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Plan to increase wind power price to be approved

Released at: 08:38, 05/12/2016

Plan to increase wind power price to be approved

Photo: Viet Tuan

MoIT to build a strategy to reduce investment costs for wind power

by Ngoc Chi

A plan to increase the price of wind power is expected to be approved at the end of this month, according to Mr. Pham Trong Thuc, Director of the New and Renewable Energy Department under the Ministry of Industry and Trade (MoIT)

He stressed that the plan to increase the wind power price was submitted to the government in November. "It is expected that the plan will be approved in the end of this year or no later than early 2017,” said Mr. Thuc. “MoIT is building a price plan so that wind power output can account for 15 to 20 per cent of the national power system." 

There are now four wind power projects gridding in the national power system including two projects in southern Binh Thuan province, one project in southern Ninh Thuan province and one in the Mekong Delta’s Bac Lieu province.

Only the wind power project in Bac Lieu province has a price at 9.8 US cents per kWh because it is sea wind power. The remaining projects apply the price at 7.8 US cent per kWh.

According to a study by the German Development Cooperation Organization (GIZ), each MW wind power project in Vietnam needs investment capital of $2 million and operating costs are $35,000. Therefore, the price of 7.8 cents per kWh cannot attract investors.

“Increasing the price of wind power is what we expected for a long time,” said Mr. Bui Van Thinh, Director of Thuan Binh Wind Power. “We can have a profit with this price even though reducing costs and optimizing everything.”

Under the National Renewable Energy Development Strategy 2020, Vietnam targets total wind power capacity of 800MW and 6,000 MW by 2030. Currently, the capacity of wind power is at 160 MW. Meanwhile, as calculated, the potential of onshore wind is 7,000 MW and offshore wind is 10,000 MW.

Along with increasing the wind power price, MoIT will also build a strategy to reduce investment costs for wind power. “Loan interest rates for renewable energy projects is very high, 9 to 10 per cent for a hydroelectric project for instance,” said Mr. Thuc. “If we keep the high interest rates, it is very difficult to develop renewable energy.”

“Wind power now accounts for about 4 per cent of the total global energy consumption," said Mr. Steve Sawyer, Secretary General of the Global Wind Energy Council, highlighting the need to shift towards renewable sources to reduce greenhouse gas. "It is expected to increase to 6-8 per cent by 2020, 18-20 per cent by 2030 and a fifth of total consumption by 2050.” 

Vietnam’s electricity demand is expected to continue to grow 13 per cent annually in the next four years due to its fast-expanding economy, which has grown above 5 per cent on average per year since 1999 and is forecast to reach 6.5-7 per cent in the next four years.  

The country now depends on thermal and hydropower for almost all of its electricity demands, while wind power has only contributed 0.3 per cent, according to a recent article from State-owned utility Electricity of Vietnam.

Thermal power plants make up more than half of the total generation, and among them, coal-fired plants account for 34 per cent. Investors have committed to more than 45 wind power projects to generate more than 4,800 MW in total, but most of them are still on paper. Binh Thuan alone has 16.

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