Sustainable projects struggling in Vietnam’s energy business
Sustainable projects struggling in Vietnam’s energy business
While coal-fired power plants are increasing in numbers despite environmental concern, clean energy projects are facing major economic and policy challenges to stay in business.
Vietnam has a plan in place to increase its number of coal-fired power plants from 19 to 51 by the year 2030, most of which are located near residential areas.
This number is alarming, given the fact that some nations and even regions such as the U.S., Europe, and China, are taking drastic measures to reduce their coal-powered electricity plants due to their adverse environmental and health effects.
In Europe, 109 coal-fired power plants have been closed, while the U.S. has denied permits for 179 new projects and closed down 165 operating stations of its own, according to figures provided by Vietnamese non-profit organization GreenID.
In 2014 the Chinese government introduced a ban on granting new permits for coal-fired power plants in three key economic regions surrounding Beijing, Shanghai, and Guangzhou.
Following global trends, Vietnam has also eyed a shift toward cleaner alternatives, setting out a goal to transform the southern provinces of Ninh Thuan and Binh Thuan into the country’s center of wind and solar energy production by 2020.
However, having set a target of meeting between 5 and 8 percent of Vietnam’s power demands by 2020, as of today, Ninh Thuan Province has fulfilled none of its production goals, according to the local administration.
The People’s Committee of Ninh Thuan Province said it had attracted only 13 wind power projects as of July, with total investment capital of VND40.5 trillion (US$1.81 billion) and a total capacity of 1,100 MW.
However, only two out of the 13 plants have commenced construction, falling behind targets in “both installed capacity and power output,” according to local authorities.
The provincial administration has blamed the high cost of investment, high bank loan interest rates, and low selling prices.
Wind-generated electricity currently sells at 7.8 US cent/kWh in Vietnam, among the lowest rates in the world, according to Chairman of Binh Dinh Province Wind Power Association Bui Van Thinh.
In contrast to the price of wind electricity in other countries such as Germany (12.3 cent/kWh), Japan (29), the Philippines (14), Thailand (20), and China (8.5-10), Vietnam’s price is too low to encourage businesses to invest in the clean alternative to coal, Thinh said.
The low price of wind electricity has also made it difficult for investors to take out bank loans, the expert explained, suggesting that the government increase the price to over 12 cent/kWh.
According to Director of the Binh Thuan Province Department of Industry and Trade Do Minh Kinh, the department has made a request to the country’s Prime Minister to adjust the price to over 9.6 cent/kWh.
Meanwhile, solar energy projects in Vietnam are facing even bigger challenges, as there is no official price listing for solar-generated electricity at the moment, according to Vice Chairman of the Ninh Thuan Province People’s Committee Pham Van Hau.
Hau added that there was no plan in place for solar projects in the province despite many businesses having already applied to invest in such projects.
“If everything goes according to plan, we will finish drafting the planning by October 2016,” Hau said.
