Will Covid derail 4GW in Vietnam?

Wind projects totalling 4GW in Vietnam are set to miss a key deadline of 1st November 2021 to win support under the nation's feed-in tariff (FIT) regime.

Robert Malthouse
September 23, 2021
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This content is from our archive. Some formatting or links may be broken.
Will Covid derail 4GW in Vietnam?

Wind projects totalling 4GW in Vietnam are set to miss a key deadline of 1st November 2021 to win support under the nation's feed-in tariff (FIT) regime.

The government could help but hasn’t so far – and there are now just 39 days to go. This situation has arisen due to the impact of Covid-19.

As a result of the spread of the Delta variant, wind developers have faced significant delays in construction. Bottlenecks in the supply chain and limited mobility of workers has delayed those schedules.

This means projects worth a total of $6.7bn are now at risk of failing to complete by 1st November and losing out on FIT support, the Global Wind Energy Council has warned. It also said this puts 21,000 jobs at risk.

GWEC has argued that the Vietnamese government could help wind investors by extending the FIT deadline for these projects by at least six months, in a Covid-19 relief package. But will it? A Word About Wind spoke to Mark Hutchinson, chair of GWEC’s Southeast Asia Taskforce, to find out more.

Vietnamese potential

Vietnam has become one of Asia’s most attractive emerging markets for wind in recent years. The country has identified wind as key to decarbonisation and long-term energy security, and has therefore made it a priority to deploy wind farms at scale in its national power development plan (Draft PDP8).

In late 2018, the country set the terms for the wind FIT – including the deadline for completion by 1st November 2021 – and led to the signing of more than 140 wind power purchase agreements in the intervening years.

However, Covid-19 has made that timetable unrealistic.

Due to the pandemic-related obstacles and delays, 70% of wind projects that submitted grid connection requests have been delayed and are unlikely to complete by the deadline. Hutchinson warned this could induce a ‘bust’ cycle in Vietnamese wind that takes years to recover from.

“This is not just a marginal issue,” he said. “Losing this volume of wind projects would strike a blow to the renewable energy investment environment.”

This follows the government’s strict limits on inbound freight and passenger travel; localised lockdowns; and, in some cases, total shutdowns of building activity. It is an understandable set of policies from a country that has fought hard to suppress the Delta variant since April 2021, but it has severe knock-on effects on developers.

Hutchinson explains: “Take a company like Vestas for example. If they want to bring in a commissioning expert, they have to go to Ho Chi Minh and quarantine for two to three weeks. Then, to do anything in province X, they must quarantine for another two weeks. Already you have a four- to five-week wait, just to move people around.”

Companies in the component supply chain have also endured delivery delays: “The component comes into port A and has to go through province B and C to get to the site. They sometimes force you to switch trucks at the borders because they don’t let the truck drivers cross over,” he said.

Deadline day looms

While the government hasn’t extended the FIT deadline, Hutchinson is positive about its track record with wind.

“We’re very supportive of what the Vietnamese’s government has done so far. This is new to all of them, including Taiwan, Japan and Korea. But they’ve been very open and willing to talk to us,” he said.

In the first half of September, the office of the Vietnamese prime minister has asked the country’s industry and trade ministry to work with wind-supportive provinces on a solution to this looming crisis. The ministry is due to report back by 30th September.

There is also a precedent that will give investors hope. Vietnam’s government is providing Covid-19 relief to other industries. Meanwhile, failing to help wind would send a negative message to those in renewables and other infrastructure sectors: “If there is not an extension, it would definitely hurt investor confidence in the renewable energy space in Vietnam,” said Hutchinson.

The industry holds its breath.

Wind projects totalling 4GW in Vietnam are set to miss a key deadline of 1st November 2021 to win support under the nation's feed-in tariff (FIT) regime.

The government could help but hasn’t so far – and there are now just 39 days to go. This situation has arisen due to the impact of Covid-19.

As a result of the spread of the Delta variant, wind developers have faced significant delays in construction. Bottlenecks in the supply chain and limited mobility of workers has delayed those schedules.

This means projects worth a total of $6.7bn are now at risk of failing to complete by 1st November and losing out on FIT support, the Global Wind Energy Council has warned. It also said this puts 21,000 jobs at risk.

