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Vietnam’s trade ministry heeds calls to extend wind power tariff policy, submits proposal to government

If signed, the extension will give the industry and investors the certainty and confidence needed to maintain wind energy momentum in the country, experts say.

Vietnam’s Ministry of Industry and Trade (MOIT) on Friday proposed to the country’s central government to extend the deadline for its feed-in tariff scheme by two years, from the original cut-off date in November 2021 to the end of 2023, according to a source close to the Vietnamese government.

MOIT suggested that a new, albeit lower feed-in tariff—a fixed rate paid to generators for wind energy they produce and export to the national power grid—be implemented for projects that become commercially operational after November next year. Details on how high the new rate would be have not been disclosed.

After the new scheme ends in three years, the ministry proposed shifting from fixed renewable energy rates to an auction programme, reflecting a global trend towards a competitive selection of developers amid rapidly falling prices of clean energy equipment. An auction scheme would enable Hanoi to select the most price-competitive wind power firms for specific renewable energy projects.

If signed, the new policy would mean more than 4 gigawatts (GW) worth of wind energy projects—that’s nine times Vietnam’s installed onshore and offshore capacity of 490 MW in 2019—currently waiting for government approval are set to reach completion in the next two years.

The disruption of global clean energy supply chains and construction timelines in the wake of the ongoing coronavirus pandemic as well as delayed wind project approvals due to regulatory obstacles in the country were among the reasons cited for MOIT’s policy proposal.

Other reasons for the move include challenges facing offshore wind energy projects in Vietnam, a country new to wind power, and delays of coal and natural gas projects at a time when the nation urgently needs more electricity to support its burgeoning economy and growing population. By 2030, Vietnam—one of Asia’s fastest-growing economies—is expected to require about 130 GW of electricity, more than double the 54 GW currently.

There is also the need to lend continuous support to renewable energy industries if the nation is to reach its ambitious clean energy targets, said the ministry. Vietnam has ambitions to install 11 GW of wind power and 20 GW of solar power capacity by 2025.

The new proposal comes in response to appeals from wind energy developers, industry associations and local governments from nine provinces. They warned two weeks ago that Hanoi’s failure to send a clear signal of continued support to the industry threatened to deter investors and derail the country’s wind targets. They also said the government risked more power outages and worse air pollution, amid rising demand for electricity and more coal burning.

Commenting on the new proposal, Qiao Liming, Asia director of the Global Wind Energy Council (GWEC), told Eco-Business: “GWEC is very happy to see this positive movement of the government of Vietnam. We have been in active dialogue with the government on this issue and applaud them for their openness and willingness to work with the private sector. This gives the industry confidence and certainty.”

In recent years, Vietnam’s rich wind resources as well as strong government support in the form of its latest feed-in tariffs—USD 8.5 cents per kilowatt-hour (KWh) for onshore and USD 9.8 cents/KWh for offshore wind projects, for a period of 20 years—have propelled wind power growth in the country.

The new proposal comes three days after the Vietnamese government approved a much anticipated second feed-in tariff scheme for solar energy.

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