Vietnamese Ministry of Industry and Trade has proposed new Feed-in Tariff (FIT) rates as part of the country’s plan for an extension of the FIT scheme for wind energy projects entering operation from November 2021 to December 2023.
The new FIT proposal is reducing tariffs for intertidal/nearshore projects by 13.6 per cent and by 17.4 per cent for onshore wind power, which the Global Wind Energy Council (GWEC) called one of the most dramatic reductions seen for wind power globally.
While GWEC hailed Vietnamese government’s decision to approve an extension of the wind power Feed-in Tariff, the organisation said that the now proposed FIT rates risk significantly hindering wind power sector’s growth in Vietnam. The move could lead to slowing down investments and the creation of new jobs, according to GWEC.
The government decided to introduce a FIT extension for wind power to compensate for permitting and COVID-19- related delays, however, GWEC said that the dramatically reduced rates would derail investment in new and planned wind projects in Vietnam and threaten the country’s current position as a leading wind market in South East Asia. The organisation recommended a minimum six-month extension to the current FIT, followed by “milder” reductions to the FIT from May 2022 onwards.
“Developers already facing delays due to COVID-19, and the general challenges encountered in an early stage wind market would struggle to close financing, leading to a ‘bust’ period that could reduce new wind installations by up to 80 per cent in 2023, and a further 25 per cent per year thereafter” , GWEC said. “The reductions to the project pipeline would create missed job opportunities in the thousands and loss of billions of dollars in inward investment”.
Nearshore/intertidal wind projects are seeing a rise in Vietnam, with several wind farms now either nearing construction, in development or in planning.
So far, there are several intertidal wind farms being developed in the country, mostly with an installed capacity of around 50 MW, with some of them slated for commissioning from the third quarter of 2021 onwards. In November, plans for the country’s largest intertidal wind farm were revealed, which include building four wind farms that would make up a 350 MW Ca Mau 1 project off Nangen County in Ca Mau Province.