Vietnam approves $60 mln wind power project

A Singaporean company plans to tap the potential for wind power in southern Vietnam.

Southeast Asia’s leading renewable energy developer, The Blue Circle, has been awarded an Investment Certificate from Vietnamese authorities for a 40 Megawatt (MW) Dam Nai wind project worth $60 million in the southern province of Ninh Thuan.

The Singapore-based wind energy specialist, along with its Vietnamese partner TSV, have received an investment allowance for the wind project as well as a Power Purchase Agreement with Vietnam’s national utility, EVN, after having been granted land-use permission by provincial authorities for 16 months, according to The Blue Circle’s official website.

The Blue Circle installed a 100 meter-tall meteorological mast on the 933-hectare site along National Highway No.1 in May 2015 to gauge wind velocity. The site was approved in Ninh Thuan's Energy Development Master Plan, along with grid capacity for the project.

The Blue Circle CEO Olivier Duguet said that: “This approval for 40MW is only the first phase of the total project. With the grid connection on site, as well as very good wind speeds, the Dam Nai project has all the attributes to succeed even in a low Feed-In-Tariff environment.”

“It is a great achievement and recognition of the professional development work which has been done by our team in Vietnam during the last three years,” the CEO added.

The company will conduct engineering studies as the following step and construction of the plant is scheduled to begin in 2017 for the first phase.

“With less than 120 MW of wind power installed in the country so far, the Dam Nai project will position The Blue Circle as one of Vietnam’s wind energy pioneers, able to significantly contribute to the ambitious target set by the government. We intend to fully participate in the wind power expansion in Vietnam going forward and make wind energy become a reality in a country with big potential,” explained Gilles Beau, chief evelopment officer of The Blue Circle.

In pursuance of the Paris Climate Conference signature, Prime Minister Phuc has set a new target of 4,000 MW generated from wind power by 2025 which positions the country as potentially the largest market for wind power in Southeast Asia.

The Blue Circle is a developer of renewable energy projects in Thailand, Vietnam, Indonesia and Cambodia. Based in Singapore, the company works to bridge the gap in project development in Southeast Asia by being vertically integrated with unique regional wind engineering capabilities.

Reference source: e.vnexpress.net

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Vietnam, Ireland ink deals to build $2.2 billion wind farms

The farms, one in the central region and the other in the south, will have a combined capacity of 940 MW.

Companies from Vietnam, Ireland and the U.S. on Monday signed cooperation agreements to build two wind farms in Vietnam worth $2.2 billion.

The pacts are part of various deals reached by Vietnam and Ireland during the visit to Vietnam by President of Ireland Michael D. Higgins from November 5-14.

Vietnam’s Phu Cuong Corporation will join hands with Ireland’s Mainstream Renewable Power Ltd. and the U.S. giant General Electric to set up an 800-megawatt wind farm in the southern province of Soc Trang. The project will need $2 billion.

In the second project, Vietnam’s Pacific Corporation will cooperate with Mainstream Renewable Power Ltd. to build another 140-MW wind farm in the central province of Binh Thuan, which is worth $200 million for construction.

The same day Vietnam and Ireland also signed other agreements on poverty reduction, education and training, information and communications.

Vietnam has recently revised down the target for electricity generation by coal-fired thermal power plants from 56.4 percent of the total electricity generation to 53.2 percent by 2030.

The country is more focused on renewable energy, particularly solar and wind energy, targeting a renewable energy ratio of 10.7 percent by 2030.

But that will require a lot of investment in the coming years. Wind and solar powercapacity is estimated to account for only 0.8 percent and 0.5 percent of total electricity generation respectively by 2020.

With over 3,000 km of coastline and numerous islands, Vietnam has more wind power potential than most of other Southeast Asian nations with a total estimated capacity of 24,000 MW, the Vietnam News Agency has reported.

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INVESTMENT IN WIND POWER PROJECT IN VIETNAM

Wind power is one of priority sectors to develop in Vietnam. Vietnam Government has been given a lot of incentives as well as support for wind power development projects.

