VN Industry & Trade Ministry proposes keeping current FiT for wind power projects
Due to the impact of the COVID-19 pandemic, the Ministry of Industry and Trade (MoIT) proposed maintaining the FiT for wind power until December 2023, switching to bidding later.
The MoIT would extend the timeline of the current FiT for wind power projects until the end of 2023
According to the MoIT, Decision No.39/2018/QD-TTg adjusting support mechanisms for the development of wind power projects in Vietnam created the motivation for wind power development in Vietnam. Numerous projects were proposed to add to the power planning and begin construction.
However, just a few wind farms have been put into operation for many reasons, including difficulties related to the Law on Planning, the impact of the COVID-19 pandemic, and difficulties arising during construction process.
Notably, after Decision 39 came into effect on November 1, 2018, activities to register new projects and transmission projects to receive and release capacity was delayed for a year due to the lack of guidance to implement the Law on Planning. As a result, 4,800MW of wind power was added to the planning and the MoIT are reviewinganother raft of projects with a total 45,000MW capacity to submit to the prime minister to add to the planning.
In addition, the prolongation of the COVID-19 epidemic impacted the delivery of turbines as well as the construction process of ongoing projects. Notably, according to the MoIT, manufacturing of main equipment and components of wind turbines have been delayed around the globe. Besides, the halt on the entry of foreign experts into Vietnam was another barrier preventing construction from proceeding according to schedule.
In reality, there are 18 months left until November 1, 2020, the deadline for investors to complete part or whole of the grid-connected wind power projects in order to enjoy the FiT for 20 years from the commercial operation date.
These concerns of investors prompted the MoIT to submit its proposal to the prime minister.
Accordingly, in its proposal, the MoIT mentioned concerns about the delayed construction of coal-fired thermal power projects, including Long Phu I and II and Song Hau I and II, among others, which were scheduled to be completed in 2018-2021. These delays will cause a shortage of electricity in the southern region in 2021-2025. Thus, it is necessary to consider new energy supplies and wind power is an ideal choice.
According to the MoIT, in order to encourage investment in wind farms, a FiT mechanism is important in ensuring enough time for investors to develop projects already in the planning as well as to mobilise new projects for 2020-2025.
As of now, nine localities requested the MoIT to forward their proposals to the PM to extend the FiT deadline for projects which are expected to start commercial operation in 2022-2023 due to these above difficulties.
The MoIT is also waiting for the prime minister’s approval to assign it to propose a new selling price to apply from November 1, 2021 to December 31, 2023. From 2023 onwards, interested investors will have to join bids and competitive auctions to develop projects. VIR
If Vietnam can create reasonable policies and keep strict control over the development, it may become an emerging market in the wind power industry.
The rush to invest in wind energy to take advantage of the Government's pricing incentives could lead to overloading of the national grid in a repeat of the solar scenario, experts warn.