Based on recent update in Vietnam renewable energy market,84 wind power projects with a total installed capacity of 3,967.28MW has achieved commercial operation (COD) as of November 1st, 2021 to meet the feed-in-tariff (FiT) deadline. Among these projects, 68 projects with installed capacity of 3605.83MW have achieved full COD, while 16 projects with installed capacity of 361.45MW have only achieved partial COD. Based on the Decision No. 39/2018/QD-TTg issued by the Prime Minster, part or entire grid-connected wind projects with 20 years PPA will be applied with FiT price of 9.8 US cents/kWh for offshore wind and 8.5 US cents/kWh for onshore wind.
To date, the market remains 62 Power Purchase Agreement (PPA) signed projects with capacity of 3,380.85MW have not achieved COD. Out of these projects, around 1.7 GW projects have started construction but failed to achieve COD within deadline. Despite the COVID-19 disruption and provincial People’s Committees’ proposals, the Vietnam government did not apply any extensions to the current FiT mechanism timeline.
Under such circumstance, investors and financiers may face severe losses if the projects that they invest in have started construction but did not achieve COD on time. In response, affected independent power producers (IPPs) may file proposals or petitions to Vietnam government for compromised solutions to minimize investors’ financial loss.
In the long term, Vietnam wind power market will experience a transition from FiT to bidding mechanism as this is the global trend of renewable energy market according to MOIT. Furthermore, with its abundant wind resource potential, offshore wind market also tends to be Vietnam governments’ key development sector. According to the most recent draft of PDP VIII, Vietnam government’s offshore wind projects installation plan is 2 GW by 2030, 8.5 GW by 2035 and 26 GW by 2045. We will share more detailed information about this topic in the future posts.
Along with this round of wind power projects connected to the grid, Vietnam renewable energy (solar and wind) has achieved around 23.1GW installed capacity in total – 18.7GW for solar and 4.4GW for wind. As shown in the below chart, the FiT price of Vietnam solar and wind power projects are relatively high globally. Therefore, we anticipate that mergers and acquisitions of COD project in the Vietnam renewable energy market will become more active due to the decline of the development market in the near term. According to our study and interviews with local and international IPPs, the market price for the projects is listed as follows:
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