Wind power investors have wind taken out of their sails.

Electricity of Vietnam (EVN), the country’s sole power distributor, will have the responsibility for buying electricity from wind power farms at VND1,317 (about US6.9 cents) per kilowatt-hour, according to the draft, released by the Ministry of Industry and Trade earlier this month.

Wind power is a clean, green way to address Vietnam’s chronic power shortages

In addition, the government will subsidise VN185 (US1 cent) for each kilowatt-hour. That means wind power investors can get back 7.9 cents for each kilowatt-hour.

“This is low and not encouraging,” said Nguyen Tien Long, vice general director at Vietnam Renewable Energy Joint Stock Company (REVN), owner of the only operating wind farm in Vietnam.

Located in a subtropical zone with a long coastline, Vietnam is said to have great advantages for developing wind power. According to a World Bank survey, under the Asia Sustainable and Alternative Energy programme, 8.6 per cent of Vietnam’s soil is considered having potential for wind power development, totaling 513,360 megawatts.

The divergence in electricity selling prices between EVN and wind power investors is the biggest challenge for wind power development in Vietnam. While many wind power investors claim selling prices must be higher than 8.5 cents per kilowatt-hour, EVN said it could not afford to buy at this price, as the group resells to consumer at an average of 6 cents per kilowatt-hour.

“The draft has not yet tackled the biggest challenge for investors. We need more subsidy from the government,” said Long.

Long’s company is in purchase price negotiations with EVN, despite its $76.6 million wind power farm connected to national electricity transmission line nine months ago.

The price offered by REVN is 13 cents, in which EVN pay 9 cents and the government subsidises the remaining 4 cents. However, EVN has not accepted.

“The price and subsidy offered in the draft is just sufficient for maintain the operation of wind farms, but not for making profit,” said Bui Van Son, a representative of Swiss Aerogie.Plus Company in Vietnam, which is preparing to build a wind farm in central Ninh Thuan province.

Though the prices offered in the draft does not satisfy the expectation of investors, it is still considered as a milestone for wind power development. “They are better than nothing,” said Son.

Duong Manh Thao, former chairman of Vietnam Wind-Power Joint Stock Company, said said investors could survive at a price of 8 cents. The company is investing in four wind power farms in Vietnam.

“I think the draft offers better conditions for wind power development. This is time for investors to start the construction of projects. If they hesitate, they will miss investment opportunities because potential for wind power in Vietnam is not too high,” said Thao.

As the demand for power is sharply rising in Vietnam, many domestic and foreign investors are eyeing developing wind power, especially in central Binh Thuan and Ninh Thuan provinces where are said to be the most favourable places for wind mills.

According to Binh Thuan’s Department of Planning and Investment, about 12 private investors gained wind power investment certificates in the province. Some other investors like Belgium’s Enfinity and German Donier Aircraft Leasing Limited are also preparing to develop new projects in neighbouring Ninh Thuan province.

Norway’s SN Power recently set up a representative office in Vietnam to study the investment opportunities in renewable sector.