Wind power investment procedure in Vietnam

Step 1: Project location

Investment in wind power projects must be suitable with the development plans of wind power and electricity, which are approved by the competent authorities.

Investors are licensed the wind power investment and development permit for wind power projects that are on the list of approved national wind power and electricity development plans. Moreover, in terms of the projects which are not in the approved list, the investors are responsible to create its dossiers which will be added to the development plan and examined by Ministry of Industry and Trade and then by Prime Minister.

Step 2: Evaluate wind potential at selected location

It is necessary to install wind measurement masts (if they are not available on the project location) and implement the wind measurement at least one year.

Step 3: Pre-feasibility research and require adding the project to power development plan

If the project location has potential wind condition, the investors will make a report and submit to Ministry of Industry and Trade to add this project to the list of power development plan. The Ministry is responsible to consider the application and asks for Prime Minister’s approval (wind power is a new sector in Vietnam, so the procedure has not been issued yet. All wind power projects with large scale as more than 50 MW have to be approved by the Prime Minister). After the project has been approved, the application is submitted to Department of Planning and Investment where the project is located

Step 4: Make investment report (feasibility study)

After being approved, the investment report will be submitted to Ministry of Industry and Trade to evaluate and approve

Step 5: Signing power purchase agreement with EVN

Under the provisions of Decision No. 37/2011/QD-TTg, EVN is obliged to buy the entire power output of the wind power project. Agreement and finalize the signing of the power purchase contracts, connection, design metering systems. Currently, the standard power purchase agreement is still in the process of waiting for approval from the Government.

Step 6: Implementation of the project

When the technical design is completed and the investment report is approved by the competent authorities such as Department of Industry and Trade, Department of Construction, Department of Natural Resource and Environment and other relating departments.

Step 7: Construction

According to Decision 37/2011/QD-TTg, the investors are allowed to start the construction only when its investment certificate is granted, have the signed power purchase agreement with the power buyer, have connecting agreement with the power distributor; wind condition report is continuously recorded in 12 months. 

Policy framework relating to wind power supporting in Vietnam

Policies and incentive mechanisms of the Vietnamese Government for wind power sector are expressed through clearer legal policies clearer in recent times. Prime Minister issued Decision No. 1208/QD-TTg of July 21, 2011, approving the national plan for power development in the period 2011 – 2020 with consideration to 2030. In which expresses the goal of the Vietnam Government is to prioritize developing renewable sources for electricity production, increasing the proportion of electricity produced from 3.5% in 2010 to 4.5% of total power manufactured in 2020 and 6% in 2030.

The government’s commitment to renewable power sector in general and wind power sector  in particular is clearly indicated after Decision No. 37/2011/QD-TTg was issued on 29 June 2011 (taken into effect on 20^thAugust, 2011) stipulating the mechanism to support the development of wind projects in Vietnam. Accordingly, the wind power projects enjoy preferential of capital, tax and fee.

– Mobilizing investment capital: Investors are allowed to mobilize capital in the form of permission from the organizations and individuals at home and abroad, has preferential investment credit under the existing legal provisions on investment credit and export gorvernment’s.

– Preferential of tax:

+ Import tax: The project to develop and use of renewable energy sources are exempt from import duty for goods imported to form fixed assets for the project; imported goods are raw materials, supplies and semi-finished products cannot be produced domestically and imported for production of projects as stipulated by the current legislation on export tax and import tax.

+ Enterprise income tax: The exemption and reduction of enterprise income tax for projects to develop and use of renewable energy sources is made as to projects in the field of investment incentives as stipulated by the current legislation on taxes.

– Incentives on land: The project to develop and use of renewable energy sources be exempted or reduced of land use fees and land rent as stipulated by the current legislation applicable to projects in the field of incentives invest.

– Priority is given to research related to the development and use of renewable energy resources in the field of scientific development and technology and development of high-tech industry; allocate funds from the fund to support scientific studies and technology in the pilot project, the project of industrialization for development and use of renewable energy, promote technological improvements relating to the development and use of renewable energy, reduce production costs of renewable energy products and improve product quality.

