What's the Opportunity in Vietnam?

Topics
No items found.
Adam Barber
April 20, 2015
This content is from our archive. Some formatting or links may be broken.
This content is from our archive. Some formatting or links may be broken.
What's the Opportunity in Vietnam?

Last year we saw Chile establish itself as a significant new market.

The South American nation is well positioned to support the wind industry because of its long coastline. And this could be the year the industry takes off in a country in southeast Asia that has a similar geography - and therefore a similarly strong wind resource - Vietnam.

It was almost exactly two years ago to the day that we firstdiscussed the Vietnamese - drawing parallels between its culture (adaptability and resilience) and the needs of the wind market.

The Vietnamese coastline may not be as long as that of its Spanish-speaking counterpart — 3,260km versus 4,270km — but investors are starting to see great potential in Vietnam. In fact, the country has the greatest wind potential for wind energy in Southeast Asia, compared with the likes of Cambodia, Laos and Thailand. But exploiting this resource has not historically been helped by positive policies.

For instance, Vietnam does not have dedicated renewable energy regulation, even though the government has issued decrees on topics including corporate energy reduction. It also set up a feed-in tariff in June 2011 to support the development of wind farms and set a target of 1GW of wind by 2020, and 6.2GW by 2030. But this has not really worked. Currently, Vietnam only has three wind farms, totalling around 50MW.

The problem is that the level of the feed-in tariff is just too low. The government mandated that state utility Vietnam Electricity (EVN) must buy wind energy at a regulated price of 7.8 cents per kWh; and the Vietnam Environment Protection Fund is set to give EVN a subsidy of 1 cent for every kWh it buys.

That should give wind investors certainty, but wind ends up being around $1.50/kWh more expensive than the current market price for electricity. This means it is difficult to make schemes stack up financially if they aren’t in windy areas. The Vietnam Energy Association has been calling on the government to raise the rate to a minimum of 10 cents per kWh, but this has not happened. This is frustrating for investors. Nevertheless, we are now seeing some developers emerge in the Vietnamese market.

Last month Vietnamese firm HBRE Wind started work on the 28MW first phase of its 120MW wind farm in Dak Lak province. The project is set to use 60 turbines from General Electric and is scheduled to be built in three phases by 2020. And late last year we saw manufacturer Vestas agree a deal with developer Phu Cuong to build a 170MW scheme in Soc Trang province.

The Danish firm told a seminar in capital Ho Chi Minh City around the time of this deal that its experience of working in new markets could help to support local developers with the financing of their projects. Such partnerships provide a great opportunity for overseas investors with a track record in new markets to get involved in Southeast Asia.

After all, government officials have said there are 45 registered wind projects with a combined capacity of over 4.8GW, and many of the companies behind those are likely to lack the experience to go it alone.

If the Vietnamese government takes the time to listen to the market's call for a higher feed-in tariff, change will be quick. The past two years have been steady - time now, to pick up the pace.

Last year we saw Chile establish itself as a significant new market.

The South American nation is well positioned to support the wind industry because of its long coastline. And this could be the year the industry takes off in a country in southeast Asia that has a similar geography - and therefore a similarly strong wind resource - Vietnam.

It was almost exactly two years ago to the day that we firstdiscussed the Vietnamese - drawing parallels between its culture (adaptability and resilience) and the needs of the wind market.

The Vietnamese coastline may not be as long as that of its Spanish-speaking counterpart — 3,260km versus 4,270km — but investors are starting to see great potential in Vietnam. In fact, the country has the greatest wind potential for wind energy in Southeast Asia, compared with the likes of Cambodia, Laos and Thailand. But exploiting this resource has not historically been helped by positive policies.

For instance, Vietnam does not have dedicated renewable energy regulation, even though the government has issued decrees on topics including corporate energy reduction. It also set up a feed-in tariff in June 2011 to support the development of wind farms and set a target of 1GW of wind by 2020, and 6.2GW by 2030. But this has not really worked. Currently, Vietnam only has three wind farms, totalling around 50MW.

The problem is that the level of the feed-in tariff is just too low. The government mandated that state utility Vietnam Electricity (EVN) must buy wind energy at a regulated price of 7.8 cents per kWh; and the Vietnam Environment Protection Fund is set to give EVN a subsidy of 1 cent for every kWh it buys.

That should give wind investors certainty, but wind ends up being around $1.50/kWh more expensive than the current market price for electricity. This means it is difficult to make schemes stack up financially if they aren’t in windy areas. The Vietnam Energy Association has been calling on the government to raise the rate to a minimum of 10 cents per kWh, but this has not happened. This is frustrating for investors. Nevertheless, we are now seeing some developers emerge in the Vietnamese market.

