The Vietnamese government on Thursday (25 June) formally approved 7 gigawatts (GW) worth of new wind projects to be built in the country, putting it on track for a total wind power generation capacity of nearly 12 GW by 2025, according to a source close to the administration.
The go-ahead was given in a letter addressed to the nation’s Ministry Industry and Trade (MOIT) and encompasses a total of 91 onshore and offshore wind projects, with most installations to be sited in the central and southern regions of the country, said the source.
The move comes as fears mount Vietnam could face severe power shortages from 2023 as its industry and increasingly energy-hungry population burgeon. By 2030, the country is expected to require about 130 GW of electricity, more than double the 54 GW currently.
Amid such concerns, the Communist Party’s decision-making politburo released a new energy strategy earlier this year that strongly promoted wind and solar energy, with ambitions to source up to 20 per cent of the country’s electricity from renewables by 2030.
In April, MOIT announced a bold new plan to install 11.6 GW by 2025, a goal significantly more ambitious than the 2-GW target enshrined in the country’s current power development plan. MOIT has been mandated to present the first draft of a new power master plan in October this year.
Commenting on the decision, Luu Hoang Ha, energy partner at Vietnam International Law Firm (VILAF) and a board director at Vietnam-based clean energy company Nami Energy, said: “This formal approval shows the strong political will of the government to support the growth of renewable energy. It demonstrates the ambition of both the public and private sectors in Vietnam’s energy transition. It is a major push for the development of the wind energy sector in Vietnam.”
However, Vietnam’s new ambitions for wind power also pose challenges.
The country’s power grid has struggled to keep up with the proliferation of renewables coming online, with fluctuating and intermittent clean energy placing stress on transmission lines. Although progress has been made, major infrastructure updates are required to ensure the grid is ready for the wave of new projects springing up across the country.
Vietnam also has yet to decide which direction to take after its current feed-in tariff scheme—a support mechanism introduced in 2018 that stipulates fixed, subsidised rates paid to wind farm operators for the electricity they export to the national grid—expires in November 2021.
Two months ago, MOIT submitted a proposal to the government to extend the tariff scheme to 2023 in response to appeals from industry players and local governments who warned that Hanoi’s failure to send a clear signal of continued support threatened to deter investors and derail the country’s wind targets. According to Ha, the government is still deliberating on the proposal.
An auction programme is being mulled over to replace fixed renewable energy rates once the scheme ends, reflecting a global trend towards a competitive selection of developers amid rapidly falling prices of clean energy equipment. Auctions would enable Hanoi to select the most price-competitive wind power firms for specific energy projects.
In recent years, Vietnam’s rich wind resources as well as strong government support have propelled wind power growth in the country. As of 2019, it boasted an installed onshore and offshore capacity of 490 megawatts.
