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GWEC Calls on Vietnamese Government to Extend Wind Tariff

Power News - Published on Wed, 30 Sep 2020

Image Source: GWEC Vietnam Wind Power
An industry alliance led by the Global Wind Energy Council has called on the Government of Vietnam to urgently extend the wind energy Feed-in-Tariff scheme. Vietnam’s wind industry is already facing a slowing of investment in 2020 because of uncertainty around the investment framework, and further delays to the FiT extension will hinder supply chain development and cost reduction in the emerging wind market, and ultimately undermine Vietnam’s goal of affordable, reliable and clean electricity.

Vietnam is the fastest-growing wind market in the region, with 500 MW of onshore and offshore capacity currently installed and at least 4 GW forecast to be commissioned by 2025. However, investor interest in wind project development in Vietnam has slowed significantly in 2020, as onshore wind projects typically require 2 years for development but the current FiT only applies to projects completed by November 2021. Without clarity on the FiT scheme from 2022 onward, investors are facing too much uncertainty to commit to new wind projects, jeopardizing the future pipeline and leading to job cuts in the sector.

The Prime Minister’s Office and Ministry of Industry and Trade have already recognised the substantial potential of wind energy to generate clean power and green growth. In June this year, the Prime Minister approved an additional 7 GW of new wind projects to be added to Vietnam’s master plan for the power sector PDP 7. However, the reality is that the vast majority of the 7 GW may not materialize, due to lack of certainty on the FiT extension.

At least 1.65 GW of wind projects is forecast to be installed before the current FiT expires in November 2021. Wind energy, as a clean, indigenous energy source, plays an important role in bolstering Vietnam’s energy security and meeting its soaring electricity demand. Moreover, the growing renewables sector could generate billions of dollars in investment capital and hundreds of thousands of jobs in the long term.

This industry alliance understands that the Government of Vietnam is currently considering the FiT extension and the introduction of a new FiT scheme. The situation for the wind sector has now become critical, as the slowdown in investor interest in 2020 has been compounded by disruptions from the COVID-19 pandemic. Due to component bottlenecks in the global wind supply chain and less favourable CAPEX rates at future sites for new wind projects, particularly around the Mekong Delta, the investment case for wind projects in Vietnam will be significantly challenged without a transparent and reasonable FiT scheme announced as soon as possible.

To date, Vietnam’s wind market has benefited from increasingly strong flows of foreign and domestic capital. The 4 GW due to be installed by 2025 could generate up to 65,000 jobs and about USD4 billion in investment. To realize this potential, the Government of Vietnam must act now to extend the wind energy FiT scheme and avoid a prolonged slowdown of clean energy investment and installation in the years ahead.

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Posted By : Yogender Pancholi on Wed, 30 Sep 2020
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