GWEC urges Vietnam to postpone the FiT deadline for wind projects

Solar and wind farm business

The Global Wind Energy Council (GWEC) has requested the Vietnamese government to postpone the FiT deadline for wind projects by at least six months to April 2022 as a COVID-19 relief measure for the wind sector in Vietnam.

Due to pandemic-related obstacles and delays, most onshore wind projects currently in the pipeline will not complete construction in time to meet the 1 November 2021 deadline for tariff access. Without postponement of the deadline, these wind power projects will be unable to progress, adversely impacting renewable energy investment environment in Vietnam.

Vietnam’s targets proposed in the draft PDP8 master energy plan have reflected the government’s commitment to long-term decarbonization of the energy system and strengthening Vietnam’s regional competitiveness.

The COVID-19 situation in Vietnam has created many hardships for the industry. This extends to supply chain bottlenecks for wind project components, workers prevented from reaching project sites for crucial inspections and activities, travel restrictions for foreign personnel, and other issues.

As of August 2021, an industry survey conducted by GWEC estimates that 4,000MW of mainly onshore wind projects in Vietnam are severely challenged by these extenuating circumstances and are now at risk of missing the November deadline for the wind FiT.

Using standard industry calculations based on global and Vietnam averages, 4,000MW of wind projects translates to around USD 6.7 billion in investment that would significantly benefit local authorities and communities. This includes USD 6.51 billion in capital expenditures, and an additional USD 151 million in operating expenditures per year across an average 25-year lifetime of projects.

Approximately 21,000 jobs could be created from these wind projects, sustaining coastal populations and supporting a blue economy in Vietnam. Much of this investment and workforce expansion would be locally focused at province level, including in transport, installation and operations and maintenance activities.

GWEC is calling on the Government of Vietnam to implement a 6-month postponement of the FiT deadline to April 2022, to allow wind projects to complete construction safely and within the current procurement scheme. GWEC supports establishing clear criteria for eligibility for this deadline postponement, not a blanket extension.

In May 2020 the US provided one year of “safe harbour” for wind projects to complete and continue accessing a clean energy tax credit.

In June 2021, India issued a 2.5-month commissioning extension for renewable energy projects, in recognition of the lockdown measures which lasted from April to mid-June.

GWEC’s survey found that more than 70 percent of wind projects which had submitted grid connection requests by August 3, 2021 will not achieve COD by the deadline. Missing this deadline would leave these projects outside the FiT scheme, deteriorating their economics and raising the risk of becoming stranded assets.

Mark Hutchinson, Chair of GWEC’s South East Asia Taskforce, said: “Vietnam must introduce a FiT time postponement that will allow these 4,000MW of otherwise viable and economic wind projects to complete on a reasonable deadline.”