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Wind power investors insist on UScent13.5/kwh floor price

The government has been warned that it would fail to implement the wind power development strategy if it does not raise the buy price to UScent12-13.5 per kwh.

The Electricity of Vietnam (EVN) now buys electricity at UScent7.8 per kwh from ashore wind power plants and UScent9.8 from the plant at sea, in accordance with a Prime Minister’s decision released in mid-2011.

However, the low prices set by the government cannot attract investors, because it will take them more time to recover the investment capital.

To Hoai Dan, General Director of Cong Ly Construction, Trade and Tourism Company Ltd, said with the current prices, investors can only expect to recover the investment capital after 15 years.

He said that most investors still keep cautious with wind power projects because they cannot see any benefits if injecting money in the sector. They would only feel encouraged enough if the government agrees on the floor price of UScent13.5 per kwh.

Cong Ly has completed the installation of 10 wind power pillars on Bac Lieu Sea, which has the capacity of 16 MW when joining the national grid. The company is implementing the second phase of the project with 52 pillars and the capacity of 83 MW, hoped to be completed by 2015.

Bui Van Thinh, Deputy Chair of the Binh Thuan provincial Windpower Association, thinks that the biggest obstacle now for the wind power development plan is the low price.

He stressed that the wind power price in Vietnam is the lowest in the world, even though the government once accepted to raise the price to UScent7.8-9.8 per kwh.

The association has shown some documents to prove that a 30 MW wind power project needs the investment capital of $65 million, 80 percent of which is from bank loans.

With the electricity price of UScent7.8 per kwh now, the investors need to borrow money at the low interest rate of 1.1 percent per annum to be able to make profit. Meanwhile, the low interest rate does not exist.

Therefore, the Binh Thuan provincial Windpower Association has proposed the government to gradually raise the electricity price from UScent7.8 per kwh now to UScent10 per kwh by 2015, and to over UScent12 per kwh by 2017.

The Ministry of Industry and Trade (MOIT), which seems to be patient about the slow pace of the renewable energy development plan implementation, considers offering some additional investment incentives to attract more projects.

It is expected that the ministry would submit to the government the suggested additional investment incentives for wind power investors by the end of 2014.

According to Pham Trong Thuc, Director of the Energy Department under the Ministry of Industry and Trade, under the plan, Vietnam need to have 1,000 MW wind power by 2020 and 6,200 MW by 2030.

Meanwhile, the total capacity of all the operational wind power plants is 52 MW only.

There are three operational wind power projects nationwide, including the 30 MW Binh Thanh project in Tuy Phong district of Binh Thuan province, the 6 MW project on Phu Quy Island and the 16 MW in Bac Lieu.

According to MOIT, 45 other projects have been registered with the total capacity of 4,822 MW.

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