Vietnam Overseas

By Thai Son Do, Research Associate, Energy & Power Systems Practice

During the last 10 years (1997–2007), the electricity demand in Vietnam has been growing at a rate of more than 15 percent per year, significantly higher than the GDP in the same period, 5 to 7 percent. With 75 percent of the population living in rural areas and about 20 percent of them have not yet been provided with electricity, it is expected that Vietnam would have a prolonged electricity strain due to electrification, urbanization, industrialization and population growth. Besides using the traditional energy sources, increased reliance on renewable energies could be a solution. Of several alternative renewable energies, wind is the most technically suitable and could be a good solution for about 300,000 rural non-electrified households in Vietnam.

It is found that Vietnam has a good potential for wind energy. The coastal areas of southern and south-central Vietnam show exceptional promise for wind energy both because of strong winds with average speed of over seven meters per second at the height of 65 meters above sea level and their proximity to population centers. On a land area basis, approximately 28,000 square kilometers (sq. km) of Vietnam (8.6 percent of the total land area) experience good to excellent winds, while the corresponding figures for Cambodia, Laos, and Thailand are 345 sq. km (0.2 percent), 6776 sq. km (2.9 percent), and 761 sq. km (0.2 percent), respectively . The wind energy potential in Vietnam can produce 513,360 MW annually, or 200 times the output of the Son La Hydroelectric Plant in the north – Southeast Asia’s largest power plant – and ten times the entire national capacity forecast for 2020.

Potential Onshore and Offshore Area

Most potential of wind power energy in Vietnam is coastal area of the North covers provinces such as Quang Ninh, Quang Binh, Quang Tri and the South covers two provinces Binh Thuan and Ninh Thuan. Meanwhile the offshore wind power seems to be potential.

Existing and Planned Wind Power Project

Beside that, Vietnam’s first wind turbine factory would be commissioned in 2009 at Nhon Hoi economic zone in Binh Dinh province. This US$39 million project is a cooperation between four local companies Lilama, Techcom Bank, Coma, Thien Nang Co and German Manufacturer Fuhrlaender AG Group.

Drivers for Wind Energy

Currently, Vietnamese government is encouraging wind power development by:

Considering application for incentives favorably (Import tax exemption, land-use, etc)

Planning to standardize Power Purchase Agreement (PPA)

Encourage Pilot Projects

Welcome international assistances

However, the development and exploitation of wind energy faces significant barrier in the form of pricing. State-owned monopoly power distributor Vietnam Electricity (EVN) only pays US$4.5 cents for a kilowatt hour (kWh) of wind energy though the cost of generating it is not less than US$6 cents. It is necessary for a country like Vietnam developing wind energy to provide subsidies since costs cannot yet compare with that of traditional electricity.

Opportunity

The Government of Vietnam introduced policy framework for development of renewable electricity related to rural electrification and supplying electricity to the power grid. The recent decision of government on approval of rural energy project that makes favourable conditions for renewable energy utilization. Also the priority is to develop renewable energy sources capable of meeting:

2.0 percent of total primary commercial energy needs by 2010

3.0 percent by 2020 and

6.0 percent by 2050

Vietnam has developed a sufficient technological base for small wind turbines, which appears to be one of the best options for isolated rural areas. So, in the near future, there is a good potential market for small wind turbines, estimated at 300,000 units. In addition, the rural electrification in Vietnam becomes good base for encouraging investors to invest in development of grid connected renewable electricity projects owned by the private enterprises, cooperatives or other entities.

Wind energy industry in Vietnam is at an early stage of development. Eventually wind sector has a potential to create a strong local manufacturing industry, apart from of course aleviating the country’s power needs.Thus it will be a win-win situation, which needs a combination of government support, industry initiative and entreprenurial spirit to succeed. Wind could indeed blow Vietnam’s way!

By Matt Steinglass Dec 18, 2009, 2:08 GMT

Hanoi - Gleaming white and spanking new, the five Fuhrlaender FL1500 wind turbines rise from a sandy hillside in the southern coastal province of Binh Thuan. Eighty-five metres high with a generating capacity of 1.5 megawatts each, they are the tallest, most sophisticated wind turbines in Vietnam.

