Vietnam's southern province of Binh Thuan is set to receive a new wave of investment worth over VND90 trillion ($4 billion) in renewable energy, reinforcing it as the focal point in the country's push for clean energy to keep up with increased energy consumption.
The investment is part of pledges announced at a conference Wednesday by nearly 30 domestic and foreign enterprises in various fields, which also include tourism, agriculture and high tech industry, with the total value of over VND126 trillion.
The renewable energy projects, mainly in two districts about 200 kilometers (120 miles) east of Ho Chi Minh City, include a solar power plant invested by Vietnam Electricity group and the $2.2 billion Son My 1 gas-fired power project by a French-Japanese venture.
A new array of electricity projects is expected to propel Binh Thuan to become Vietnam's major energy center, with capacity totaling more than 12,000 megawatt, or nearly a quarter of the country's total power generation by 2020, said Chairman Nguyen Ngoc Hai of the provincial People's Committee.
He said Binh Thuan has favorable natural conditions suitable for electricity generation, such as low rainfall, many sunshine hours and an impressive system of lakes and major rivers. It has built coal-fired and liquefied gas-fired plants along with hydropower, wind power and solar power.
Ba Ria-Vung Tau Province, Binh Thuan's southern neighbor, has already become the country's power hub, mainly in thermal power generation and offshore oil and gas production
Under Vietnam’s latest power development master plan, the country’s total wind power capacity would increase to 800MW by 2020, 2,000MW by 2025 and 6,000MW by 2030, much of which would be contributed by Binh Thuan.
But skepticism remains in the Binh Thuan Wind Power Association.
Chairman Bui Van Thinh of the association said it often takes a long time to obtain investment licenses for wind power projects while investors have been facing problems with access to credit and investment returns.
He said the current low electricity price would prompt Vietnam to miss its power capacity target in the next three years.
High installation costs and relatively low power prices have been discouraging investors to join Vietnam’s wind energy market. The current buying price at 7.8 U.S. cents/kWh is well below that in other Asian countries, such as 20 cents in Thailand, 29 cents in the Philippines and 30 cents in Japan.
Prime Minister Nguyen Xuan Phuc said Wednesday he has signed a directive to increase the solar power price to 9.35 cents, which will take effect between June 1, 2017 and June 30, 2019.
The directive also mentions other incentives relating to capital, land, import tax and corporate income tax. For instance, solar power projects are exempt from duties on goods imported to create fixed assets.
While some investors have previously said the solar power price should be set at 10 cents per kWh or higher to ensure profits, they could still make some profit at the new price, partly because solar power generation costs have been on decline in recent years.
Vietnam is trying to generate enough energy for growth and for millions of people who still lack access to electricity while gradually shifting towards clean and low-carbon energy.
Last year the government revised down the output target of coal-fired power plants to 53.2 percent of the total power generation by 2030, from 56.4 percent previously projected.
Vietnam now aims for 10.7 percent of the total electricity output by 2030 generated from renewable energy, mainly solar and wind energy, up from 6 percent previously planned.