Energy in the air 09/05/2011

Deputy Prime Minister Hoang Trung Hai has asked the Ministry of Industry and Trade to collect opinions of relevant ministries and sectors about a draft decision on policies to support windpower projects in Viet Nam and submit them to the Government early this month.

Hai recently met with representatives from relevant ministries, sectors and economic groups to discuss the draft decision, which has been revised for the fourth time by the ministry.

Viet Nam Renewable Energy Joint Stock Co has developed a wind power project in the central province of Binh Thuan's Tuy Phong District. The Government is seeking input on policies to support wind power projects.

The draft decision was clarified to include information on preferential policies for investors, including regulations on purchasing electricity from windpower projects, soft loans, tax exemptions and land allocation for windpower projects.

The decision could help curb power shortages because investment in windpower projects is often rapid, said Dinh Quang Tri, deputy general director of the State-owned Electricity of Viet Nam Group (EVN), the country's sole power distributor.

In addition, EVN's business partners and banks are interested in windpower projects and have given priority to gathering investment capital for renewable energy projects, Tri said.

Angelika Wasiekel, chief technical advisor for the GIZ-Wind Energy Project, said GIZ was a consultant for the ministry.

The GIZ-Wind Energy Project, sponsored by the German Federal Ministry of Environment, Nature Conservation and Nuclear Safety, supports the Ministry of Industry and Trade in establishing a legal framework and improving technical capacities for grid-connected wind power development.

Wasiekel said the draft decision outlined the responsibilities of the EVN, which included provision of grid connections as well as the purchase and distribution all of the electricity that windpower projects generate.

According to the draft, EVN will have to pay VND1,317 (about 7 US cents) for 1 kWh and the Government will subsidise another VND185 (about 1 US cent) per kWh.

Although this price is below the expectations of potential investors in Viet Nam, the draft described other incentives, including soft loans, and tax and land-use fee exemptions, she said.

Under the draft, companies planning to build grid-connected windpower projects can get soft loans for up to 80 per cent of the total investment cost, and benefit from a preferential corporate income tax of 10 per cent for the lifetime of the project.

However, the draft decision cannot do away with some of the concerns that have been troubling potential investors in Viet Nam such as the Government-quoted, feed-in tariffs in dong which can lead to an exchange-rate risk for foreign developers and different approval procedures for projects that still exist, according to the consultant.

In addition, the draft does not present any criteria for the selection of private windpower developers. This carries the potential risk of complicated and probably less than transparent negotiation processes between potential investors and authorities.

Viet Nam has 21 windpower projects under construction in Binh Thuan, Ninh Thuan, Binh Dinh and Lam Dong provinces.

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