According to Decision No. 37/2011 / QD-TTg on the mechanisms to support wind power. In which, the buyer (EVN) is responsible for purchasing all electricity output from wind power project at the price of 1,614 VND / kWh (excluding VAT value added taxequivalent to 7.8 US cents / kWh) at the point of delivery of electricity. Electricity purchase prices are adjusted according to fluctuations in the exchange rate between VND and USD. In particular, the State shall support for the buyer the price of electricity at the price of 207 VND / kWh (equivalent to 1.0 US cents / kWh) for the entire output of electricity purchased from wind power plants through Protection Fund Vietnam environment. This means, the buyer or EVN only pay 6.8 US cents / kWh.

According to Decision No. 37/2011/QD-TTg on the mechanisms to support wind power. In which, the buyer (EVN) is responsible for purchasing all electricity output from wind power project at the price of 1,614 VND / kWh (excluding VAT, equivalent to 7.8 US cents / kWh) at the point of electricity delivery. Electricity purchase price will be adjusted according to the fluctuations in the exchange rate between VND and USD. In particular, the State shall support for the buyer at the price of 207 VND / kWh (equivalent to 1.0 US cents / kWh) for the entire output of electricity purchased from wind power plants through Vietnam Environment Protection Fund. This means, the buyer or EVN has to pay only 6.8 US cents / kWh.

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VIETNAM PROMOTES THE DEVELOPMENT OF WIND POWER

The very first wind power plants, one in Binh Thuan and one in Bac Lieu, can be considered a breakthrough to pave the way for the construction of Vietnam’s wind power industry, which is expected to be pillar of the future power source in Vietnam.

 In the field of renewable energy, hydropower and wind power are considered clean power sources

In fact, hydropower has hidden dangers for communities. On the other hand, wind power is friendly and gentle to humans. We can consider hydropower as an old power source and the wind power is the young one. While hydropower has been playing a vital role in the power industry of many countries, wind power has only been noticed and invested for about 5 – 10 years.

With the wind power plants in Bac Lieu, Binh Thuan and Ninh Thuan, recently, Vietnam Prime Minister has agreed to invest in a wind power plant in Khai Long resort – Ca Mau.

Under the direction of the Government, the investment objective of the above project is to build a wind power plant, connecting to the national electricity system and sell electricity through power purchasing agreement with the Electricity of Vietnam (EVN), contributing to ensure national energy security.

The plant will be built in Khai Long Village, Dat Mui Commune, Ngoc Hien District, Ca Mau. The total installed capacity is 100 MW on an area of land and sea of approximately 2,165 hectares.

The project will be implemented in the period from 2016 to 2018.

According to the Ministry of Industry and Trade, Vietnam currently has nearly 50 registered wind power projects but only about 10% of which are under construction, of which 3 projects are producing commercial electricity, which are Tuy Phong wind power project (Binh Thuan) with capacity of 30 MW; Phu Quy island wind power project with capacity of 6 MW in Binh Thuan; Bac Lieu wind power project with capacity of 16.5 MW.

Most recently, Phu Lac wind power project (Binh Thuan) with capacity of 20 MW and the total investment of nearly 1,100 billion USD has been started construction in July 2015.

ANT Consulting is here to assist you from the outset; providing corporate intelligence, risk advisory, management consulting services that assist market entrance, and ensure efficient business start-up operation.  Our services are as following:

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We strive to save your cost by guiding you towards economical solutions that comply with local legislation and procedures. We support you through early logistic solutions and carry you through as your business grows.  We aim to bridge the gap between international best practices and local cultures and assist foreign companies and organizations entering Vietnam market to overcome commercial and regulatory issues.

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POTENTIAL OF VIETNAM WIND POWER

Located in the monsoon subtropical area with long coastline, Vietnam has fundamental advantages to develop wind energy. When comparing the average wind speed in the East Sea of Vietnam and the surrounding sea areas, the result showed that wind in the East Sea of Vietnam is fairly strong and seasonally change.

