Paving the way for wind power

Wednesday, 2021-02-10 09:37:37
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The installation of a wind power pole at Trung Nam wind power plant in Ninh Thuan province.
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NDO – Developing renewable energy, particularly wind power, is considered a vital solution to contribute to increasing power supply to the national grid and ensuring national power security. This is also the policy encouraged by the Party and State following the Politburo’s Resolution 55.

Potential and policy

Vietnam was quite fortunate to meet the electricity demand in 2020, but this will be difficult to repeat in 2021 because of the obvious danger of power shortage. Therefore, to ensure enough electricity for socio-economic development from 2021 onwards, the promotion of wind and solar power projects is both necessary and urgent, in addition to solutions to remove difficulties for stagnant projects and promote electricity saving.

According to the World Bank (WB), Vietnam’s offshore wind power has a potential of 475GW and the total capacity of Vietnam's currently operating power plants is about 40GW, with the main sources from hydroelectricity and coal-fired thermal power. The potential for offshore wind power is many times higher than the existing capacity, capable of meeting current and future power demand.

To encourage investment in wind power development, the Prime Minister issued Decision 39/2018/QĐ-TTg on September 10, 2018, on amending and supplementing a number of articles of Decision 37/2011/QĐ -TTg dated June 29, 2011, on the support mechanism for wind power projects in Vietnam.

Accordingly, the price of wind power in the mainland has been increased to VND1,927 per kWh while offshore wind power will be VND2,223 per kWh. This electricity price will be applied to a part or the whole plant with commercial operation date before November 1, 2021, and applied in 20 years from the date of commercial operation.

Therefore, businesses and investors have made efforts to speed up progress of wind power plants to enjoy incentives from the Government’s policy.

However, a renewable energy expert said that investing in wind power to enjoy incentives will also face certain risks. The investment in wind power is much more difficult than in solar power projects, together with the influence of the COVID-19, so many projects are facing the possibility of delaying progress.

In addition, with the wind power project added to the planning, the investors must take wind measurement data for at least 12 months to complete the feasibility study report. Only after the wind measurement data has been gathered can investors conduct the design for the project. Moreover, investors are also worried about the price mechanism, difficulties in construction, policies and laws, and the transmission of wind power to the national grid.

Nguyen Tam Tien, the General Director of Trung Nam Group - one of the companies investing largely in renewable energy projects, said that Vietnam is facing the opportunity to welcome a big wave of investment after the COVID-19 pandemic, including in the field of renewable energy, but to seize the opportunity we must have superior policies than other countries.

“In my opinion, there should have a preferential, clear and stable price policy, because good policies will help us attract private resources, and then investors themselves will have to develop the best plans and solutions to promote the efficiency of their projects and the people will be the biggest beneficiaries. In other words, good policies will help renewable energy projects to develop sustainably,” Tien emphasised.

Stable and consistent

Amid the difficulties facing investors, the Ministry of Industry and Trade reported to the Prime Minister for the approval of the extension of the time of applying the increasing electricity prices for wind power projects under Decision 39 until the end of 2023.

The Ministry of Industry and Trade is also studying the mechanism of selling electricity directly from electricity producers to electricity consumers.

This mechanism will create a driving force to attract investment from various economic sectors to develop power sources, especially renewable energy, towards creating a competitive electricity retail market in accordance with the Politburo's Resolution No. 55-NQ/TW dated February 11, 2020, on the national energy development strategy until 2030, with a vision to 2045.

In particular, thanks to the effectiveness of the EU-Vietnam Free Trade Agreement (EVFTA), large capital sources and offshore wind power technology from the EU will easily participate in promoting offshore wind power in Vietnam.

Experts and investors hope that the opportunity has converged enough for Vietnam to make a breakthrough to lead ASEAN and become a major offshore wind power centre of the world. It is also the driving factor for the marine industries and services and for the export of wind power to ASEAN and neighbouring regions.

Thus, it is not only necessary to have a good price mechanism to attract private investment in energy sector, but also the stable and consistent mechanisms and policies. In addition, related recommendations should be clearly quantified to ensure the transmitting capacity of the wind power projects and the capacity for power absorption of the power system in the project area.