Unfortunately, they don’t have much competition.

Vietnam is desperate for electricity to feed its economy, which bucked the worldwide recession and grew more than 5 per cent this year. Electricity demand is growing even faster, by more than 10 per cent each year through 2030, according to forecasts.

Much of that electricity could come from wind. A recent World Bank study found Vietnam could produce more than 500 gigawatts of electricity from land-based and off-shore wind farms, 10 times the country’s expected national demand in 2020.

But for now, the wind farm at Binh Thuan, a joint venture between the German wind power company Fuhrlaender AG and the Vietnamese renewable energy company REVN, is one of two operating in Vietnam. The other, the 50-megawatt Phuong Mai 3 wind farm in the central province of Binh Dinh, opened in 2008.

More wind farms are scheduled to come online in 2010 in the Central Highlands city of Dalat and on the southern islands of Con Dao. But for the most part, the promise of wind energy in Vietnam has yet to materialize.

Vietnam has embraced the idea that carbon emissions and global warming are a serious threat. The country is among the developing nations most likely to be harmed by climate change, according to the World Bank, largely because of its low-lying Mekong and Red River deltas, which would be largely submerged if predictions of sea-level rises prove correct.

And while Vietnam itself, with its 85-billion-dollar economy, is hardly a major contributor to global emissions, Vietnamese largely see themselves as part of any global effort to slow emissions.

‘We have to do our part if we expect others to do theirs,’ said National Assembly deputy Nguyen Minh Thuyet.

But it’s not just wind power; other renewable energy technologies are lagging in Vietnam, too. Conservation efforts have scarcely begun, and with energy demand growing so quickly, the medium-term forecast is more pollution and more carbon dioxide emissions.

At a green business conference in Hanoi in September, panelists explored the reasons for the delay in launching renewable energy projects.

‘The problem is simple,’ said Oliver Massmann, and energy sector expert. ‘Who will pay?’

Massman and other participants explained that Vietnam’s government keeps electricity prices low to benefit poor consumers and export businesses. Consumers pay an average of 7 cents per kilowatt hour for electricity while electricity from wind turbines cannot be sold profitably for less than 10 cents per kilowatt hour.

The government lacks the funds to subsidize wind or other renewable energy sources on a large scale. Instead, to meet its urgent electricity needs over the next five years, Vietnam is turning to an old, reliable solution: coal. Vietnam plans to quadruple its coal-fired power capacity by 2015.

Historically, Vietnam’s electricity has come mainly from hydropower, meaning relatively little pollution from power plants. That seems likely to change as coal starts to supply more of the country’s energy: 19 per cent by next year and 34 per cent by 2015.

Tran Viet Ngai, head of the Vietnam Energy Association, insisted the new plants would be clean. ‘We are buying the best modern technology,’ Ngai said.

Indeed, a new coal-fired power plant at Cam Pha uses technology that improves efficiency and reduces emissions, but the overall impact of the huge rise in Vietnam’s reliance on coal is sure to be more pollution and more emissions.

The trend is no welcome prospect in cities like Hanoi and Ho Chi Minh City, where the population commutes on fleets of millions of gasoline-powered motorbikes. Pollution levels in traffic-heavy areas of Vietnam’s major cities sometimes exceed the World Health Organization’s recommended levels by a factor of three.

Ngai said other wind farms were in the works and Vietnam plans to have 1,000 megawatts worth of wind-generating capacity by 2019. But he added that financial incentives for wind investors were dependent on working out a complicated plan to create a free market in electricity generation and distribution and break up the government monopoly distributor EVN.

That plan has been in the works for years and is currently caught between versions proposed by the Ministry of Industry and Trade and by EVN itself.

While, as Thuyet said, Vietnam’s government recognizes the need to do its part to stop climate change, it doesn’t appear to view that part as being very large.

One of the holdovers from Vietnam’s old Soviet-style economy is the government habit of working according to five-year plans, and the government has a target for how much of Vietnam’s energy should be supplied by renewable sources by 2020.

The target: 5 per cent.