Higher tariff to spark waste energy power

Power stations using waste to generate electricity have been stymied by uncompetitive tariffsPhoto: Le Toan

The Ministry of Industry and Trade (MoIT) has proposed instigating a supporting mechanism for a solid waste-generated power plant, which will pay the way for private investors to build waste-to-power projects in Vietnam.

The proposal is a set feed-in-tariff of 10.05 UScents per kilowatt hour for renewable power generated from solid waste-to-power plants. This level is higher than the tariff of 7.8 US cents set for wind power plants and the feed-in-tariff proposed for biogas plants generated from solid waste which stands at just 7.28 US cents.

If the proposal is approved by the Vietnamese government, it will be the first time Vietnam has introduced a feed-in-tariff for waste-to-power projects.

“This mechanism will be an important support for renewable power projects generated from solid waste. It would help attract investors in this type of renewable energy,” said Nguyen Duc Cuong, head of the MoIT’s Institute of Energy.

During the past years, several private investors have proposed building renewable energy projects generated from solid waste in the country, but most of them have not been realised due to the lack of supporting mechanisms which would make the investment safer. Those include Australia-based Trisun International Development’s $400 million project and Vietnam Waste Solutions’ $400 million project in Ho Chi Minh City. The joint venture of Japan’s Hitachi Zonen and the Hanoi Urban Environment Company is the only one to have begun construction.

Cuong said the supporting mechanism was expected to take effect in 2014.

Besides favourable feed-in-tariffs, the MoIT also proposed a number of financial and land incentives for waste-to-power investors that are presently applied for wind power projects. Proposals include exempting developers from import duty for goods required for building the projects, and fixed contracts with Electricity of Vietnam agreeing to buy power from the projects for the first six months of commercial operation.