Vietnamese "wind power capital" unattractive to investors

Considered the country’s “capital of wind power” with as many as 20 wind power projects planned for development until 2020, yet the south central province of Binh Thuan is not likely to meet capacity targets as investors are discouraged by the long time to recoup their investments.

Wind power turbines are seen at the south central province of Binh Thuan.

Photo: Tuoi Tre

 Under the development master plan for the 2011 – 2020 period, the wind farms in Binh Thuan are expected to reach the installed capacity of 700MW, with nearly 1,500 kWh of total equivalent wind power output.

“But the target seems unfeasible,” said Duong Tan Phong, head of power and energy management of the provincial Department of Industry and Trade.

“The best we can do is to make it to only 500MW,” he admitted.

The largest obstacle at the moment is the lack of capital from the investors, he analyzed.

“A turbine for wind power costs millions of US dollars, but it takes quite a long time to recoup investments.

“So it’s difficult to attract investors,” he concluded.

In 2010 the PV Power RE Co Ltd broke ground on the Phu Quy wind power project with three turbines.

The VND335-billion project with a total capacity of 6MW officially became operational last August with the first two turbines beginning supplying power for the area. (VND1 billion = US$48,000)

But the company will have to earmark some VND10 billion on an annual basis in order to offset losses from the project, company director Pham Cuong said.

“The power produced by the wind farm is bought by the local power sector at 6.8 cent, plus 1 cent subsidized by the government,” he said.

“But we will only be able to break even at 10.36 cent a kWh, although it will also take as long as 12 years.”

Meanwhile in Tuy Phong District, the wind power produced by the project of the Renewable Energy Vietnam Co (REV) has been connected to the national electricity system.

The VND1-trillion project consists of 20 turbines with total capacity of 30MW, and it will also take it a long time to recoup investment given the current power buying price, a company representative said.

Source: Tuoi Tre

Wind-energy farms may get Government’s priority

Wind energy project in Phu Quy Island in the central province of Binh Thuan

Photo: Tuoi Tre

Wind farms that offer economic efficiency and plan to connect with the national grid could be given priority status by the Government as it seeks to modernize the nation's energy supply. 

The Ministry of Industry and Trade has issued circular No 32/2012/TT-BCT on Wind Energy Projects and a template Contract on buying and selling for wind energy.

Under the circular, the Energy General Department has to submit an annual report on November 30, on the number of wind farms which are scheduled to generate electricity in the next five years.

These wind farms must be in alignment with the national energy sector's development and priorities will be given to those with high economic and financial efficiency, as well as plans to connect with national or regional grids.

The ministry requests that project owners follow its guidelines and stipulates that capital investment from a project owner must exceed 20 percent of the project total investment.

The provincial people's committees will be the sole authorities to grant licences after getting approval from the ministry.

However, a project's licence will be revoked if the project fails to start within 12 months of the licence being issued.

In addition, the wind farm must produce electricity within 24 months, an agreement the project owner commits to in the licence application.

During the operation, on May 31 every year, the project owner has to file a report on their energy yield for the previous year and plans for the following year to the Energy General Department.

The energy tariff will be worked out between the Department and the project owner before October 30 annually.

Source: Tuoi Tre

Viet Nam embraces wind power

A view of Wind Power Plant No 1 in Tuy Phong District in the southern central province of Binh Thuan. Wind power has a growing role in Viet Nam's energy market. — VNA/VNS Photo Ngoc Ha

HA NOI (VNS- November, 09 2012 11:23:14)— As an experienced country in wind power development, Denmark was willing to share knowledge and technology with Viet Nam and help tap the country's huge potential for this form of renewable energy, said Danish Minister of Climate, Energy and Building Martin Lidegaard. 

Speaking at a partnership seminar between the two countries yesterday, he emphasised the growing role of wind power in the energy market and its contribution to reducing green house gases and creating jobs, as shown by Denmark's experiences.

Deputy Minister of Industry and Trade Le Duong Quang said that Viet Nam was targeting to increase the proportion of renewable power from 3.5 per cent in 2010 to 4.5 per cent in 2020 and 6 per cent in 2030.

It had already offered investors incentives including import tax exemption for equipment that wasn't produced locally, corporate income tax breaks, and no land use or environmental protection fees.

He appreciated Danish aid to Viet Nam aimed at mitigating and responding to the impacts of climate change, as well as renewable energy projects including one in the central province of Binh Thuan.

Also yesterday, Vestas – a Danish wind turbine manufacturer – and its Vietnamese partner Cong Ly Construction, Trading, Tourism Company based in the southern province of Bac Lieu signed a partnership agreement to develop wind farms in Viet Nam.

Feasibility studies would be conducted and finished by the end of this year

.

Senior director of Vestas Asia-Pacific and China Naveen Raghavan Balachandran said that Viet Nam was a market with excellent fundamentals for wind power including economic growth, a favourable energy mix, abundant wind resources and an emerging wind power policy.

However, he pointed out challenges including a lack of detailed wind studies and its compatibility with infrastructure, and the limited capitalisation of local banks which meant reliance on international banks, resulting in a high cost of capital to compensate for market and sovereign risks.

Moreover, the country's current wind feed-in-tariff was not high enough to enable projects to become financially viable, he said. 

Source: VNS

VND20 trillion needed for EVN projects

HA NOI (VNS)– Electricity of Viet Nam (EVN) is short of VND20 trillion (US$960 million) in funds targeted for work on electricity projects during the remainder of the year.

According to EVN's report, the group has mobilised only VND54 trillion ($2.6 billion), which accounts for 73 per cent of its capital needs for 2012.

EVN's 2012 development plan is part of a five-year plan that sets out targets on electricity production. Despite rising demand for power across the country, total productivity this year is 110MW lower than targeted.

According to Prime Ministerial decision 854/Qd-TTg, EVN's productivity should reach an annual average growth of 13 per cent for the 2011-15 period.

For five years, EVN will operate 42 turbines at 20 power plants with total capacity of 11,600MW and improve more than 300 power transmission lines.

Total targeted investment for the five years is more than VND500 trillion ($24 billion). For this 2012, the amount is around VND74 trillion.

The shortfall in funds has led to calls for a delay in scheduled coal price hikes, over concerns that these price increases will lead to skyrocketing production costs for the electricity sector.

At the Ministry of Industry and Trade's monthly review early this week, Dang Huy Cuong, Head of the Electricity Regulation Department, suggested a delay in increasing coal prices for the electricity sector.

Coal prices were scheduled to rise late this year or early next year, in what would be the third power price rise in this year.

According to Cuong, EVN's calculation that electricity production will increase by 13 per cent next year was too high, as estimated GDP had risen at 5.5 per cent, a rate that was lower than expected.

In an interview with Nhan Dan (People) newspaper, a representative of the Finance Ministry said low electricity prices were one of the reasons for the shortfall in capital for power projects.

In addition, local investors do not have enough funds to invest in the projects and it takes time to mobilise capital from foreign sources, said the representative.

This year EVN has put into operation six turbines equivalent to 1,153MW, including turbine 5 and 6 at the Son La, Dong Nai 4 and Kanak hydro power plants. Ban Chat power plant is scheduled to generate electricity from its turbine 1 by the end of this year, with the second turbine set to begin generating power early next year.

In addition, EVN plans to start three projects with total capacity of 1,790MW. They are the Trung Son hydro power plant and O Mon I and Duyen Hai 3 thermal power plants. -- VNS

Source: VNS