VietNamNet Bridge – The low selling prices that the government set for wind power cannot encourage the investment in the renewable power sector.

To Hoai Dan, Chair of Cong Ly Construction, Trade and Tourism Company Ltd, has sighed with relief after a long period of waiting in hope, as the government has approved the new electricity price for the Bac Lieu wind power project developed by Cong Ly.

Dan said the government has agreed on the cent9.8 per kwh electricity price Cong Ly plans to sell to the Electricity of Vietnam (EVN), the only wholesale buyer in Vietnam.

The level is lower than the cent12 per kwh proposed by the investor, but it is cent2 per kwh higher than the price stipulated before by the government in the Decision No. 37 on the mechanism to support wind power projects.

“The approved price level is good enough,” Dan said, adding that if the government insisted on the pricing mechanism stipulated in the Decision No. 37, Cong Ly would surely incur loss for Bac Lieu project.

According to Dan, the investment rate for Bac Lieu project is very high. A report of the Ministry of Industry and Trade to the Prime Minister in July showed that Bac Lieu has the total capacity of 99.2 MW and the total investment capital of VND4.893 trillion for two phrases.  This means the investment rate at $2.371 per kwh.

The high investment rate has been attributed to the utilization of the advanced turbine technology provided by General Electric. The location of the project, 300 meters far from the coast, has also led to the higher construction costs.

With the new price level approved, Dan said Cong Ly would start the second phase of the project next year. The company has signed a credit contract with the Vietnam Development Bank on the loan arrangement for the second phase.

The government has been encouraging private investors to develop wind power projects to increase the power supply to the national grid and ensure the power security. However, very few investors have shown their interests in the field.

Cong Ly was believed to take a venturesome move when deciding to invest in a wind power project several years ago. This is the second wind power project in Vietnam developed with private funds, though the legal framework on the issue was laid in 2011 already.

The Decision No. 37 remains the only decision relating to the mechanism to support renewable energy projects so far.

Before Cong Ly started developing Bac Lieu project, the Vietnam Renewable Power Company had developed a project in Binh Thuan province.

As per the estimates by the Ministry of Industry and Trade’s New and Renewable Energy Department, the wind power potential in Vietnam is about 7,000 MW.

Werner Kossmann, Chief Consultant of the Renewable Energy Project Support Project belonging to German GIZ organization, believes that the Vietnamese renewable energy potentials are in no way inferior to Malaysian, Indonesia or Thai.

However, the expert noted that Vietnam’s wind power industry still cannot take off despite the great potentials, because of the pricing problem. Low pricing proves to be the biggest barrier against renewable energy projects, even though the government gives support to help investors minimize risks.

NCDT