GWEC has argued that the Vietnamese government could help wind investors by extending the FIT deadline for these projects by at least six months, in a Covid-19 relief package. But will it? A Word About Wind spoke to Mark Hutchinson, chair of GWEC’s Southeast Asia Taskforce, to find out more.

Vietnamese potential

Vietnam has become one of Asia’s most attractive emerging markets for wind in recent years. The country has identified wind as key to decarbonisation and long-term energy security, and has therefore made it a priority to deploy wind farms at scale in its national power development plan (Draft PDP8).

In late 2018, the country set the terms for the wind FIT – including the deadline for completion by 1st November 2021 – and led to the signing of more than 140 wind power purchase agreements in the intervening years.

However, Covid-19 has made that timetable unrealistic.

Due to the pandemic-related obstacles and delays, 70% of wind projects that submitted grid connection requests have been delayed and are unlikely to complete by the deadline. Hutchinson warned this could induce a ‘bust’ cycle in Vietnamese wind that takes years to recover from.

“This is not just a marginal issue,” he said. “Losing this volume of wind projects would strike a blow to the renewable energy investment environment.”

This follows the government’s strict limits on inbound freight and passenger travel; localised lockdowns; and, in some cases, total shutdowns of building activity. It is an understandable set of policies from a country that has fought hard to suppress the Delta variant since April 2021, but it has severe knock-on effects on developers.

Hutchinson explains: “Take a company like Vestas for example. If they want to bring in a commissioning expert, they have to go to Ho Chi Minh and quarantine for two to three weeks. Then, to do anything in province X, they must quarantine for another two weeks. Already you have a four- to five-week wait, just to move people around.”

Companies in the component supply chain have also endured delivery delays: “The component comes into port A and has to go through province B and C to get to the site. They sometimes force you to switch trucks at the borders because they don’t let the truck drivers cross over,” he said.

Deadline day looms

While the government hasn’t extended the FIT deadline, Hutchinson is positive about its track record with wind.

“We’re very supportive of what the Vietnamese’s government has done so far. This is new to all of them, including Taiwan, Japan and Korea. But they’ve been very open and willing to talk to us,” he said.

In the first half of September, the office of the Vietnamese prime minister has asked the country’s industry and trade ministry to work with wind-supportive provinces on a solution to this looming crisis. The ministry is due to report back by 30th September.

There is also a precedent that will give investors hope. Vietnam’s government is providing Covid-19 relief to other industries. Meanwhile, failing to help wind would send a negative message to those in renewables and other infrastructure sectors: “If there is not an extension, it would definitely hurt investor confidence in the renewable energy space in Vietnam,” said Hutchinson.

The industry holds its breath.

Wind projects totalling 4GW in Vietnam are set to miss a key deadline of 1st November 2021 to win support under the nation's feed-in tariff (FIT) regime.

The government could help but hasn’t so far – and there are now just 39 days to go. This situation has arisen due to the impact of Covid-19.

As a result of the spread of the Delta variant, wind developers have faced significant delays in construction. Bottlenecks in the supply chain and limited mobility of workers has delayed those schedules.

This means projects worth a total of $6.7bn are now at risk of failing to complete by 1st November and losing out on FIT support, the Global Wind Energy Council has warned. It also said this puts 21,000 jobs at risk.

GWEC has argued that the Vietnamese government could help wind investors by extending the FIT deadline for these projects by at least six months, in a Covid-19 relief package. But will it? A Word About Wind spoke to Mark Hutchinson, chair of GWEC’s Southeast Asia Taskforce, to find out more.

Vietnamese potential

Vietnam has become one of Asia’s most attractive emerging markets for wind in recent years. The country has identified wind as key to decarbonisation and long-term energy security, and has therefore made it a priority to deploy wind farms at scale in its national power development plan (Draft PDP8).

In late 2018, the country set the terms for the wind FIT – including the deadline for completion by 1st November 2021 – and led to the signing of more than 140 wind power purchase agreements in the intervening years.

However, Covid-19 has made that timetable unrealistic.

