New FiT hike paves way for investment in biomass electricity

Biomass energy can come from multiple sources of feedstock, from sugar bagasse and wood chip to rice husks and stalks (Photo: GIZ)

Under the prime minister's newly-approved Decision No.08/2020/QD-TTg on amending and supplementing some articles of Decision No.24/2014/QD-TTg on support mechanism for the development of biomass power projects in Vietnam, the FiT applied for co-generation heat power projects will be VND1,634, equivalent to 7.03 US cents, per kWh while for other types of biomass projects it will be VND1,968, equivalent to 8.47 US cents per kWh. The tariff is calculated at the central exchange rate of VND/USD and does not include value-added tax (VAT).

This move aims to attract more investment in biomass electricity generation and achieve the objectives of the revised Power Development Plan (PDP) VII, which set the goal for biomass electricity production to 660MW, 1,200MW, and 3,000MW in 2020, 2025, and 2030, respectively. In 2019, only 175MW of installed biomass capacity was feeding into the grid.

Sven Ernedal, director of Renewable Energy and Energy Efficiency Project (4E)/EVEF, Energy Support Program (ESP), said, “Vietnam has great potential for biomass, which can be exploited for energy production, especially electricity. The decision of the Government of Vietnam to create favourable conditions for biomass power development will help the country reduce greenhouse gas emissions, create more green jobs, improve the security and quality of electricity supply, as well as enhance the competitiveness of the sugar industry by increasing revenue for sugar companies, increasing efficiency, and reducing waste.”

He added that biomass energy plays a very important role in fulfilling Vietnam's Nationally Determined Contribution commitment, green growth strategy, and Sustainable Development Goals. This renewable energy source will help Vietnam meet the growing energy demand as the economy continues to grow.

Tobias Cossen, director of Sustainable Bioenergy Markets, ESP, added, “In regard to the renewable energy policy in Vietnam, attention has been concentrated on solar and wind energy lately. The increase of the FiT for biomass is a very positive signal from the government, showing that bioenergy will have its place in the future energy matrix.”

The EU‐Vietnam Energy Facility (EVEF), implemented by GIZ, has supported the Ministry of Industry and Trade in recent years in the calculation of biomass tariff.

GIZ has been also working with its political partner the Electricity and Renewable Energy Agency of the Ministry of Industry and Trade since 2019 to implement the Climate Protection through Sustainable Bioenergy Markets in Vietnam project to explicitly improve the preconditions for the sustainable use of biomass for electricity and heat generation in the country.