Encouraging Feed in Tariff for Biomass in Vietnam

Korea’s Dohwa, last week showed interest in developing a biomass power project in the central province of Quang Binh and signed a memorandum of understanding to that effect.
The project, expectedly capitalised at $400 million with a generation capacity of 100 megawatt, would use raw materials such as bagasse, rice traw, and husk to generate biomass energy.
A survey will take place later this year to locate a suitable site, with the project hopefully set up by 2018.
In the same development, Japan’s Sojitz Group plans to further add to its investment plans in Vietnam. Sojitz has operated across many sectors since it entered the Vietnamese market in 1993.
Sojitz will begin production of fuel made from woody biomass as early as 2018, in partnership with state-run Vietnam Forest Corporation, also known as Vinafor.
The duo agreed this month to conduct a feasibility study and plan to spend a year hammering out a specific plan.
Sojitz and Vinafor jointly run four production facilities for papermaking materials across Vietnam.
They plan to build new facilities that use bark and other leftover plant matter to produce fuel. The capital for this project has not yet been released, while Vinafor refused to give further information.
The Nikkei Asian Review cited Japanese company Itochu as aiming to boost its annual import of biomass fuel pellets from around 120,000 tonnes in 2015 to 1.2 million tonnes by 2019. The firm plans to set up a plant in Vietnam.
Pham Trong Thuc, head of the New and Renewable Energy Department under the Ministry of Industry and Trade, said the ministry had introduced an incentive policy for biomass power projects for the first time two years ago.
Under that, Decision No.24/2014/QD-TTg on mechanisms to support the development of biomass power production in Vietnam, the country’s state-run Electricity of Vietnam (EVN) would have to purchase electricity made from agricultural by-products, or biomass power, at 5.8 UScents per kWh.
The electricity purchase price does not include value added tax and would be adjusted based on fluctuation in the dong and US dollar exchange rates, according to the decision that took effect in May this year.
Vietnam has no fully functional biomass plants operating today. However, some sugar processing plants and rice mills do generate electricity for their own use.
Thuc suggested that when connecting to the national and local grids to sell electricity, a similar mechanism applied to other renewable energy sources should also be used, where the developer is asked to build their own electricity lines.
He also advised investors to build plants near the main electricity grids which would reduce the cost of selling the power at a later date.