Vietnam will offer preferential pricing for wind energy projects

Vietnamese Prime Minister, Nguyen Xuan Phuc, is expected to approve preferential prices for renewable wind energy projects that come online by Dec. 31, 2020, with an official announcement of both policies and prices expected in October.

Vietnam’s Ministry of Industry and Trade (MOIT) has created a draft plan specific to wind energy projects that it believes will stimulate increased investment by both domestic and foreign companies. According to Vietnamese government reports the final prices that have been authorized by the prime minister will see the government buying energy at the Feed-In-Tariff (FIT) rates of 8.5 US cents/kWh for onshore projects and 9.8 US cents/kWh for offshore projects.

The prime ministers decision is the latest of government polices to stimulate investment into renewable energy projects across the country and promotes clean energy and economic development. 

In mid-September the government announced an extension of its deadline for solar power projects in Ninh Thuan province that allows solar energy producers to have a guaranteed FIT rate of 9.35 cents/kWh for a period of 20 years, for projects that begin commercial operations begin by the end of 2020. This is an extension of an earlier deadline of June 30, 2019 for Ninh Thuan solar projects and will be in effect until projects reach a combined capacity of 2,000MW.

The MOIT is also considering special provincial plans to support investment Binh Thuan and Ninh Thuan provinces. These provinces are considered prime locations for solar energy projects since both average 2,500 ~ 2,700 hours of sunlight per year, with low rainfall. Many of Vietnam’s largest solar energy projects are being built in these two provinces. 

Energy industry experts say that if the government creates additional investment guarantees, such as the extension of dates for projects to come online, then both provinces can expect continued investment in solar energy projects for the foreseeable future. 

Government energy plans dating back to 2010 had called for Vietnam to build two nuclear power plants to help fulfill the country’s energy needs. However, in 2016 the government abandoned its plan to develop nuclear energy because of costs and environmental concerns and since that time has focused on renewable energy as a key component of its energy policies.

The government also has plans to build at least 25 additional coal power energy plants by 2025, but because of environmental concerns and an estimated coal import cost of $250 million USD per year, renewable energy is seen as the alternative that will allow the country to build energy capacity while creating a cleaner environment. 

Trinh Dinh Dung, Vietnam’s Deputy Prime Minister, instructed all ministries in August to implement and promote projects for electricity generation and grid connections. These instructions also authorize the MOIT and provinces to develop procedures that will supplement solar power projects. The national power utility, Vietnam Electricity (EVN), has been directed to expedite grid connection agreements (GCA) and power purchase agreements for approved projects.

Additionally, the MOIT was instructed to create studies on solar power development until 2020, 2025 and 2030 that provide the government different energy options. These options will include projections for increased renewable energy projects and a decrease in coal-powered projects. Energy experts and officials from the MOIT say that is unreasonable to expect that renewable energy sources will supply Vietnam with 100% of its energy needs, but that the country can continue to increase its reliance on renewables and that government policies should reflect this.