Investment in wind power investment still a far cry

Prime Minister last month approved in principle a mechanism to support wind power projects in Vietnam, in which, the electricity purchase price from the projects was approved at 1,630 dong per kWh (7.8 US cent) in 2011, according to the Vietnam Investment Review.
With the electricity price of 7.8 US cent per kWh, the door of investment has not been yet opened for wind power projects.

Under the mechanism, the state supports 209 dong per kWh produced by wind power plants, the money is sourced from the Vietnam Environmental Protection Fund (VEPF). The support level will be reduced gradually until the electricity selling price will be conducted in line with market price. Remaining part of wind power, 1,421 dong per kWh according to the mechanism, will be in the retail frame, meaning that the amount will be paid by the Electricity of Vietnam (EVN)—the wholesaler of power plants.

Thus, compared with the current average price of 1,242 dong per kWh, the wind power price is higher 388 dong/kWh. Anyway, investors have not felt secured to develop strongly the clean power energy.

As estimated by Vietnam Energy Institute, with the basic plan of European-US technology-used wind power plants sized at 30MW (with a designed capacity of 1.5MW/turbine), wind speed 7 meters per second (m/s) and right price of CO2 waste gas at 15 US cent per ton, and other indices….the investment cost for the projects is $2,250 per kWh. If using Chinese technologies, the cost will be $1,700 per kWh.

Basing on the above investment, the average electricity price should be 10.68 US cent per kWh and 8.6 US cent per kWh (including the capital return time of almost 20 years and equipment depreciation for 12 years), respectively to the technologies.

Overall, not many, even none of investors dare to pour capital in the costly industry because they foresee loss.

According to specialists, investors will be able to sell the right of CO2 waste at 15 US cent per ton, or 0.906 US cent per kWh. At the selling price of 6.8 US cent per kWh, the remaining needed to be offset is 3 US cent per kWh or 0.9 US cent/kWh depending on European-US equipments or Chinese. In order to compensate the gap, it is necessary to have the state’s subsidize via Vietnam Environment Protection Fund whereby the door of wind power investment is more open a bit for investors.

The country now has about 9 MW of wind power installed, in which 7.5 MW was put into the national grid on August 22, 2010 by Vietnam Renewable Energy Joint Stock Co in the south-central province of Binh Thuan. In addition, there are other 21 projects under pipeline , sized from 21 MW to 40 MW.

In line with the wind power development to 2015, the industry targets to generate 600MW. Thus, the funding to support these projects is estimated to average $20 million per year, Ministry of Industry and Trade reported. – Vietbiz24

Tags: Vietnam energy, Vietnam wind power project