By: Karin Ohlenforst, Director of Market Intelligence, GWEC
Market to Watch: Vietnam
Vietnam can be the next big wind energy market in South East Asia. With a growing GDP, increasing population, surging power growth rate with dependance on coal, a favourable FiT system, and fantastic wind resources along the 3,000 km coastline for both onshore and offshore wind – Vietnam has all the fundamentals in place to be a wind power leader in the region.
With energy security becoming an increasing concern as industry and power consumption continues to grow, the question is if Vietnam can provide sufficient capacity to this growth and regulators are now turning their sights to wind and other renewables energy sources.
The Vietnamese government has taken the lead and established renewable energy targets in order to meet the growing energy demand and power economic development sustainably. The current target in place is to provide 10.7 percent of electricity production coming from renewables by 2030. They have also established a wind-specific target of 800 MW by 2020 in order to meet their renewable energy goals.
On top of these targets, the government has also raised the Feed-in-Tariff (FiT) for both onshore and offshore wind in September 2018, in order to spur market activity and balance out the high risks within emerging markets, specifically PPA bankability. The FiT is set for all projects entering operation by November 2021, but what comes after this date remains unclear. A planned solar PV auction in Vietnam could be an indication what market regulators are considering for other renewable sources. For now, there is no signal about the regulatory framework for onshore and offshore wind after November 2021.
The current pipeline data shows about 2GW of projects, with just over 1 GW of capacity expected to be installed in 2021, although 440MW have a permit or even secured financing already. Although the target of 800 MW by 2020 might not be reached, total installations of 600-800 MW by 2021 seems realistic.
Posing the biggest obstacle right now to reaching this target is obtaining financing for projects with a bankable PPA. International investors see many risk factors in this emerging market such as arbitration law, curtailment, termination and government guarantees. Other hurdles include permitting, pricing and capacity-building, all of which must be taken into account when unlocking the market potential for wind energy in Vietnam.
All market participants are currently working to overcome these hurdles, and if they are successful, GWEC Market Intelligence expects the Vietnamese market to be an important wind market driving growth in the South East Asia region.
To give an official industry platform to discuss the challenges and opportunities in Vietnam’s budding wind market, GWEC is holding the second edition of Vietnam Wind Power on 11-12 June in Hanoi. These two-day event is organised in partnership with GIZ, the Danish Embassy in Hanoi and the Irish Embassy and will bring industry, financial institutions, government representatives, international organisations, and other stakeholders together to discuss the burning issues in Vietnam’s wind market. On top of the main conference which will feature high-level panel discussions on finance, policy, technology and offshore wind, we are also adding a Finance Workshop and Offshore Roundtable to the agenda in order to more meaningfully engage stakeholders on these key topics.
If you are interesting in learning more about Vietnam’s exciting wind market, this is the must-attend event and will set the stage for the next-steps in South East Asia.
Learn more about the event here: https://gwec.net/vietnam-wind-power-2019/