Due to the pandemic-related obstacles and delays, 70% of wind projects that submitted grid connection requests have been delayed and are unlikely to complete by the deadline. Hutchinson warned this could induce a ‘bust’ cycle in Vietnamese wind that takes years to recover from.

“This is not just a marginal issue,” he said. “Losing this volume of wind projects would strike a blow to the renewable energy investment environment.”

This follows the government’s strict limits on inbound freight and passenger travel; localised lockdowns; and, in some cases, total shutdowns of building activity. It is an understandable set of policies from a country that has fought hard to suppress the Delta variant since April 2021, but it has severe knock-on effects on developers.

Hutchinson explains: “Take a company like Vestas for example. If they want to bring in a commissioning expert, they have to go to Ho Chi Minh and quarantine for two to three weeks. Then, to do anything in province X, they must quarantine for another two weeks. Already you have a four- to five-week wait, just to move people around.”

Companies in the component supply chain have also endured delivery delays: “The component comes into port A and has to go through province B and C to get to the site. They sometimes force you to switch trucks at the borders because they don’t let the truck drivers cross over,” he said.

Deadline day looms

While the government hasn’t extended the FIT deadline, Hutchinson is positive about its track record with wind.

“We’re very supportive of what the Vietnamese’s government has done so far. This is new to all of them, including Taiwan, Japan and Korea. But they’ve been very open and willing to talk to us,” he said.

In the first half of September, the office of the Vietnamese prime minister has asked the country’s industry and trade ministry to work with wind-supportive provinces on a solution to this looming crisis. The ministry is due to report back by 30th September.

There is also a precedent that will give investors hope. Vietnam’s government is providing Covid-19 relief to other industries. Meanwhile, failing to help wind would send a negative message to those in renewables and other infrastructure sectors: “If there is not an extension, it would definitely hurt investor confidence in the renewable energy space in Vietnam,” said Hutchinson.

The industry holds its breath.

Wind projects totalling 4GW in Vietnam are set to miss a key deadline of 1st November 2021 to win support under the nation's feed-in tariff (FIT) regime.

The government could help but hasn’t so far – and there are now just 39 days to go. This situation has arisen due to the impact of Covid-19.

As a result of the spread of the Delta variant, wind developers have faced significant delays in construction. Bottlenecks in the supply chain and limited mobility of workers has delayed those schedules.

This means projects worth a total of $6.7bn are now at risk of failing to complete by 1st November and losing out on FIT support, the Global Wind Energy Council has warned. It also said this puts 21,000 jobs at risk.

GWEC has argued that the Vietnamese government could help wind investors by extending the FIT deadline for these projects by at least six months, in a Covid-19 relief package. But will it? A Word About Wind spoke to Mark Hutchinson, chair of GWEC’s Southeast Asia Taskforce, to find out more.

Vietnamese potential

Vietnam has become one of Asia’s most attractive emerging markets for wind in recent years. The country has identified wind as key to decarbonisation and long-term energy security, and has therefore made it a priority to deploy wind farms at scale in its national power development plan (Draft PDP8).

In late 2018, the country set the terms for the wind FIT – including the deadline for completion by 1st November 2021 – and led to the signing of more than 140 wind power purchase agreements in the intervening years.

However, Covid-19 has made that timetable unrealistic.

Due to the pandemic-related obstacles and delays, 70% of wind projects that submitted grid connection requests have been delayed and are unlikely to complete by the deadline. Hutchinson warned this could induce a ‘bust’ cycle in Vietnamese wind that takes years to recover from.

“This is not just a marginal issue,” he said. “Losing this volume of wind projects would strike a blow to the renewable energy investment environment.”

This follows the government’s strict limits on inbound freight and passenger travel; localised lockdowns; and, in some cases, total shutdowns of building activity. It is an understandable set of policies from a country that has fought hard to suppress the Delta variant since April 2021, but it has severe knock-on effects on developers.

Hutchinson explains: “Take a company like Vestas for example. If they want to bring in a commissioning expert, they have to go to Ho Chi Minh and quarantine for two to three weeks. Then, to do anything in province X, they must quarantine for another two weeks. Already you have a four- to five-week wait, just to move people around.”

Companies in the component supply chain have also endured delivery delays: “The component comes into port A and has to go through province B and C to get to the site. They sometimes force you to switch trucks at the borders because they don’t let the truck drivers cross over,” he said.

