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Vietnam considering new, more promising feed-in tariff for wind power

Mon 10 Sep 2018 by David Foxwell

Vietnam considering new, more promising feed-in tariff for wind power
Vietnam has a solid national energy policy and realistic targets, but work needs to be done to improve the effectiveness and transparency of the market rules and the procurement process

Vietnam’s ministry of industry and trade has proposed new tariffs for onshore and offshore wind energy that are being considered by the prime minister’s office.

Duane Morris Vietnam LLC general director Dr Oliver Massmann and colleagues said work on drafting a new feed-in tariff (FIT) for offshore and onshore wind projects has continued in recent months, and that the ministry of industry and trade (MOIT) has proposed what they described as a new “and very promising FIT” for wind energy projects to the prime minister for his consideration and approval.

The proposed FIT for onshore wind was set at US$0.085 and US$0.098 for offshore wind energy projects. The draft of the proposed legislation describes onshore wind power projects as “on-grid wind power projects that have wind turbines to be built and operated on inland areas and coastal zones” (the boundary of such inland areas and coastal zones is the average low-water line for 18.6 years). It describes offshore wind power projects as “on-grid wind power projects that have wind turbines to be built and operated outside inland areas and coastal zones to the sea.”

Writing further about the subject, Dr Massmann said the MOIT planned to promulgate new FITs and draft PPAs for wind projects and the policy is likely to be issued by the end of 2018.

Vietnam has significant nearshore and offshore wind potential but needs to reform its energy sector and develop a competition-based generation and a wholesale and resale market to attract the foreign investment it needs to develop wind energy and solar projects. It also faces challenges such as developing windfarms in typhoon-prone areas, local supply chain limits and sometimes challenging seabed conditions offshore.

The country needs to focus on wind and solar energy because of growing energy demands. Most hydropower potential in the country has already been exploited, it has begun importing more coal, does not have access to sufficient natural gas for electricity generation and has pulled back from nuclear power.

In June 2018, the Global Wind Energy Council (GWEC) issued recommendations to help Vietnam increase its wind power capacity, a document that was also signed by Siemens Gamesa, Vestas, Mainstream Renewable Power and DNV GL.

“While Vietnam has a solid national energy policy and realistic targets, work still needs to be done to improve the effectiveness and transparency of the market rules as well as the procurement process,” said GWEC, which said it was confident that working with government on some regulatory issues, the wind power sector in Vietnam can take off, “providing major economic and environmental benefits, as well as making Vietnam an attractive investment destination for international institutions and investors.”

The US Trade and Development Agency recently awarded a grant to Power Engineering Consulting Joint Stock Company 2 (PECC2), a Vietnamese engineering company, to support development of a 100-MW nearshore windfarm in southern Vietnam.

Doosan Heavy Industries has signed agreements to develop windfarms in Vietnam, including a storage-linked offshore demonstration project.

In early 2018, Enterprize Energy and partner Renewable Energy Global Solutions, together with the PetroVietnam consortium comprising Petroleum Equipment Assembly & Metal Structure and VietSovPetro, MHI-Vestas Offshore Wind and DNV GL signed a series of exclusive agreements forming an alliance for multi-phased, utility-scale wind developments, offshore southern Vietnam.

 

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