New tariffs could recharge Vietnam’s wind power projects

However, even with the latest feed-in-tariff (FIT) increase approved by the Prime Minister, the rates are lower than in other ASEAN countries, they add.

The Prime Minister approved the amendment and revision of the wind tariffs as per Decision No. 37/2011/QD-TTg issued on September 10 on support mechanisms for the development of wind power projects in Vietnam.

Under the revision, the FIT for wind power projects will be increased from 7.8 US cents/kWh for onshore to 8.5 US cents/ kWh for onshore and 9.8 US cents/kWh for offshore respectively.

"The higher FIT is a significant and especially important signal for all market actors to further invest into the wind power market in Vietnam," German international development agency GIZ’s Energy Support Programme wrote in a statement sent to VnExpress International.

As of now, Vietnam has just 200 MW of installed wind power capacity and another 100 MW is under construction, according to GIZ.

Due to Vietnam’s constantly growing need for energy and its "excellent wind power resources," many developers have been eyeing the market for several years now.

But the low FIT published in 2011 and risks arising from the project development process had slowed down wind energy development in Vietnam. Investors and financing entities were concerned about the commercial risks involved.

Tobias Cossen, who directs a project to support upscaling of wind power in Vietnam under the GIZ programme, said that with the higher tariff, many projects are expected to push through and get actually implemented.

Cossen said defining FIT is always a complex and sometimes "emotional" topic.

"The revised tariff will give investors and financial institutions who are providing the long-term debt capital the security they need," he said.

But, he noted, that the tariffs were still lower than in any other Southeast Asian wind market.

GIZ estimates that the technical potential of wind power in Vietnam is huge, at about 27 gigawatts, capable of replacing a large share of thermal (coal and gas) power generation planned for the future.

Under the country’s current Power Development Plan, the government targets 6,000 MW of wind energy and 12,000 MW of solar energy production by 2030.