th, 2013

Vietnam possesses considerable potential for the development of wind power, an energy sector which has generated strong interest from domestic and foreign investors.

However, to fully exploit this endless source of energy, besides support policies, investors will feel more at ease if there are complete pricing and trading mechanisms.

According to the International Energy Agency (IEA) and the World Bank, Vietnam has an overwhelming advantage for the development of wind power, compared with other countries in Southeast Asia.

The two organisations’ statistics show that 8.6% of Vietnam’s territorial area is suitable for wind turbines, in comparison with 2.9% of Laos, and just 0.2% of Cambodia and Thailand.

The Ministry of Industry and Trade of Vietnam predicts that the country’s total wind power capacity on land may reach 513,000MW, which is 200times more than that of the current Son La hydroelectric power plant – the largest of its kind in Southeast Asia – and 10 times more than that of the power sector’s combined capacity.

In the coastal areas and islands, total wind power capacity may reach 200,000MW.

In a national power development masterplan to 2030, the government gives priority to developing various sources of renewable energy, including raising the ratio of wind power to total national power capacity to 4.5% by 2020 and 6% by 2030.

Despite the great potential, there are only about 20 wind power projects up and running in the coastal and Central Highlands provinces of Bac Lieu, Binh Thuan, Ninh Thuan and Lam Dong.

Binh Thuan, the national wind power leader, last year operated 20 turbine groups for its wind power plant No1 in Binh Thanh district, with a total combined capacity of 30MW.

In May 2013 the Bac Lieu wind power project completed the first phase, when 10 of its turbine groups with a design capacity of 16MW were put into operation, aiming to generate 56 million kWh/year.

Recently Ninh Thuan province licensed the Cong Hai wind power project, which has 15 turbine groups with a design capacity of 37.5 MW and an investment capitalisation of approximately VND900 billion.

Besides domestic businesses, foreign companies have come to Vietnam to seek investment opportunities in this area.

Recently, France’s Volorem worked with Electricity of Vietnam (EVN), pledging to seek capital with appropriate interest rates for any wind power projects in Vietnam.

However, the main obstacles to foreign investors include the high production cost of such a project, time taken for investors to get back their investment capital, and the lack of a competitive sale price.

Experts calculate that the production cost for every kW would be US$2,250 if US technology is used, and US$1,700 for Chinese technology. As a result, the corresponding selling prices for every kWh would be 10.68 cents and 8.6 cents. This means it would take the investor 20 years to get back the initial investment capital.

A wind power investor in Bac Lieu complains that a modern wind power plant offers electricity at 10-12cents/kWh, while EVN is authorised by the government to purchase wind power at just 7.8cents/kWh.

To run the project effectively, this investor has asked the government and relevant ministries to have a price subsidy policy and raise the average buying price.

However, Tran Viet Ngai, chairman of the Vietnam Energy Association, has advised investors to increase the use of local equipment and train local workers to operate the plant, so as to lower production costs. According to his calculations, investors will make a profit if the selling price is 7.8 cents/kWh.

The Energy institute under the Ministry of Industry and Trade says to develop this source of energy, the government should allow projects of this type to enjoy existing credit preferences, import tax exemptions, and reduced corporate income tax.

In addition, the government should introduce an appropriate energy price policy to encourage businesses investment in this field.

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