On 9 April 2020, Vietnam’s Ministry of Industry and Trade (MOIT) filed a report to the Prime Minister’s office proposing an extension for the wind Feed-in Tariff (FiT) that was set to expire in November 2021. The key points of MOIT’s extension recommendation include:
Extend the period of the fixed Feed-in Tariff for wind power projects in Decision 39 to 31 December 2023.
Assign MOIT to propose to the Prime Minister a new Feed-in Tariff for wind power projects having commercial operation date from 1 November 2021 until the end of 31 December, 2023.
After 2023, wind power projects will be awarded through an auctioning mechanism.
The report cited several reasons for FiT extension, such as power shortages due to the delayed installation of some of the natural gas and coal projects, planning law impacts, the long construction timeline of wind projects, as well as the COVID-19 impact on the wind industry.
The GWEC Asia Team and South East Asia Task Force were pleased to hear this news after engaging with the MOIT over the past few weeks. Highlighting the impact of COVID-19 was especially important in the realisation of this proposal, as GWEC was the first organisation to present a full analysis of the impact on the wind industry to the MOIT to better highlight how the health crisis would impact supply chain, meeting project deadlines, and securing investor confidence. This is an important example that other governments can look to in order to mitigate the impact of COVID-19 on the wind industry and ensure that projects can continue to be developed without major penalties post-COVID-19.
According to GWEC Market Intelligence, Vietnam has a cumulative installed wind power capacity of over 487 MW by the end of 2019, making it the second largest wind market in South East Asia. Due to strong flows of foreign and domestic investors into Vietnam’s wind sector, the market is predicted to install approximately 4 GW of additional wind capacity by 2025, of which at least 1 GW will be offshore wind. GWEC believes a strong political commitment such as the FiT extension will be necessary to ensure steady growth of wind energy in Vietnam’s power system, to offer the prospect of a more competitive, cleaner, and more secure energy pathway.