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During the Vietnam Wind Energy Summit 2019 held in Hanoi on March 13, Nguyen Quang Minh, deputy head of the Power System Department under the Electricity Regulatory Authority of Vietnam, asserted that the country has considerable potential for wind power development through both medium and small – sized wind turbines.

Minh added that central and southern coastal areas have the highest potential to expand wind power projects, stressing that huge potential remains for offshore wind power.

He noted that at present there are seven wind power plants operating across the country with a combined capacity of 270 MW. Furthermore, there are as many as 11 provinces, mostly located in the central and southern regions, which have technical wind potential aggregating to 23,000 MW. To date, the total capacity of wind power projects approved in these localities has only reached 4,000 MW.

Under Decision 39/2018/QD-TTg by the Prime Minister dated September 10, the feed-in tariff (FiT) for wind power increases from US cents 7.8/kWh to US cents 8.5 for onshore generation, and a further US cents 9.8 for offshore, respectively. This decision took effect as of November 1, 2018.

Since the decision came into force, local competent authorities have received a number of proposals on how to enact wind power projects. Currently up to 7,000 MW have been submitted for approval to the power master plan.

According to Minh, there are big opportunities to expand the wind power market which is poised to benefit from a string of favourable conditions.

He said that the domestic demand for electricity is estimated to rise by 10.6 per cent by 2020, 8.6 per cent by 2025, and 7.4 per cent by 2030. The country has shelved plans to construct nuclear power plants while traditional power plants are suffering as progress on their development stalls.

However, vague legal regulations pose an obstacle for the expansion of wind farms.

Minh pointed blames for the unclear clauses and subsequent implementation of the Planning Law. He noted that under Decision No.39, FiTs are valid until November 1, 2021 without short- or long-term rates, while there is a lack of a national body empowered to take on a strong control function.

A limited connection capacity and network also remains another issue as there exists a conflict over defining the priority to which solar and wind power projects would being added first to the power master plan, Minh said.

There is also a lack of equipment and service providers and technical standards set on the equipment used in wind energy, he stressed.

According to Le Hoang Nam of the Power Market Department of Vietnam Electricity group (EVN), the country, in the light of the revised Power Master Plan VII, is projected to increase its total wind capacity to 800 MW by 2020. The figure is set to climb to 2,000 MW by 2025 and 6,000 MW by 2030.

However, the total capacity of wind power projects that operate in accordance with the power purchase agreements signed by the power project developers and the EVN has so far amounted to 834.2 MW.

Manchang Wang, Chairman of the China-based CSIC Haizhuang Windpower Co., Ltd, said his firm wishes be part of the bright future ahead for the country’s wind power market.

Currently the country’s wind power market is undergoing a period of rapid growth. However, it is facing several challenges, including capital mobilisation, facilities and equipment, and engineering, Wang said.

He underscored the need to provide customized services to wind power projects.

The businessman noted that Vietnam is home to some of the biggest wind resources in Southeast Asia, adding that the country is also a potential market for large-scale expansion of offshore wind power farms while local onshore wind power projects are still listed in the IEC (International Electrotechnical Commission) III category.

He mentioned that although the cumulative installed capacity remains small, his firm believes that the above-mentioned three figures, as stated in the revised Power Master Plan VII, can be fully fulfilled thanks to a range of factors. These include huge wind potential, relatively appropriate electricity tariff policies, and clear planning by the Government.

Over the past few years, although there has been a climb in investment in renewable energy, not only authorised agencies, but investors have expressed their concern about the capacity of absorbing electricity of the national power grid.

Making an interesting comparison, Bui Van Thinh, chairman of Thuan Binh Wind Power JSC, said, “The issue about grid connection is just like that of My Dinh National Stadium in Hanoi. While the stadium can accommodate only 40,000 people, the demand for watching football matches is far higher than that. Thus, who will stand inside and who will stand outside the stadium? The same pressure is also facing the national power grid.”

