“What worries us the most is we haven’t reached a price agreement with Electricity of Vietnam though the project is almost complete,” he said.
The cost of generating a kilowatt hour of wind energy is at least 10 US cents but the state-owned monopoly utility only pays around 5.8 cents for the electricity it buys. The 30-megawatt plant will cost US$60 million to build. Several other investors have plans to build wind-power plants but are not enthused by the current low prices.
Tran Viet Ngai, chairman of the Vietnam Energy Association, said the country cannot attract investment in wind power if it continues to offer these rates.
“Investors may agree to sell below cost for several years. But the point is the government has to draw up firm plans for development of wind power and agree to use cheaper sources like hydroelectricity to offset wind power prices.”
Despite its huge potential, wind power has not found serious mention in the country’s power development plans, Ngai said. Even a plan for the post 2015 period envisages wind power accounting for just 4-5 percent of total generation, he said.
With the country having just the one wind-energy plant in Binh Thuan, the government should attract investment in the sector by offering tax incentives, he said.
The country can generate at least 2,000 hours of power from wind every year, “which will be invaluable during the dry season,” he said.
The Asian Development Bank said last week that Vietnam has made “big strides” in improving infrastructure but the electricity sector still suffers from several “bottlenecks.”
Power generation capacity is expected to reach 18,000 megawatts this year, up 20 percent from a year ago, according to the government. But a shortfall continues to plague the country, making blackouts common even in major cities.
Experts forecast a severe shortage from 2015 onwards as demand further outpaces supply and call for developing feasible alternative sources like wind power.
A World Bank study found southern and south-central coastal areas to have exceptional wind-energy potential because of strong winds and their proximity to population centers. On a land area basis, 8.6 percent of the country experiences “good to excellent” winds.
The bank said even when it uses less than 8 percent of its total land area for wind power, Vietnam has a wind-energy potential of 102,716 MW.
Nguyen Thanh Son, director of Song Hong Energy, a subsidiary of the Vietnam Coal and Minerals Group, said to ease the pressure on power supply the country should soon launch a national program to develop wind power.
“Current technologies allow the construction of large windmills with a capacity of up to three megawatts,” Son said. “At favorable locations, an area of one square kilometer can accommodate enough wind mills to produce 20 megawatts.”
But since wind energy is 2-2.5 times costlier than hydro or thermal generation, the government needs to provide incentives to investors, he said.
It should focus on resolving the pricing problem, factoring in both generation costs and the benefits of using green energy, he said.
“Experts say a 10-kilowatt windmill in an area with a wind speed of 20 kilometers an hour will reduce emissions equivalent to that of one car.”
Wind power projects that are smaller can be left to private investors, he added. Nguyen Boi Khue, a wind energy expert, said the problem is that renewable energy has not received enough attention in Vietnam.
In Denmark, where wind energy makes up 30 percent of electricity, the government provides a subsidy of three cents per kilowatt hour of generation until investors recover costs. Wind power generators subsequently cut their prices, he said.
Long of REVN said he only hopes for a subsidy of two cents. His company would use funds from the Clean Development Mechanism established under the Kyoto Protocol to offset another one cent in generation costs, he said. With subsidies, “more investment will flow into wind power in the future,” he said.
But right now, the scenario is not so positive, he said, “We will incur losses for sure, but we accept it because we want to prove Vietnam is capable of developing green energy.”