Vietnam faces difficulties in wind power development

Despite of owning a great potential of wind power development, Vietnam has faced with many difficulties to exploit the renewable energy.

Despite of owning a great potential of wind power development, Vietnam has faced with many difficulties to exploit the renewable energy.

Vietnam faces difficulties in wind power development ảnh 1
(Illustrative photo: SGGP)

According to World Bank, Vietnam’s natural condition is very advantageous for wind power development but it has not been well exploited.

If being able to make use of the advantage, Vietnam can produce as much as 500,000MW wind power every year.

The Ministry of Industry and Trade reported that 50 wind power projects have been registered nationwide for the last three years at a total capacity of 4,876MW.

Only three plants have generated commercial electricity including Binh Thuan, Phu Quy and Bac Lieu, making up a small number compared to Vietnam’s wind energy potential.

Low purchasing prices has been among reasons for the issue. The Government has paid as low as VND1,614 (7.8 US cents) per kilowatt hour, VND310 higher than the average electricity price of VND1,304 per kilowatt hour but much lower than that in many Asian nations, discouraging domestic and foreign investors.

A representative from the Binh Thuan Wind Power Association said that a 30MW ashore wind power project required a total investment capital of US$65 million while 80 percent of investment capital came from loans.

Investors must get loans at an interest rate of less than 1.1 percent to ensure the price of 7.8 US cents per kilowatt hour and this is impossible, he added.

Therefore the association has proposed the Government to increase the ashore wind power prices from 7.8 cents to 10 cents by 2015 and 12 cents by 2017.

Mr. To Hoai Dan, chairman of Cong Ly Company who built the  wind power plant in Bac Lieu, said that because their project would be built at sea, the Ministry of Industry and Trade has agreed to purchase at 9.8 cents (VND2,100) a kilowatt hour.

This has made them hesitate about investing in the project because they will take at least 15 years to reclaim investment capital.

Chairman of Phu Cuong Ca Mau Group Nguyen Viet Cuong--investor of Soc Trang wind power project, said that 9.8 cents is not a profitable price for investors. It should be increased to 12.8 cents (VND2,700), which will reduce by 10 percent after ten years of exploitation.

In addition, Mr. Cuong said that Vietnam has faced difficulties in wind energy development. Of these the outdated wind speed measuring technology has failed to provide a sufficient and reliable database for estimating the practical potential of wind energy.

Vietnam has not had advanced and suitable technologies for effective wind power production.

Chairman of the Danish Vestas Group in the Asia Pacific and China region Chris Beaufait said that Vietnam has faced challenges from three issues including shortage of investment capital, uncalculated ability of connection to the national grid and weaknesses in management, operation and maintenance.

The country lacks policies and regulations on price subsidization to purchase green energy while investors meet difficulties in getting bank loans for wind power projects, he added.

On the other hand, the Government has not had a clear and synchronous plan and specific regulations on wind power development and investment, he added.