Higher feed-in tariffs for wind power projects in Viet Nam will help push forward the completion of many projects and ensure they begin operation.
The statement was made by Tobias Cossen, project director of the ‘Support to Up-Scaling of Wind Power in Viet Nam’ project under the German international development agency (GIZ)’s Energy Support Programme.
On September 10, Viet Nam’s Government approved an amendment and revision of the wind tariff defined as per Decision No 37/2011/QD-TTg on the support mechanism for the development of wind power projects in Viet Nam.
Under the revision, the feed-in tariff (FIT) will be increased from 7.8 to 8.5 US cents per kWh for onshore and 9.8 US cents per kWh for offshore wind power projects.
GIZ applauded the Government’s adjustment, considering it a significant signal for all market actors to further invest in the wind power market in Viet Nam, which currently only accounts for 200MW of installed capacity (with 100MW under construction).
Due to Viet Nam’s growing need for energy and excellent wind power resources, many developers have considered the market for quite some time.
However, the tariff published in 2011 and other issues rising during the development process have slowed projects due to the commercial risks perceived by investors and financing entities.
“Now, with the clear signal from the Vietnamese Government to increase the tariff, we expect many projects to push through and be implemented,” said Cossen.
“Defining feed-in tariffs is always a complex and sometimes ‘emotional’ topic. The revised tariff will give investors and financial institutions which provide long-term capital the security they need. At the same time, the tariff is still lower than in other Southeast Asian markets,” Cossen added.
GIZ estimates that the technical potential of wind power in Viet Nam is huge – at about 27 gigawatts – and able to replace a large share of future planned thermal (coal and gas) power generation.
Even if renewable energies, such as wind and solar, are intermittent, Viet Nam’s power system is still able to include large shares and with further expansion, adaptation and upgrading of the grid network towards ‘smart grids’ – integrate even higher shares of renewable energy, in accordance with the political targets of the Power Development Plan (for example, 6,000MW wind and 12,000MW solar by 2030).