EVN suggests not to extend deadline for wind farm FiT

EVN proposes not to extend deadline for current FiT for wind farms

In a document sent to the prime minister, Electricity of Vietnam (EVN) was of the opinion that the FiT rate for wind farms should be maintained at the level outlined in Decision No.39/2018/QD-TTg of 2018 adjusting support mechanisms for the development of wind power projects in Vietnam in order to ensure transparency, competition, as well as contribute to stabilise the selling price of wind power.

Previously, due to the impact of the COVID-19 pandemic, the Ministry of Industry and Trade (MoIT) proposed the government to extend the scheme to apply FiT mechanism for wind power until December 2023 (The existing deadline is November 1,2021), and then conduct bids and auctions to select investors for new projects.

According to the MoIT, after the issuance of Decision No.39/2018/QD-TTg adjusting support mechanisms for the development of wind power projects in Vietnam, numerous projects were proposed to add to the power planning and begin construction.

However, only a few of these wind farms have been put into operation for a variety of reasons, including difficulties related to the Law on Planning, the impact of the COVID-19 pandemic, and difficulties arising during the construction process.

At present, according to Decision No.39, the tariff is VND1,928 (8.4 US cents) per kWh for on-shore wind power projects and VND2,223 (9.6 US cents) per kWh for off-shore wind power projects, which started operation before November 1, 2021. These rates exclude VAT.

The cost of purchasing electricity from wind power projects is calculated and included in the input parameters of the electricity price scheme of EVN.

4,800MW of wind power was added to the planning, however, as of early July, only 11 projects came into operation with the capacity of 429MW. Most recently, the prime minister gave in-principle approval to add 7,000MW of wind power to the planning.

Investors were expecting the FiT scheme to be extended by more than two years compared to the current October 2021 deadline.

According to Nguyen Quang Huan, deputy chairman of the Board of Directors of Halcom Vietnam JSC, enterprises in this sector have faced numerous difficulties because there is only a year left of the incentive. The COVID-19 pandemic remains a major concern, freezing international flights while all machinery and equipment for wind farms are imported and foreign experts still cannot enter Vietnam. In addition, it takes at least one year for manufacturers to complete equipment orders for wind farms. Thus, it is nearly impossible for investors to complete wind farm projects on time to enjoy the current FiT.

Furthermore, Huan also requested the government to build stable and long-term policies for wind farms.