Vietnam really wants to develop wind power, but it has not done necessary things to encourage the development of the industry.

Electricity pricing mechanism unclear

Binh Dinh is the first province in Vietnam which has wind power projects licensed.

According to Nguyen Ngoc Toan, Deputy Head of the Binh Dinh provincial economic zone management board, the province has licensed two projects – Phuong Mai 1 (143 hectares) invested by Phuong Mai Wind Power Company and Phuong Mai 3 (140 hectares) developed by the Central Region Wind Power Company. The two factories have the total capacity of 50MW.

Besides, Nguyen Gia Company is also carrying out a survey to draw up the project on a wind power with the capacity of 120-180MW.

However, the projects are all remain on paper.

As planned, if reaching an agreement with EVN about the electricity price, the Central Region Wind Power Company would sign the contracts on importing equipments by the end of the year. After that, it would provide geological data to the equipment manufacturers, so that the manufacturers can make necessary adjustments. If everything goes smoothly, Phuong Mai 3 would become operational by 2013.

Meanwhile, the investor still hopes that the government would adjust some policies in the time to come and give more support to wind power projects.

Toan said on Saigon Tiep Thi that the local authorities really want to encourage to develop wind power projects, considering wind power plants as the breakthrough in developing clean energies. Therefore, the local authorities have been doing all the things they can to support investors. However, to date, the projects still have not been implemented due to many problems.

“Especially, there has been no proper policy that encourages the development of wind power, which has made investors hesitant,” Toan said.

According to Bui Quang Ngan, Deputy General Director of the Central Region Wind Power Company, in 2000-2007, EVN only accepted to buy electricity at 4 cent per kwh.

On August 2, 2007, the government issued the regulations on the preferential mechanism applied to clean energy projects. However, only after four years, did the investors hear about the electricity price and the subsidization level.

Recently, the government’s Decision No 37 dated June 29 stipulates that EVN will buy electricity from wind power plants at 7.8 cent per kwh, while the plants will get the subsidization of one cent per kwh sourced from the Vietnam Environment Protection Fund.

However, most of the investors believe that the price levels are not high enough to run wind power plants, because the production cost has risen to 10-12 cent per kwh.

As such, the new pricing mechanism which has been decided after a long period of consideration has become out of date. As the material prices and labor cost have increased, the demand for wind power has also increased, the prices of equipment have increased sharply, thus making the production cost rise to 10-12 cent per kwh.

A lot of other barriers

Nguyen Thanh Hoan, Director of the Ninh Thuan provincial Department of Industry and Trade, said that in general, wind power projects are located in the areas near the sea. However, the areas are places where local residents settle, therefore, it would be very costly to compensate local residents for site clearance for wind power plants.

Besides, a lot of wind power projects have not been implemented because of they are located on the black sand areas. Under the current regulations, only when all the black sand is exploited, will investors can set up construction works on the areas. Therefore, it is unclear how much time the investors will have to wait.

Meanwhile, in Binh Thuan province, wind power projects have been hindered by titanium mines. The problem is that the areas potential for wind power projects are also the ones which have big titanium reserves.

Source: VNN