Deadline day looms

While the government hasn’t extended the FIT deadline, Hutchinson is positive about its track record with wind.

“We’re very supportive of what the Vietnamese’s government has done so far. This is new to all of them, including Taiwan, Japan and Korea. But they’ve been very open and willing to talk to us,” he said.

In the first half of September, the office of the Vietnamese prime minister has asked the country’s industry and trade ministry to work with wind-supportive provinces on a solution to this looming crisis. The ministry is due to report back by 30th September.

There is also a precedent that will give investors hope. Vietnam’s government is providing Covid-19 relief to other industries. Meanwhile, failing to help wind would send a negative message to those in renewables and other infrastructure sectors: “If there is not an extension, it would definitely hurt investor confidence in the renewable energy space in Vietnam,” said Hutchinson.

The industry holds its breath.

Wind projects totalling 4GW in Vietnam are set to miss a key deadline of 1st November 2021 to win support under the nation's feed-in tariff (FIT) regime.

The government could help but hasn’t so far – and there are now just 39 days to go. This situation has arisen due to the impact of Covid-19.

As a result of the spread of the Delta variant, wind developers have faced significant delays in construction. Bottlenecks in the supply chain and limited mobility of workers has delayed those schedules.

This means projects worth a total of $6.7bn are now at risk of failing to complete by 1st November and losing out on FIT support, the Global Wind Energy Council has warned. It also said this puts 21,000 jobs at risk.

GWEC has argued that the Vietnamese government could help wind investors by extending the FIT deadline for these projects by at least six months, in a Covid-19 relief package. But will it? A Word About Wind spoke to Mark Hutchinson, chair of GWEC’s Southeast Asia Taskforce, to find out more.

Vietnamese potential

Vietnam has become one of Asia’s most attractive emerging markets for wind in recent years. The country has identified wind as key to decarbonisation and long-term energy security, and has therefore made it a priority to deploy wind farms at scale in its national power development plan (Draft PDP8).

In late 2018, the country set the terms for the wind FIT – including the deadline for completion by 1st November 2021 – and led to the signing of more than 140 wind power purchase agreements in the intervening years.

However, Covid-19 has made that timetable unrealistic.

Due to the pandemic-related obstacles and delays, 70% of wind projects that submitted grid connection requests have been delayed and are unlikely to complete by the deadline. Hutchinson warned this could induce a ‘bust’ cycle in Vietnamese wind that takes years to recover from.

“This is not just a marginal issue,” he said. “Losing this volume of wind projects would strike a blow to the renewable energy investment environment.”

This follows the government’s strict limits on inbound freight and passenger travel; localised lockdowns; and, in some cases, total shutdowns of building activity. It is an understandable set of policies from a country that has fought hard to suppress the Delta variant since April 2021, but it has severe knock-on effects on developers.

Hutchinson explains: “Take a company like Vestas for example. If they want to bring in a commissioning expert, they have to go to Ho Chi Minh and quarantine for two to three weeks. Then, to do anything in province X, they must quarantine for another two weeks. Already you have a four- to five-week wait, just to move people around.”

Companies in the component supply chain have also endured delivery delays: “The component comes into port A and has to go through province B and C to get to the site. They sometimes force you to switch trucks at the borders because they don’t let the truck drivers cross over,” he said.

Deadline day looms

While the government hasn’t extended the FIT deadline, Hutchinson is positive about its track record with wind.

“We’re very supportive of what the Vietnamese’s government has done so far. This is new to all of them, including Taiwan, Japan and Korea. But they’ve been very open and willing to talk to us,” he said.

In the first half of September, the office of the Vietnamese prime minister has asked the country’s industry and trade ministry to work with wind-supportive provinces on a solution to this looming crisis. The ministry is due to report back by 30th September.

There is also a precedent that will give investors hope. Vietnam’s government is providing Covid-19 relief to other industries. Meanwhile, failing to help wind would send a negative message to those in renewables and other infrastructure sectors: “If there is not an extension, it would definitely hurt investor confidence in the renewable energy space in Vietnam,” said Hutchinson.

The industry holds its breath.

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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.