|Developers are scrambling to push on with construction and other requirements for commercial operation. Photo: Shutterstock |
An investor of a project in the Mekong Delta province of Soc Trang is not 100 per cent sure the venture will attain commercial operation date (COD) before October 31, even though his company committed to the date to Electricity of Vietnam (EVN).
The date is a key one, as under Decision No.39/2018/QD-TTg dated 2018 on the development of wind power projects in the country, the feed-in tariff (FiT) rate for onshore wind power is set at 8.5 US cents per kWh and offshore wind power at 9.8 cents per kWh. These rates are applicable to projects that reach COD before October 31.
However the investor, along with other wind farm developers, has concerns over equipment not arriving in time, workers not being able to mobilise, experts not being able to visit the country, and risk of coronavirus infection. “We are trying our best to progress and ensure the safety of workers against the risk of infection,” he told VIR, while adding that the race against time may not be won in the end.
According to the latest EVN report, 106 wind power plants with a total capacity of 5,655MW have registered to begin commercial operations before November, up 27 times compared to last year. The reason for so many registered projects is because current regulations require wind power investors to submit a written registration for commissioning 90 days in advance.
However, COD remains out of reach for many, with a major batch of the projects still to complete site clearance, and with equipment not yet reaching its destination. Worse still, the preferred COD deadline is less than three months away, while a typical wind project takes between 18 months and two years to begin operations. Industry insiders predicted that only half of the registered offshore wind ventures, equivalent to around 2GW, will connect to the grid.
In the Mekong Delta region, Tra Vinh province has approved the investment of eight wind power projects with a total capacity of 570MW so far. Among these, six projects are speeding up construction, but it is unlikely that the projects will reach COD before November.
As a result, the province has asked the prime minister to approve extension of the time to apply the FiT pricing mechanism for wind power projects in the area until at least the end of April next year.
Elsewhere in Soc Trang, a total of 20 wind power projects with capacity of 1,435MW have been approved in the local wind power development planning as well as the current National Power Development Plan. The province has so far approved policies for 16 projects, of which 11 are under construction.
With the impact of the current pandemic leading to inevitable delays in the construction progress, Soc Trang People’s Committee also asked the Ministry of Industry and Trade (MoIT) to request an extension of the time to implement the mechanism until next April. Other provinces such as Quang Tri in the central region and Gia Lai in the Central Highlands region are in the same boat.
Most of the coastal provinces of the Mekong Delta such as Ca Mau, Bac Lieu, Soc Trang, Tra Vinh, Ben Tre, and Long An have included renewable energy development in their economic development goals. After solar power, wind power is an option for clean energy development. Bac Lieu in particular has set ambitions to become a wind power hub for the western areas.
Meanwhile, Vietnam is facing an important turning point to decide on the choice of energy sources to meet the increasing electricity demand and boost the rapidly growing economy. Regardless of the FiT change in November or later, a representative of the Global Wind Energy Council (GWEC) noted that the government and the MoIT need to soon make a detailed decision so that investors can actively calculate the method of FiT rates in order to avoid repeating a “price gap” as happened with solar power. “The production cut will affect the business plans of investors. It also affects the ability of projects to raise capital,” said a member of GWEC.
In 2019, the government approved more than 10GW of solar and wind capacity, around 4GW of which was connected to the grid. The surge of added capacity and the concentration of new projects in a few provinces created enormous pressure on the power system. As a result, a number of projects reportedly requested to curtail output without compensation from EVN.
Law firm ACSV Legal cited last year that the government is accelerating new power transmission investments and engaging with private investors to assist with building the necessary infrastructure. Pending resolution, curtailment risk has become a factor that needs to be considered carefully by investors, it said.
Michael Stephenson - Associate director, Renewables Consulting Group
The policy solution for Vietnam to accelerate offshore wind growth and maximise its benefits will require more than auctions on their own – but they could be a piece of the puzzle.
We have seen countries learn how to integrate auctions into offshore wind policy in different ways, and the key conclusions and case studies from our analysis are presented in our report.
Overall, a more coordinated approach is critical, considering the interaction of auction policy with factors such as investor confidence and supply chain maturity, as well as ensuring a suitable transition period to move to a new mechanism.
Liming Qiao - Head of Asia, Global Wind Energy Council
With world-class resource potential and rapidly growing power demand, Vietnam is poised to be Southeast Asia’s offshore wind leader over the next decade.
But true large-scale offshore wind projects are not due to be connected until 2026 at least, and a number of policy and regulatory challenges need to be addressed to safeguard the pipeline of investment and project development in this country.
Among these are the expiration of the current intertidal feed-in tariff by November and the current 2GW by 2030 offshore wind target in the eighth Power Development Plan (PDP8) – which, our report finds, could be raised to 10GW by 2030 to maximise social, economic, and environmental gains from offshore wind. The PDP8 is due to be approved and finalised later this year.
The Global Wind Energy Council is calling on the Vietnamese government to urgently adopt a transition stage for offshore wind and incorporate a systematic and open consultation process on future procurement and auction design.
With fewer than 10 years to meet PDP8 targets for the end of the decade, the time is now to begin wider consultation and consider raising ambitions to 10GW by 2030. We hope our report will support Vietnam in this vital period of making offshore wind a pillar of the future energy mix.
Bui Van Thinh - Chairman, Binh Thuan Wind and Solar Energy
Although investors are making great efforts, the goal of completing wind power targets and meeting deadlines are threatened.
Firstly, foreign experts who come to Vietnam must be isolated, according to current regulations. The transportation of equipment to construction sites is also facing obstacles because many ports are blocked. Vehicles on the way move very slowly due to medical declarations and review procedures. Lastly, there is a shortage of workers on these construction sites.
Faced with the above difficulties, we propose the government consider extending the FiT to avoid bankruptcy of several wind power projects.