Vietnam's wind power target blown off course by low profitability

Vietnam's wind power target blown off course by low profitability

Cheap electricity prices have literally taken the wind out of the sails of
potential investors.
High installation costs and relatively low power prices are making investors
think twice about diving into Vietnam's wind energy market.

The country has set a target of producing around 6,000 MW of wind power by
2030, equivalent to 2.1 percent of total electricity generation.

Deputy Trade Minister Hoang Quoc Vuong said Vietnam currently has four wind
farms with a combined capacity of just 160 MW, implying that there is much
more room for wind power in the country's energy mix, the Saigon Times
reported.

Power prices in Vietnam are relatively low and not an attractive proposition
for investors in the wind energy market.

Investors have been asking for government support and a guarantee that it
will buy electricity at higher prices so that they can make recoup from
costly wind energy projects.

"At first, [the government] said it would set a new buying price in December
last year, but it has failed to keep its promise again," said Bui Van Thinh,
chairman of the Binh Thuan Wind Power Association, adding that local wind
power investors have proposed a price of 9.5 U.S. cent per kWh.

"According to the latest information, the government plans to set a new
buying price for wind power in the first quarter of this year," Thinh said.

Other projects have been delayed as investors claim that the current buying
price of 7.8 U.S. cents/ kWh, compared to 20 cents in Thailand, 29 cents in
the Philippines and 30 cents in Japan, would significantly cut into their
profits.

Installing wind turbines is challenging in Vietnam and the country relies
heavily on imported equipment.

"When a wind turbine breaks down, we have no choice but to order a new part
from Denmark," said Pham Van Tin, a deputy executive at Thuan Binh Wind
Power Company.

It is obvious that costs are a major deterrent to wind energy projects.

Despite existing difficulties, there is still huge potential for wind power
in Vietnam.

According to the Ministry of Industry and Trade, under the country's latest
revised power development master plan, Vietnam's total wind power capacity
would increase to 800MW by 2020, 2,000MW by 2025 and 6,000MW by 2030.

Vietnam has significantly more potential for wind energy than neighboring
countries in Southeast Asia, according to the World Bank. A study by the
bank showed that 8.6 percent of the country's total land mass could be used
effectively to develop large wind farms, while the figures for Cambodia,
Laos and Thailand stood at 0.2, 2.9 and 0.2 percent, respectively.

The country had previously set a target of developing 1,000 MW of wind
farms, later revised down to 800 MW, by 2020. The push to boost electricity
production from wind turbines has been driven by its rapidly expanding
demand for electricity.

The country's electricity demand is expected to grow 13 percent annually in
the next four years due to its fast-expanding economy, which has grown by
more than 5 percent on average per year since 1999 and is forecast to reach
6.5-7 percent in the next four years.

Vietnam also plans to increase the amount that renewable energy contributes
to national power consumption to at least 7 percent by 2020, up from the
previous target of 4.5 percent.

--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---

Link to Original Article:
http://e.vnexpress.net/news/business/vietnam-s-wind-power-target-blown-off-c
ourse-by-low-profitability-3542940.html

--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---

John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com