10:02 | 26/09/2019 Economy
(VEN) - Vietnam’s policies and mechanisms to encourage investment in renewable energy, such as credit and tax preferences, and financial support for research activities, have given strong impetus to its efforts to attract foreign investment in this field.
Developing renewable energy is one of Vietnam’s priorities, helping the country gradually reduce its dependence on traditional sources of power generation in order to protect the environment for the sustainable development of Vietnam and other countries in the region.
According to the National Electricity Development Plan approved by the government, the national power installation capacity will reach 130,000MW in 2030 compared to 47,000MW at present. This requires the construction of new power plants with combined capacity of about 83,000MW, as well as transmission and distribution infrastructure, from now to 2030.
To encourage the development of renewable energy, the Ministry of Industry and Trade has developed a series of mechanisms such as feed-in tariffs for solar power, wind power, electricity produced from solid waste and biomass power. The government has also promulgated a number of policies that offer investors preferences, such as preferential credit loans, corporate income tax and land rent reduction/exemption, and encourages the use of sample power purchase agreements (PPAs).
These policies have enabled Vietnam to receive a strong wave of investment in renewable energy development. By the end of last year, the country had put into operation 285 small hydropower plants with a total capacity of more than 3,322MW, eight wind power plants with a total capacity of 243MW, and 10 biomass power plants with a total capacity of 212MW.
By the end of 2018, investors had registered to invest in solar power plants with a total capacity of about 10,000MW. So far, PPAs have been signed for more than 100 solar power projects. Two projects with a total capacity of about 86MW have been put into operation. Power plants using renewable energy, not including medium and large hydropower plants, account for 2.1 percent of total capacity of the entire power generation system.
Vietnam’s renewable energy sector has attracted great attention of both domestic and foreign investors.
The UK’s Energy Industries Council (EIC) recently sent a delegation to survey the Vietnamese energy market, looking towards building renewable energy value chains. Stuart Broadley, the Chief Executive Officer of the EIC, believes Vietnam is a perfect place for investment in renewable energy.
Superblock Pcl, Thailand’s largest solar energy company, also intends to invest US$1.76 billion in building wind farms with a total capacity of 700MW in Vietnam. In the initial period, it will pour US$651.84 million in the construction of three onshore wind power plants in the southern provinces of Bac Lieu, Soc Trang and Ca Mau, with respective capacity of 142MW, 98MW and 100MW. These plants are expected to commence operations next year.
Other investors from the Philippines, AC Energy, Inc and B&T Windfarm, recently signed memorandums of understanding to invest US$493 million in a 352MW wind farm in Quang Binh Province. In the first phase of this cooperation project, US$353 million will be invested in a 252MW wind farm.
The International Finance Corporation (IFC), a member of the World Bank Group, has also invested in a number of renewable energy projects in Vietnam. It has invested US$75 million in green bonds issued by AC Energy, Inc to provide the company with funds for wind and solar power projects in Vietnam, with total installed capacity of 360MW. AC Energy, Inc cooperated with BIM Group to invest VND7 trillion in a complex of three solar power plants with combined capacity of 330MW in Ninh Thuan Province. This complex was connected to the national power grid in April 2019.
Philippe Le Houerou, the Chief Executive Officer of the IFC, said the corporation would continue mobilizing funds and private sector solutions to help Vietnam achieve its renewable energy development goals throughout the country.
According to Russel Marsh from Ernst & Young Solutions, Vietnam needs to attract private sector investment in
renewable energy and harmonize financial policies to make energy prices more reasonable, while at the same time
simplifying administrative procedures related to the granting of licenses and provision of land for renewable energy