Foreign investors eye clean electricity

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Vietnam is in need of clean electricity due to its short of power supply and then its need to produce renewable, besides the traditional generation types of thermal energy and hydro power which are said to cause severe environmental issues.

“Wind, solar and biogas are prioritised,” said the Seventh Master Power Plan 7 approved by the Prime Minister in September, 2011. These sorts of generating power can maximise the advantages of Vietnam’s natural geography with thousands of rivers, hundreds of hot days, and abundant wastes by hundreds of million people. The government aims at increasing renewable energy by 1,000MW by 2020, said an information source.

Investing into clean electricity industry is also a panel topic in the Vietnam Investment Summit organised by Terrapinn on October 19-20. Currently, the renewable energy just makes up roughly 0.5 per cent of the total power energy, but the government aims at pushing it to 5 per cent, said PhD Nguyen Viet Cuong, the technical director of National Power Transmission Corporation under the Electricity of Vietnam (EVN).

The portion of independent power producers has increased to 31 per cent in capacity and 41 per cent in energy volume, according to EVN’s data. However, lots of obstacles prevent investors in the industry. According to Thomas Jakobsen, CEO of Anpha Capital, a local body investing in several wind farm project in Vietnam, the key obstacles are the big required capital, difficulties in finding the right partners, and crucially the low price that EVN is buying power which may bring low ROI (return on investment) rate.

Currently, the power price in Vietnam is much lower than in other Southeast countries, 5.2 US cents per kWh on the average tariff, in comparison with Thailand’s rate of 8 UScents, Malaysia 9 UScents and Cambodia 20 UScents per kWh, said Dr Nguyen Viet Cuong.

 There is no opportunity for investment funds to operate in wind or hydro energy industries as “investment life spans” are just five to seven years, which is too short for a wind or solar energy project to be sold out, said Jakobsen.

Statkraft Norfund Power Invest AS, which opened a representative office in Hanoi in 2010, signalled its interest in hydro power plants in Vietnam, said Markus Wilkens, its vice president, business development for Southeast Asia. Its objective is also to cooperate with the main players, EVN for example, and also other independent producers.