By Phuong Thu - Vietnam Investment Review
Southeast Asia’ s leading wind energy developer, The Blue Circle, showed its pioneering spirit by commencing the first foreign - owned wind project in Vietnam - the $58 million Dam Nai project, while other foreign invested projects remain stagnant due to long delays.
Olivier Duguet, chief executive officer of The Blue Circle told VIR last week that the firm began construction of its 40-megawatt Dam Nai project in the windy central province of Ninh Thuan after receiving its investment certificate last year.
“Vietnam is a key market for our expansion into Southeast Asia, and Dam Nai will be our first operating project in the region. The Blue Circle intends to be an important long - term power producer in Vietnam, with other project under development,” Duguet said.
The Dam Nai project will position The Blue Circle to be one of Vietnam’ s wind energy pioneers. Construction of the project will take place in phases during 2017 and 2018.
Located in a subtropical zone with long coastlines, Vietnam has many advantages for developing wind power. According to a World Bank survey, under the Asia Sustainable and Alternative Energy Program, 8.6 per cent of Vietnam is conductive to wind power, which, if developed, could total 513,360MW.
Many foreign investors are considering wind power projects in Vietnam. Belgium’s Enfinity; Germany’s Domier Aircraft Leasing Limited; Switzerland’s Aero Plus Company; Norway’s SN power; and Germany’s Fuhrlaender AG have all expressed interest in wind power projects in Vietnam.
According to date released by the Ministry of Industry and Trade (MoIT), a total of 50 windfarm projects have been registered, but only five saw implementation. Three of these - the 30MW Tuy Phong plant in the south - central province of Binh Thuan; a 6MW windfarm project on Phu Quy Island; and Cong Ly’s 99MW Plant in the Mekong Delta province of Bac Lieu - are all up and running.
Most of them complained that they are face difficulties paying debt and interest expenses. Some projects have been delayed due to a lack of financing. A major challenge is the low feed- in- tariffs (FiT) for wind power, which were fixed at only 7.8 US cents per kilowatt - hour under the prime minister’s Decision No.37/ 2011/ QD-TTg, making many projects fiscally unviable.
However, Duguet said that focusing on the FiT level is the wrong approach. Instead, focusing on conditions to attract long - term debt financing for projects in Vietnam is the only way to develop widespread wind power in Vietnam. Only the very best projects in terms of wind resources and installation costs will be financially viable in the current environment of difficult financing.
“We think that the current FiT is perfectly suitable for the development of at least 2,000MW of wind projects in Vietnam. Our Dam Nai project fits these requirement,” he said.
Duguet suggests prioritising wind power projects over other projects in the master plan of each province in Vietnam to overlap with titanium mining, shrimp farming, or industrial zones. Another recommendation would be for the provincial authorities to consider a firm’s experience before awarding investment certificates, as many good sites are blocked by novice companies with no previous wind power experience.
According to MoIT, under the country’s latest power development master plan. Vietnam’s total wind power capacity would increase to 800MW by 2020, 2,000MW by 2015 and 6,000MW by 2030.
The FiT is currently under revision to become more favourable for the commercial development of the sector. MoIT suggested increasing the FiT for wind power based on the facility’s location, paying a premium to plants located offshore to offset their initial investment coats.