Vietnam_ New Gust of Interest as Wind Power Tariffs Rise

1. New gust of interest as wind power tariffs rise
The feed-in tariff for wind power projects could rise above the currently regulated 7.8 US
cents in an effort to pave the way for the development of more wind power projects in
Vietnam.
Director of the Ministry of Industry and Trade’s (MoIT) Renewable Energy Department,
Pham Trong Thuc, made the announcement at a joint Vietnamese-French seminar on
supporting the development of renewable energy held in Hanoi last week.
Thuc said that although Decision 37/2011/QD-TTg on wind power project incentives was
passed in 2011, wind power still only accounted for 1.5-2 per cent of Vietnam’s overall
power generation capacity.
“This year the MoIT will revise the Decision 37 to allow reasonable feed-in tariffs for wind
power projects to attract investors,” said Thuc.
With a more than 3,000 kilometre-long coastline, Vietnam has giant wind power potential.
The Vietnamese government is looking to attract scores of wind farm projects to produce
1,000 megawatts for the national grid by 2020.
Vietnam’s under-developed wind-power infrastructure has been ascribed to difficulties
ranging from weather to technology, and, in particular, the high cost of investment and the
cap on electricity prices.
According to the Institute of Energy, investors must spend $2,250/kWh for US and EU
technology and $1,700/kWh for Chinese technology for a wind farm project producing
30MW. However, on average, the price for power generated by these projects is 10.68 US
cents/kWh for the former’s technology and 8.6 US cents/kWh for Chinese technology.
These figures include recouping capital and depreciation.
German Federal Enterprise for International Co-operation’s chief technical advisor Werner
Kossmann told VIR that the current feed-in tariff in Vietnam of 7.8 US cents was too low to
attract investors despite support mechanisms such as a 1 US cent/kWh subsidy from the
Vietnam Environment Protection Fund, free land for projects and emissions reduction
credits.
He also said that over the past few years many wind power projects had been registered,
however, most of them remained on paper because power prices in the country were still

2. set too low. He added that if the tariff was to increase to 10.2-12 US cents/kWh, dozens of
projects would start moving forward.
Recently, Bui Quang Ngan, deputy director of the Central Wind Power Joint Stock Company
explained that rising interest rates, plus input material price increases of 1.5-2 fold for
wind power projects meant investors not only wanted, but needed an 11-12 US cent
electricity tariff just to make a small profit.
Vietnam’s wind power industry is set to take off with 42 projects in the pipeline.
Source: VIR