Nguyen Minh Quang from the National Load Dispatch Centre under the Ministry of Industry and Trade (MoIT) said that the southern central region is home to the nation’s renewable energy, but power grid conditions there are not prepared for upcoming ­demands. “It takes three years, on average, to build a power grid project, while a solar power one needs only one year to be put in place. As a result, ­electric grid development cannot catch up with the ­proliferation of solar and wind power projects,” he said.

The lesson has been put down that these renewables need to be integrated into electricity grids that are ­capable of managing new complexities such as ­unpredictable and intermittent supply, more distributed power generation, demand management, and electric ­vehicles. Grid operators will also need to expand and ­modernise their infrastructure to ensure the reliability, efficiency, and security of electricity supplies.

Unlike wind power, solar power has become hotter than ever in Vietnam. The boom began when the government’s Decree No.11/2017/QD-TTg on mechanisms for encouraging the development of solar power in Vietnam was ­released. The list of solar projects registered by foreign investors in Vietnam has been growing rapidly, including foreign names such as Tata Power, Sunseap Group, ACWA Power, SY Panel Group, AIN Group, Siemens Gamesa Renewable Energy, and Gulf Energy Development.

Thuan Binh Wind Power JSC also plans to develop a 150 megawatt (MW) solar power plant on the area the company had ­initially intended to use to ­expand the Phu Lac wind farm. The construction of the project will be ­implemented in three phases. The company is currently conducting a pre-feasibility study, an environmental ­impact assessment, and ­capital arrangement for the first phase of the project.

The MoIT recently released impressive figures, approving more than 70 new projects to be put into ­operation before June 2019, with a total capacity of over 3,000MW. The amount far exceeds the estimated solar power output of 1,000MW until 2020 as set out in the original Power Development Planning VII (PDP VII).

Nhat Dinh, a renewable energy expert, said that on average, cities and provinces need to build a power plan with vision for 7-10 years ahead as well as arrange the grid for the new projects. In 2016, when the revised plan was ­issued, no investors ­registered to develop solar and wind power projects in the central region. However, in 2017, the ­government’s approval of the feed-in-tariff (FiT) of 9.35 US cents per kilowatt-hour (kWh) for solar power ushered in an intense wave of investment, leading to the current ­overload.

China’s renewable energy ­development policy could serve as a lesson for investors planning to pour money into renewables in Vietnam.

Specifically, the total installed wind power ­capacity of China is ­now estimated at 200 gigawatts (GW), while the figure in the US is 100GW. However, the ­generated wind power ­capacity in the US is higher than in China, showing that the generated wind capacity is very low. The reason for this ­problem is that numerous wind power projects are ­completed but fail to generate power because of grid ­insufficiencies, which is the consequence of a lack of ­synchronisation in wind power development.

In Vietnam, under the government’s Decision No.39/2018/QD-TTg, which came into force last ­November, the FiT rate for onshore wind power set at 8.5 US cents per kWh, and ­offshore wind power at 9.8 cents per kWh. Under the ­decision, these rates are ­applicable to projects that are partly or entirely connected to the power grid and will begin commercial operations by November 2021.

Vu Chi Mai, senior ­project officer for an up-scaling of wind power venture under the GIZ Energy ­Support Programme, noted that two factors influencing project bankability are the level of electricity selling price, and the power purchase agreement (PPA). In the past, when the previous FiT was low, the PPA was considered an important factor to ­evaluate a project’s bankability. Today as the FiT has been raised, the bankability shall be enhanced despite the ­unchanged PPA. The current PPA is seen as acceptable by local banks but not international banks. The question remains whether local banks have the capacity to fund a multitude of wind power projects.

In the long run, to achieve the government’s goals on renewable energy development, adjustments to the PPA should be considered to meet the requirements of international financial institutions. This will have a positive impact on the financing of wind power projects. Few studies thoroughly assess the impact of fluctuating renewables on the stability of the national grid.

However on avoiding specific bottlenecks, the Vietnam Energy Partnership Group’s (VEPG) said it requires “comprehensive monitoring of application, approvals and a transparent system of prioritising project applications as opposed to a first-come, first-served basis.”