How would you assess the renewable energy situation in Vietnam, and how does the market measure up to the rest of Southeast Asia?
|Jérôme Pécresse |
Since my last visit to Vietnam two years ago, I see remarkable changes in the renewable energy scene. With over four gigawatts, Vietnam has installed more solar capacity than most countries in Southeast Asia. GE’s global renewable energy business is active in the wind business, the hydro business, and we also have a solar business in Vietnam, as well as grid transmission and distribution. The business has a total revenue of $15 billion with 40,000 employees across the world.
Vietnam is an important market for us in in hydro, solar, and wind energy alike. We realise that the country needs more renewable energy to address its astounding 10 per cent growth in electricity demand each year and to do good on its carbon emissions reduction commitments under the Paris Agreement.
When looking at the wind potential for onshore, nearshore, and long-term offshore projects, given the coast and the quality of local wind resources, Vietnam has greater potential for wind. Vietnam has more solar potential than any country I can think of in the region and it probably has the largest potential for wind power due to the wind resources and the availability of local and outside financing.
The Cypress platform is the newest generation turbine made by GE. Is it affordable for developing countries like Vietnam?
The Cypress turbine is an onshore turbine we launched a little less than a year ago for most onshore markets in wind outside the United States. This new-generation wind turbine is larger than most onshore turbines currently in the market with capacity of 5.3 megawatts and rotor length of 158 metres for onshore service.
As it is bigger, it can catch more wind and allows us to reduce the number of positions, leading to significant cuts in operating costs.
This turbine has a number of novel technical features. In particular, the fact that we produce the blades in two sections allows us to overcome logistical constraints in transporting the blade. It also offers significant benefits over time via the potential to customise the wind farms and our service abilities.
We have seen plenty of market interest in this turbine, and we have secured close to 2GW orders and commitments around the world, in Europe, Brazil, and Turkey which just last week announced an order for Cypress, and probably in Australia soon. So, there is a significant interest for this turbine around the world. We will also install the first projects before the end of this year in Germany.
In addition, we installed a test turbine in Europe five months ago and it has been running ever since, receiving 10 different certifications, attesting to its quality.
Will GE’s manufacturing facility in Haiphong play a role in the production and distribution of the Cypress turbines?
Several components of the Cypress wind turbine will actually be produced in our Haiphong factory, which underlines its role as GE’s key manufacturing base. Last year, the factory increased the workforce by 20 per cent to raise capacity and match the export demand to the world. GE is unique in Vietnam in two perspectives. First, we are the only company in Vietnam that can do wind, hydro, and solar, so we can meet all the renewable demands of the country with local execution. Second, we are the only wind turbine maker with significant production activities in Vietnam, which I think should be recognised by customers and also by the government.
Renewable energy makes up around 10 per cent of the country’s energy mix. How do you think Vietnam can raise the use of renewables?
I think it is even less than 10 per cent from the data we have, not including hydro-electric power. I think this is because of an installed base of fossil fuel capacities. Coal in particular is still very heavily present and is still a very active part of production.
Looking at the quality of wind resources, the country has wind speeds of 6.5-7.5m per second. At this speed onshore or nearshore, and with modern wind turbine technology, it is fully possible to produce wind energy at a competitive price point. There are a number of people who are ready to invest to make this project happen, so there is no reason that this 10 per cent cannot soon become 20 per cent or even more. The only bottlenecks are in administration and approval.
Based on the length of the coast and the quality of the wind, nearshore and offshore, Vietnam can increase the proportion of renewables in its energy mix. We are conducting studies and working with Electricity of Vietnam and the government to assess the impact to the grid, but we are confident that Vietnam can accommodate renewables penetration levels of 20 or even 30 per cent of the installed capacity with modern investments.
What would you recommend to the Vietnamese government to achieve these gains?
The historical reason why Vietnam does not have more wind projects is because there is a bottleneck in approvals, which makes the timeframe for wind projects far longer. This is especially painful considering the number of administrative procedures which need to be fulfilled to even begin a project. Administrative procedures are now centralised at the government level, but it still takes typically 12 or 18 months to even begin project execution.
I don’t see any reason why Vietnam could not aspire to reach higher. However, two things need to happen to get there. One, faster administrative procedures and faster approval of master planning. Two, a new feed-in tariff regime that is going to be able to sustain the market towards the end of 2021, and that should differentiate between onshore, nearshore and more long-term offshore.