The World Bank (WB) conducted a detailed survey about wind power in Southeast Asia, including Vietnam. According to this study, among the four surveyed countries, Vietnam has the largest potential for wind power and better than the neighboring countries like Thailand, Laos and Cambodia.

Vietnam has 8.6% of the territory is rated as “good” and “very good” for the construction of large wind stations, while in Cambodia, Laos and Thailand, the numbers are 0.2%, 2.9% and 0.2% respectively. The total wind power potential of Vietnam is estimated to reach 513,360 MW, more than 200 times the capacity of Son La Hydropower Plant, and more than 10 times the total forecasting capacity of the power sector in 2020.

Vietnam has up to 41% rural areas that can develop small wind powers. Comparing this figure with the neighboring countries, the rural areas that can develop wind power in Cambodia, Laos and Thailand are 6%, 13% and 9% respectively.  It is indeed a privilege for Vietnam.

In Vietnam, the areas that can develop wind power do not spread across the entire territory. With the influence of monsoon, the wind regime is also different in each area. If the northern of Hai Van Pass, the strong wind season coincides with the northeast wind season, in which the most potential areas are Quang Ninh, Quang Binh and Quang Tri. In the southern part of Hai Van Pass, the strong wind season coincides with the southwest wind season, in which the most potential areas are the Tay Nguyen area, the coastal provinces of the Mekong Delta and especially the coastal areas of Binh Thuan, Ninh Thuan.

According to research conducted by the World Bank, in the territory of Vietnam, the two most potential areas for wind energy development is Son Hai (Ninh Thuan) and sand hills at the height of 60 – 100 meters from the west of Ham Tien to Mui Ne (Binh Thuan). The advantages of these areas are high average velocity wind, less storm and stable wind trend. They are the favorable conditions for wind energy development. During the monsoon months, the proportion of south and southeast winds are up to 98% with an average speed of 6 – 7m/s. It means that we are able to build the wind stations with capacity of 3 to 3.5 MW.

In fact, people in Ninh Thuan have also created a number of homemade small wind generators for the purpose of lighting. Both these areas are sparsely populated with hot and dry weather. Moreover, this is the ethnic areas with special difficulties of Vietnam.

Although there are many advantages as mentioned above, but when mentioning wind energy, we need to note a number of unique features to be able to develop it in the most effective way.

The biggest disadvantage of wind energy is the dependence on weather condition and wind regime. Therefore, at the design stage, the wind regime, terrain and type of wind without turbulence flows which badly affect the transmitter should seriously be studied. Moreover, although wind power is becoming more popular but it cannot be used as the main energy. However, the possibility of the combination between wind power and storage hydropower will open up opportunities for Vietnam to develop energy in areas such as Tay Nguyen, which has advantages in both of these kind.

Another noted point is that the wind power stations will cause noise pollution during operation as well as disrupt the natural landscape and could affect the signal of the radio waves. Therefore, when constructing wind power stations, it is needed to calculate reasonable distance to residential areas and tourist resorts in order not to cause negative impacts.

In order to meet the goal of ambitious growth, in the medium term, Vietnam should continue to exploit the traditional energy sources. In the long term, Vietnam needs to develop strategy and roadmap for the development of new energy sources. In this strategy, the economic costs (including internal and external expenses on the environment and society) need to be analyzed carefully, taking into account new developments in technology, as well as reserves and price movements of alternative energy sources. In these new energy sources, wind power has emerged as a worthy choice and therefore need to be fully assessed.

Vietnam has many advantages for the development of wind energy. If Vietnam does not invest in research and development of wind power will be a huge waste because the risk of power shortage is always permanent, affecting economic growth and national competitiveness. Meanwhile, the current national strategy for power seems only interested in hydropower and nuclear power – the energy sources with huge initial investment and many hidden risks on both environment and society.

In the world, the development of wind power is a major trend, showing the highest growth rate compared with other energy sources. Unlike nuclear power which needs a complicated technical process and strict supervision, the construction and installation of wind power does not require such rigorous processes. With the experiences of successful development of wind power in India, China, Philippines and the geographical advantages of Vietnam, Vietnam can completely develop wind power and contributing to the overall development of the economy.

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