The Global Wind Energy Council assessed that wind power FIT price reduction proposed by the Ministry of Industry and Trade could hinder investment and derail industry growth. The above comments were made to respond of the Global Wind Energy Council (GWEC) on the proposal to extend the discount price (FIT) for wind power by the Ministry of Industry and Trade. The Global Wind Energy Council assessed and reduced wind power FIT price as proposed by the Ministry of Industry and Trade.
Currently, the price for purchase of wind power onshore according to Decision 39/2018 is 8.5 cents per kWh, while offshore is 9.8 cents per kWh with projects operating before November 1, 2021. And according to the proposal of the Ministry of Industry and Trade, the wind power purchase and sale price for the project put into operation from November 2021 to December 2022 will be 7.02 cents per kWh for onshore wind power and 8.42 cents per kWh for offshore or nearshore wind power. For projects operating in 2023, they are priced at 6.81 cents and 8.21 cents per kWh respectively.
This makes the FIT price of onshore and offshore wind power projects decreased by 17.4% and 13.6% respectively, one of the significant declines in the global wind power market, GWEC said. Therefore, if the proposal is implemented, it could damage the growth of Vietnam’s wind power industry, which is seen as promising. This also makes it difficult for Vietnam to meet its growing energy demand.
According to Ben Backwell, CEO of GWEC, the wind power markets in Europe and America used to face losses, even the bankruptcy booming cycle when electricity price for purchase was cut down.
Mark Hutchinson, Chairman of GWEC’s Southeast Asia Task Force, said that wind power needs a longer development time than solar power and a reasonable price policy will help projects and supply chains to develop stably.
According to GWEC, in Vietnam, investors will face financial difficulties if wind power prices drop in the context of many influences due to Covid-19 and common challenges in the market in the first phase. This could reduce new wind power installations up to 80% by 2023 and 25% in each following year.
Through the wind potential, electricity demand and discount FIT price mechanism in 2018, wind power has attracted great attention from investors. However, with the impact of Covid-19 and planning adjustment risks, GWEC has lowered its forecast of new wind power installation capacity in Vietnam by 2020 to 125 MW, down 75%. Therefore, the cumulative capacity up to 2020 will only reach 472 MW, “missing” the 800 MW target under the electricity development plan VII.
Previously, GWEC asked the Government of Vietnam to extend the period of applying the discount price mechanism for wind power projects by 6 months, while also reducing the FIT price for onshore and offshore wind projects to go into operation from May 2022 onwards.
Meanwhile, according to the opinion of the Ministry of Industry and Trade, the incentive period should be extended until the end of 2023. This agency explained that, by the end of October 2021, when the FIT price under Decision 39, investors did not have enough time to prepare and build wind power projects, especially projects on the sea and projects that have not been additionally planned. After 2023, wind power projects will apply competitive bidding mechanism and auction.
Source: VnExpress
