17:53 (GMT +7) - Tuesday 25/09/2018

Vietnam Today

Feed-in tariff for wind power to increase

Released at: 09:17, 14/09/2018

Feed-in tariff for wind power to increase

Photo: GIZ Vietnam

PM's move a positive sign for renewable energy development in Vietnam.

by Minh Do

The Prime Minister has approved the amendment and revision of the wind power tariff in Decision No. 37/2011/QD-TTg on support mechanisms for the development of wind power projects in Vietnam.

The feed-in tariff (FIT) is to increase from 7.8 to 8.5 US cents per kWh for onshore power generation and 9.8 US cents per kWh for offshore power generation.

In a joint effort, the Ministry of Industry and Trade (MoIT) and Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH have worked within Vietnam-Germany bilateral cooperation to develop the wind power sector, including the abovementioned revision of the FIT.

GIZ has provided advice to MoIT on the legal and regulatory framework, implemented technical and financial training for the public and private sector, and supported Vietnam-Germany research cooperation on wind energy.

It applauded the Prime Minister’s adjustment, considering it a significant and particularly important sign for all market actors to further invest in the country’s wind power market, which currently has an installed capacity of only 200 MW, with around 100 MW under construction.

“Due to the country’s constantly growing need for energy and its excellent wind power resources, many developers have eyed the market for quite some time,” said Mr. Tobias Cossen, Project Director of Support to the Up-Scaling of Wind Power project under the GIZ Energy Support Program. “The tariff announced in 2011 and further project risks within the development process have slowed down projects due to commercial risks perceived by investors and financing entities. Now, with a clear sign from the government that it will increase the tariff, GIZ expects many projects to push through and actually be implemented.”

Within GIZ’s activities for the development of the legal framework, a re-calculation of the previous tariff was conducted, wind investment guidelines and guidelines for environmental and social impact assessments of wind power projects was developed, and a review of the national wind power development plan, including long-term wind measurements, was implemented.

Defining the FIT is always a complex and sometimes “emotional” topic. The revised tariff will give investors and financial institutions providing long-term capital the security they seek. At the same time, the tariff is still lower than in any other Southeast Asian wind market, according to Mr. Cossen.

The technical potential of wind power in Vietnam is huge, at about 27 gigawatts, and it will be able to replace a large share of future planned thermal (coal and gas) generation. Even if renewable energies such as wind and also solar energy are intermittent, Vietnam’s power system is still able to include large shares of such power and - with further expansion, adaptation and upgrading of the grid network towards “smart grids” - integrate even greater shares, in accordance with the targets in the Power Development Plan of 6,000 MW of wind and 12,000 MW of solar power by 2030.

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