Two global energy-efficient and climate-friendly solution leaders are waiting for more open government policies to coax foreign direct investment into renewable energy projects.
Danish-backed Vestas Wind Systems A/S Group’s president Ditlev Engel told VIR in Denmark that Vesta’s direct investment into Vietnam would “depend on the country’s development and aspirations for wind energy development.”
“Whether Vietnam can fully tap its wind energy market very much depends on its regulatory system and policies, which remain weak now. There are some good opportunities for wind installations in Vietnam, but what about the [wind energy] transmission, gridding and planning, and power prices? These are also the things we are looking at,” Engel said.
Vestas supplies wind turbines for the Phu Quy wind power plant, whose construction began in November, 2010 and will be completed by the year’s end, in Binh Thuan province. This 6 megawatt plant will produce 25.4 million kWh of power annually.
Meanwhile, another Danish-backed global energy-efficient leader Danfoss Group, providing heat solutions, power electronics, controls and commercial compressors, also told VIR in Denmark that though its representative office in Vietnam was established in 1997, Danfoss’ direct investment in Vietnam remained in limbo.
“We are focusing our investment in China and India, whose investment environments are better than Vietnam,” said Danfoss’s executive vice president Kim Fausing. “But, Vietnam is a very important market for us. We will continue expanding our distribution network in Vietnam and seeking more partners,” he said. At present, Danfoss is supplying its products to many key projects in Vietnam like Keangnam Hanoi Tower, Hanoi-based Yen So Park, Intel Vietnam Company, Time Square Tower, Saigon M&C Tower, Nestle and Vinamilk.
“We know that China’s labour costs are rising, while Vietnam’s cheap labour is one of its strong points to lure foreign investment. However, our production chains are almost automatically manned and need little human labour,” said another Danfoss representative.
Alternative renewable energy is a great opportunity for Vietnam, which boasts more than 3,200 kilometres of coastline and from 2,000 to 2,500 hours of sunshine per year. Vietnam’s coastal areas, including central Ninh Thuan and Binh Thuan provinces, and the Mekong Delta provinces, are considered to have the best wind sources in the Southeast Asian countries for the development of wind farms, according to US-backed GE Energy Vietnam Company.
“The key, however, would be to ensure that the long-term policies match the lifecycle of renewable energy investment. Some countries have set incentives and legislation on advanced renewable tariffs that have attracted investors. This is an aspect that Vietnam can look into to ensure investments in wind farms are profitable for developers,” GE Vietnam’s country executive Nguyen Xuan Thang told VIR.
An interenational cooperation official from Vietnam’s Ministry of Natural Resources and Environment said that Vietnam’s weak renewable energy policies and infrastructure, and low power purchasing price prevented it from luring foreign power projects, particularly renewable energy ones which were often capital-intensive.
Le Thi Khanh Van, deputy head of the National Agency for Science and Technology Information, said despite Vietnam’s profuse renewable energy development potential, local and foreign investors remained hesitant to invest in the industry as it had higher production costs than traditional energies.
“We are ready to discuss policies with the government to lure more foreign investors into wind energy development and make right a softer regulatory framework,” Engel said.
