The information was released in the latest report by McKinsey & Company titled “Capturing the wind: Renewable-energy opportunities in Vietnam”, to study the great potential of wind as an alternative renewable energy source, and explain why this may be the right time for wind energy investors and developers to explore and exploit opportunities in Vietnam.
Vietnam has made significant progress on expanding its capacity to generate renewable energy. The vast majority of that expansion to date has come from photovoltaic (PV) solar installations, in large part driven by private investment. Still, coal retains a dominant share of the energy mix today, accounting for more than 50 per cent of the capacity added since 2018, which has contributed to persistent poor air quality. According to a 2019 report from the Ministry of Natural Resources and Environment, for example, pollution metrics in Hanoi reached historical highs before the pandemic despite a variety of efforts.
Several factors in the Vietnamese market suggest that wind investors and developers can find significant opportunities for growth. In addition to the sizable natural potential for wind projects, the Government is indicating its strong support for wind development. For example, the extension of feed-in tariffs (FiTs) for wind-power projects from 2021 to the end of 2023 underscores Government support and reduces financial risk for wind projects commissioned before the new deadline.
Second, the success of FDI and private-sector investment in solar projects to date demonstrates the financial viability of renewable projects in Vietnam. The next wave of investment in renewables will likely include substantially larger projects, especially offshore wind projects, which tend to provide more generation capacity than either solar or onshore wind projects. Also, despite their higher cost and added complexity, offshore wind projects offer an opportunity to add capacity while providing more relief to the grid than other renewables. Offshore output tends to fluctuate less than onshore or solar (though it is still not fully predictable or dispatchable) and can connect directly into the grid at transmission-grade voltages. The successful addition of large offshore projects could be a more scalable source of renewable power for Vietnam.
Several pioneering developers think these advantages outweigh the challenges. Most recently, Ørsted, the largest offshore wind farm company in the world, opened a Vietnamese office. It has proposed an offshore wind power plant near Hai Phong, with an estimated investment of US$11.9 billion to $13.6 billion. Once operational, the power plant will have a total capacity of 3,900 MW.
It also signed a memorandum of understanding with T&T Group to develop several gigawatts of offshore wind projects in Binh Thuan and Ninh Thuan provinces.
Two large projects already announced in Binh Thuan demonstrate interest in wind projects at the provincial level: Enterprize Energy announced the Thang Long Wind project, and Copenhagen Infrastructure Partners launched the La Gan project. Separately, Nexif Energy, a Singapore-based power company, has formed a partnership to start a project in Ben Tre Province.
Considering that wind projects require large scale, are emission free, have significant potential to anchor FDI, and are relatively simple to integrate into the grid, they have the potential to fit quite naturally into regional power plans.
According to this report, investors and developers, when approaching wind power projects in Vietnam, seek to exploit wind energy opportunities in Vietnam by researching and establishing partnerships with other wind power projects. Local businesses, co-operate with provincial authorities, position their projects strategically within the context of local power development plans, and apply best practices for project implementation of infrastructure projects with large capital.
The Vietnamese government has reaffirmed and expanded its commitment to building renewable-energy capacity beyond the solar installations that have dominated development to date. Vietnam’s next phase of energy expansion will entail larger, more capital-intensive, and more technically complex projects in solar and onshore wind—but especially offshore wind. Some early movers already have projects under way, but there is still room for others to study the power market, establish partnerships with local entities, and secure value before the window closes.
84 wind power projects put into commercial operation
Eighty-four out of 146 wind power projects signing power purchase and sale contracts with Vietnam Electricity (EVN) had been put into commercial operation as of October 31, according to a document the EVN had sent to the Ministry of Industry and Trade on Commercial Operation Date (COD) results.
The remaining 62 projects with a total capacity of 3,479MW could not become operational before November 1, the date the feed-in tariff (FIT) for wind power expired under Decision 39/2018/QĐ-TTg.
Restriction measures induced by the recent resurgence of the COVID-19 pandemic have affected the pace of construction of many wind power plants.
Under the decision dated September 10, 2018 amending and supplementing several regulations on incentives for wind power projects in Vietnam, fixed preferential price of offshore wind power is VND2,223 (9.8 US cents) while that of inland wind power is around VND1,927 (8.5 US cents), excluding VAT.
The above prices are applied to wind power projects with a part or the whole plant having commercial operation date before November 1, 2021 and applied for 20 years from the date of commercial operation.
EVN said wind power plants are capable of playing a remarkable role in ensuring supply security for the national grid.