Many obstacles
In 2018, the Prime Minister issued Decision No.39/2018/QD-TTg amending and supplementing a number of articles of Decision No. 37/2011/QD-TTg on mechanisms to support the development of wind power projects in Viet Nam. With the preferential FIT mechanism, this Decision has created a driving force for the wind power market in Vietnam to develop after a quite period due to low prices. Hundreds of wind power projects have been proposed to be supplemented into the planning and are under construction. However, facing the difficulties and obstacles in the implementation process, only 11 projects with a total capacity of 377MW have been put into operation so far.
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First of all, the obstacles in implementing the Planning Law. Immediately after the Decision 39 (1 November 2018) coming into effect, investment registration and planning supplementation activities for new wind power projects and transmission projects for receiving and releasing wind power projects has been delayed for more than 01 year, as there are no guidelines on implementing the Planning Law (becoming effective on 1 January 2019).
In addition, wind power projects in development planning in the southwestern provinces are mostly onshore and nearshore ones with a total capacity of about 1,600MW. These projects use technology, technical construction solutions differing from onshore turbines, which requires longer time for project preparation and construction (about 2 years onshore, while about 3-3.5 years near-shore). Besides, the regulations on determining the sea area and licensing the sea area are quite complicated; There is currently no regulation on determining the marine area for calculating the cost of the marine area use, etc., leading to the time extension and the cost increase of projects.
In fact, the COVID-19 pandemic has been affecting the production and supply of wind power equipment and accessories; Activities of goods import and export, entry and exit of foreign technical workers and experts were interrupted, tec., thereby affecting the turbine supply schedule, prolonging the construction, installation time and slowing down the operation of wind power projects.
Mr. Le Anh Tung - Chairman of the Board of Ecotech Vietnam, the investor of the wind power project shared: The COVID-19 pandemic in the world is occurring complicatedly and is never known to come to an end. Meanwhile, if there is no timeline for completing the project, no bank would dare to lend money to investors to implement the projects.
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Decision No. 39/2018/QD-TTg dated 10 September 2018 of the Prime Minister:
- Inland wind power: The purchase price at the delivery point is 1,927 VND/kWh, equivalent to 8.5 Uscent/kWh (excluding VAT).
- Wind power at sea: The purchase price at the delivery point is 2,223 VND/kWh, equivalent to 9.8 Uscent/kWh (excluding VAT).
- Applying to wind power projects with part or all of the commercially operating plants before 1 November 2021 and applying for 20 years from the date of commercial operation.
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Need to extend the wind power FIT rate
According to the evaluation of the Ministry of Industry and Trade (MOIT), from now until the end of October 2021 (the time of FIT rate under Decision No. 39 expires) there is only about 18 months left, not enough time for investors to perform preparatory activities and construction of wind power projects, especially projects on the sea and projects that have not been approved to supplement the planning. Therefore, MOIT has just submitted a proposal to the Prime Minister for considering extending the time of applying the fixed electricity price mechanism for wind power projects in Decision No. 39 until the end of 31 December 2023. After 2023, wind power projects will apply competitive bidding and auctioning mechanism.
According to energy experts, with great potential, in the period of 2020 - 2025, Vietnam needs to develop an appropriate mechanism to maximize the capacity of projects already listed in the plan and add about 5,000MW - 7,000MW more of wind power to the power system. Therefore, an extension of FIT price is needed to promote this energy source in the future.
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According to the MOIT, as of March 2020:
- 78 wind power projects have been planned, with a total capacity of about 4,800MW.
- 11 projects have operated for electricity generation with a total capacity of 377MW.
- The project has signed power purchase agreements: 31 projects, total capacity of 1,662MW.
- 250 projects with a total capacity of about 45,000MW are being requested for additional planning.
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