Investors who once rushed to invest in Vietnam’s fledgling clean energy industry are now backing off due to unprofitability, further hindering the country’s dream of getting greener. The low price of electricity produced by wind and solar farms and the lack of any government subsidy or favorable loan package are the reasons cited by foreign investors for their withdrawal. Wind- and solar energy for a greener future. Will it happen in Vietnam?
A Greener Future: Vietnam
19 Gigawatts of solar energy are potentially available in Vietnam via small-scale projects, according to Sonia Lioret, principal technical advisor and project lead of a joint energy support program run by Vietnam’s Ministry of Industry and Trade in cooperation with the German Corporation for International Cooperation (GIZ).
Photo by Tuoi Tre. A floating wind farm in Bac Lieu Province, located in southern Vietnam.
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Grid Operators Are Unfamiliar With How To Implement Projects
Additionally, over 100 large-scale projects are planned in Dak Lak, Binh Thuan, Tay Ninh, Ninh Thuan, and Khanh Hoa. Still, only a handful have been officially approved for development. The reason, Lioret explained, is that investors, relevant authorities of Vietnam, and local grid operators are all unfamiliar with how to implement such projects. There are now multiple power generators in Vietnam. Still, all of them have been forced to sell electricity to one buyer, the Vietnam Electricity Corporation (EVN), which distributes power to consumers via five regional units in the north, central, and southern regions, Hanoi and Ho Chi Minh City. A recent government-approved decision to raise EVN’s buying price for solar power to 9.35 cents per kWh had been expected to attract more investors. However, technical barriers have been cited among the reasons turning investors off Vietnam’s clean energy industry.
Photo by Tuoi Tre. A man walks near a wind farm in Bac Lieu Province, located in southern Vietnam.
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Most of Vietnam’s solar and wind farm projects are concentrated along the south-central coast and in the Central Highlands, where winds blow strong, and sunshine is plentiful, making it possible to produce clean energy on a large scale. In fact, this poses a risk of overload on the local power grid, as the immediate demand for energy in these provinces is not as high. Another reason, experts have pointed out, is that the deadline for solar investors to enjoy the favorable price of 9.35 cents per kWh is June 30, 2019, deemed to be too short a period of time for them to yield much profit. Investors have also been challenged with getting access to loans. Independent funds are deemed too risky a venture, while local banks are unfamiliar with approving loans for clean energy projects, GIZ claimed.
Wind Energy Yet To Deliver Fresh Air
As solar energy grapples with these difficulties, wind power has even more challenges. According to an official for renewable energy at the Ministry of Industry and Trade, as of August 2017, there had been around 50 registered wind power projects in Vietnam with a combined generation capacity of 3,000 megawatts. However, only five have gone into operation, with a total installed capacity of 190 MW.
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Bui Van Thinh, director of the Thuan Binh Company that has invested US$24 million in a 24 MW wind farm in Binh Thuan Province, said the low buying price of wind power had discouraged investors. “At the price of only 7.8 cents per kWh, we have merely managed to pay our debts, loan interest, and overhead after one year of operations,” Thinh said.
“Banks consider this rate too low, and an ineffective return on investment, making it difficult for us to take out loans,” he explained.
By the year 2020, Vietnam aims to have 850 MW of installed solar power capacity, which is set to rise to 12,000 MW by 2030.
For wind energy, the goals for 2020 and 2030 are 800 MW and 6,000 MW, respectively.
Cover photo via Monica Richter
Source Tuoi Tre News
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