Last month Vietnamese firm HBRE Wind started work on the 28MW first phase of its 120MW wind farm in Dak Lak province. The project is set to use 60 turbines from General Electric and is scheduled to be built in three phases by 2020. And late last year we saw manufacturer Vestas agree a deal with developer Phu Cuong to build a 170MW scheme in Soc Trang province.

The Danish firm told a seminar in capital Ho Chi Minh City around the time of this deal that its experience of working in new markets could help to support local developers with the financing of their projects. Such partnerships provide a great opportunity for overseas investors with a track record in new markets to get involved in Southeast Asia.

After all, government officials have said there are 45 registered wind projects with a combined capacity of over 4.8GW, and many of the companies behind those are likely to lack the experience to go it alone.

If the Vietnamese government takes the time to listen to the market's call for a higher feed-in tariff, change will be quick. The past two years have been steady - time now, to pick up the pace.

Last year we saw Chile establish itself as a significant new market.

The South American nation is well positioned to support the wind industry because of its long coastline. And this could be the year the industry takes off in a country in southeast Asia that has a similar geography - and therefore a similarly strong wind resource - Vietnam.

It was almost exactly two years ago to the day that we firstdiscussed the Vietnamese - drawing parallels between its culture (adaptability and resilience) and the needs of the wind market.

The Vietnamese coastline may not be as long as that of its Spanish-speaking counterpart — 3,260km versus 4,270km — but investors are starting to see great potential in Vietnam. In fact, the country has the greatest wind potential for wind energy in Southeast Asia, compared with the likes of Cambodia, Laos and Thailand. But exploiting this resource has not historically been helped by positive policies.

For instance, Vietnam does not have dedicated renewable energy regulation, even though the government has issued decrees on topics including corporate energy reduction. It also set up a feed-in tariff in June 2011 to support the development of wind farms and set a target of 1GW of wind by 2020, and 6.2GW by 2030. But this has not really worked. Currently, Vietnam only has three wind farms, totalling around 50MW.

The problem is that the level of the feed-in tariff is just too low. The government mandated that state utility Vietnam Electricity (EVN) must buy wind energy at a regulated price of 7.8 cents per kWh; and the Vietnam Environment Protection Fund is set to give EVN a subsidy of 1 cent for every kWh it buys.

That should give wind investors certainty, but wind ends up being around $1.50/kWh more expensive than the current market price for electricity. This means it is difficult to make schemes stack up financially if they aren’t in windy areas. The Vietnam Energy Association has been calling on the government to raise the rate to a minimum of 10 cents per kWh, but this has not happened. This is frustrating for investors. Nevertheless, we are now seeing some developers emerge in the Vietnamese market.

Last month Vietnamese firm HBRE Wind started work on the 28MW first phase of its 120MW wind farm in Dak Lak province. The project is set to use 60 turbines from General Electric and is scheduled to be built in three phases by 2020. And late last year we saw manufacturer Vestas agree a deal with developer Phu Cuong to build a 170MW scheme in Soc Trang province.

The Danish firm told a seminar in capital Ho Chi Minh City around the time of this deal that its experience of working in new markets could help to support local developers with the financing of their projects. Such partnerships provide a great opportunity for overseas investors with a track record in new markets to get involved in Southeast Asia.

After all, government officials have said there are 45 registered wind projects with a combined capacity of over 4.8GW, and many of the companies behind those are likely to lack the experience to go it alone.

If the Vietnamese government takes the time to listen to the market's call for a higher feed-in tariff, change will be quick. The past two years have been steady - time now, to pick up the pace.

Last year we saw Chile establish itself as a significant new market.

The South American nation is well positioned to support the wind industry because of its long coastline. And this could be the year the industry takes off in a country in southeast Asia that has a similar geography - and therefore a similarly strong wind resource - Vietnam.

It was almost exactly two years ago to the day that we firstdiscussed the Vietnamese - drawing parallels between its culture (adaptability and resilience) and the needs of the wind market.

The Vietnamese coastline may not be as long as that of its Spanish-speaking counterpart — 3,260km versus 4,270km — but investors are starting to see great potential in Vietnam. In fact, the country has the greatest wind potential for wind energy in Southeast Asia, compared with the likes of Cambodia, Laos and Thailand. But exploiting this resource has not historically been helped by positive policies.

For instance, Vietnam does not have dedicated renewable energy regulation, even though the government has issued decrees on topics including corporate energy reduction. It also set up a feed-in tariff in June 2011 to support the development of wind farms and set a target of 1GW of wind by 2020, and 6.2GW by 2030. But this has not really worked. Currently, Vietnam only has three wind farms, totalling around 50MW.

