The new proposed Feed-in-Tariff (FIT) extension by Vietnamese government would reduce tariffs for onshore and intertidal wind power by 17.4 percent and 13.6 percent respectively, the Global Wind Energy Council (GWEC) said.
This FIT reduction threatens to deter investment and derail the long-term growth of wind power in Vietnam, GWEC said.
GWEC welcomes a FIT extension to compensate for permitting and COVID-19- related delays, which collectively will cause Vietnam to miss its 800 MW of wind power capacity target by 41 percent.
GWEC, representing the global wind industry, recommends a minimum 6-month extension to the current FIT, followed by milder reductions to the FIT from May 2022 onwards.
The new FIT rates, included in an official letter from the Ministry of Industry and Trade on 28 October 2020, will be 7.02 US cent/kWh for onshore wind and 8.47 US cent/kWh for intertidal/nearshore wind, and would apply to projects commissioned from November 2021 to December 2023. This represents a tariff slash of more than 17 percent for onshore wind – one of the most dramatic reductions seen in any wind power market globally to date, according to GWEC.
A FIT reduction of this size would derail investment in new and planned wind projects in Vietnam and threaten the country’s current position as a leading wind market in South East Asia. Developers already facing delays due to COVID-19, and the challenges encountered in an early stage wind market would struggle to close financing.
The end result will be a reduction in new wind installations in Vietnam by up to 80 percent in 2023, and a further 25 percent per year thereafter, GWEC said.
The reductions to the project pipeline would create missed job opportunities in the thousands and loss of billions of dollars in inward investment. GWEC estimates that the slowdown would result in around 4GW of total wind power installed capacity in Vietnam by 2025.
Due to delays related to the implementation of the Law on Planning and disruptions from COVID-19, GWEC Market Intelligence has downgraded its 2020 forecast for new wind power installations in Vietnam by 75 per cent to 125MW. This will bring cumulative wind capacity to only 472MW by the end of this year, which means that the country will miss its target of 800 MW of wind power capacity by 2020, set in the Power Development Plan 7, by 41 per cent.