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COVER STORY

Moving towards 2020. However, for most market participants,
it is no surprise that a lower FiT is being con-
sidered, according to Mr. Henri Wasnick,
Senior Advisor to the Renewable Energy Cen-
completion ter of the Institute of Energy at MoIT.
It is important to understand that the FiT
mechanism has various factors that drive proj-
ect realization, he explained. Against this
With the newly-proposed wind FiT in dispute, the reality, the lower FiT, after a certain number
government should extend support to developers to of installed capacities, could help steer initial
ensure project realization. project planning to high quality areas with a
minimum necessary wind speed and good
possibilities for grid connection and land use
T KHANH CHI REPORTS rights. This, together with a scoring mechanism
in the form of a project development rating
that makes good projects “early movers”, can
support more feasible projects in the energy
mix to find an investor and reach the COD.
“The FiT is not the only decisive factor
for project due diligence or for projects in
operation,” he said. “It is just one single piece
in a bigger picture of many factors in project
PHOTO: VIET TUAN
realization. Bankable Power Purchase Agree-
ments (PPAs), project due diligence, clear
administrative procedures, the political land-
scape, and so on are also taken into account
when investments are made.”
One Thai advisor on renewable energy,
meanwhile, said wind developers would need
to conduct new feasibility studies to see if the
return on investment is still sufficiently attractive.
“Returns are related to revenue, which of course
will be reduced,” he told VET. “On the positive
side, however, the engineering, procurement,
and construction (EPC) cost may also be reduced
due to improvements in technology that make
the turbine size bigger, so the quantity of units
required could be reduced, which means con-
struction costs will also be reduced. Apart from
unit size, efficiency will also improve and more
electricity will be generated, resulting in improve-
ments to revenue.”
ome 22 wind power projects with a November this year and December 2023. This
combined capacity of 907MW are set represents a cut of more than 17 per cent for Uncertainties linger
S to be put into operation in central onshore wind, one of the most dramatic seen Professional developers can still find serious
Quang Tri province by year’s end in order to in any wind power market globally, according investors even with the lower FiT, according
meet the deadline for accessing the existing to the Global Wind Energy Council (GWEC). to Mr. Wasnick. “The reason why many projects
Feed-in-Tariff (FiT) on wind power, under “The proposed dramatic reduction to the currently haven’t found an investor is not the
which the commercial operations date (COD) FiT risks seriously damaging the growth of new FiT, it is because project quality is simply
is October this year at the latest. A raft of Vietnam’s promising wind power sector, slow- not good enough,” he said. “Such projects are
wind power developers around the country ing down investment and the creation of new obstacles to the intended capacity of green
have also been speeding up construction to jobs and making it harder for Vietnam to energy in the energy mix. If they are identified
get projects underway this year. While the meet growing energy demand,” GWEC noted by ratings, it could lead to more feasible
Ministry of Industry and Trade (MoIT) has in a press release last December. “Based on projects being included in the energy mix.”
proposed continuing the FiT for wind power, market forecasts and experience in other Wind power is to be the first chapter of
it lowers it by over 17 per cent, which has wind markets, a FiT reduction of this size Vietnam’s energy story to 2050, and the coun-
triggered concern among wind power devel- would derail investment in new and planned try possesses excellent wind resources and
opers in the country. wind projects in Vietnam and threaten the skilled developers and technicians who can
country’s current position as a leading wind deliver reliable clean electricity for more sus-
Good or bad? market in Southeast Asia.” tainable economic growth. “This proposal
The proposed new FiT, included in an The current wind energy FiT, which will follows a trend of rapid reductions in incentives
official letter from MoIT last October, will be end with the COD in October, has attracted offered to power producers in Vietnam’s
7.02 US cents per kWh for onshore wind and various market players. The first draft for renewables market,” said Mr. Gavin Smith,
8.47 US cents for inter-tidal / nearshore wind, the third FiT for wind onshore and nearshore Vice Chairman of EuroCham’s Green Growth
applicable to projects commissioned between has been under discussion since the end of Sector Committee (GGSC). “The cost of pro-

26 | VIETNAM ECONOMIC TIMES | MARCH 2021