The problem is that the level of the feed-in tariff is just too low. The government mandated that state utility Vietnam Electricity (EVN) must buy wind energy at a regulated price of 7.8 cents per kWh; and the Vietnam Environment Protection Fund is set to give EVN a subsidy of 1 cent for every kWh it buys.

That should give wind investors certainty, but wind ends up being around $1.50/kWh more expensive than the current market price for electricity. This means it is difficult to make schemes stack up financially if they aren’t in windy areas. The Vietnam Energy Association has been calling on the government to raise the rate to a minimum of 10 cents per kWh, but this has not happened. This is frustrating for investors. Nevertheless, we are now seeing some developers emerge in the Vietnamese market.

Last month Vietnamese firm HBRE Wind started work on the 28MW first phase of its 120MW wind farm in Dak Lak province. The project is set to use 60 turbines from General Electric and is scheduled to be built in three phases by 2020. And late last year we saw manufacturer Vestas agree a deal with developer Phu Cuong to build a 170MW scheme in Soc Trang province.

The Danish firm told a seminar in capital Ho Chi Minh City around the time of this deal that its experience of working in new markets could help to support local developers with the financing of their projects. Such partnerships provide a great opportunity for overseas investors with a track record in new markets to get involved in Southeast Asia.

After all, government officials have said there are 45 registered wind projects with a combined capacity of over 4.8GW, and many of the companies behind those are likely to lack the experience to go it alone.

If the Vietnamese government takes the time to listen to the market's call for a higher feed-in tariff, change will be quick. The past two years have been steady - time now, to pick up the pace.

Last year we saw Chile establish itself as a significant new market.

The South American nation is well positioned to support the wind industry because of its long coastline. And this could be the year the industry takes off in a country in southeast Asia that has a similar geography - and therefore a similarly strong wind resource - Vietnam.

It was almost exactly two years ago to the day that we firstdiscussed the Vietnamese - drawing parallels between its culture (adaptability and resilience) and the needs of the wind market.

The Vietnamese coastline may not be as long as that of its Spanish-speaking counterpart — 3,260km versus 4,270km — but investors are starting to see great potential in Vietnam. In fact, the country has the greatest wind potential for wind energy in Southeast Asia, compared with the likes of Cambodia, Laos and Thailand. But exploiting this resource has not historically been helped by positive policies.

For instance, Vietnam does not have dedicated renewable energy regulation, even though the government has issued decrees on topics including corporate energy reduction. It also set up a feed-in tariff in June 2011 to support the development of wind farms and set a target of 1GW of wind by 2020, and 6.2GW by 2030. But this has not really worked. Currently, Vietnam only has three wind farms, totalling around 50MW.

The problem is that the level of the feed-in tariff is just too low. The government mandated that state utility Vietnam Electricity (EVN) must buy wind energy at a regulated price of 7.8 cents per kWh; and the Vietnam Environment Protection Fund is set to give EVN a subsidy of 1 cent for every kWh it buys.

That should give wind investors certainty, but wind ends up being around $1.50/kWh more expensive than the current market price for electricity. This means it is difficult to make schemes stack up financially if they aren’t in windy areas. The Vietnam Energy Association has been calling on the government to raise the rate to a minimum of 10 cents per kWh, but this has not happened. This is frustrating for investors. Nevertheless, we are now seeing some developers emerge in the Vietnamese market.

Last month Vietnamese firm HBRE Wind started work on the 28MW first phase of its 120MW wind farm in Dak Lak province. The project is set to use 60 turbines from General Electric and is scheduled to be built in three phases by 2020. And late last year we saw manufacturer Vestas agree a deal with developer Phu Cuong to build a 170MW scheme in Soc Trang province.

The Danish firm told a seminar in capital Ho Chi Minh City around the time of this deal that its experience of working in new markets could help to support local developers with the financing of their projects. Such partnerships provide a great opportunity for overseas investors with a track record in new markets to get involved in Southeast Asia.

After all, government officials have said there are 45 registered wind projects with a combined capacity of over 4.8GW, and many of the companies behind those are likely to lack the experience to go it alone.

If the Vietnamese government takes the time to listen to the market's call for a higher feed-in tariff, change will be quick. The past two years have been steady - time now, to pick up the pace.

Full archive access is available to members only

Not a member yet?

Become a member of the 6,500-strong A Word About Wind community today, and gain access to our premium content, exclusive lead generation and investment opportunities.

Full archive access is available to members only

Not a member yet?

Become a member of the 6,500-strong A Word About Wind community today, and gain access to our premium content, exclusive lead generation and investment opportunities.