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!