Wind energy in Vietnam

Wind energy in Vietnam: Business
opportunities
Agenda
1.
2.
3.
4.
5.
6.
Forms of investment
Present wind power developers
Investment procedure
Available service suppliers
Barriers to wind energy development
Conclusions
Forms of investment
Forms of investment
Private investors can develop wind energy projects as BOT or IPP projects. Most present wind
power projects are registered in the form of IPP projects.
Type of investment
Build-OperateTransfer
(BOT)
Independent
Power Producer
(IPP)
Description
• BOT is an investment form
whereby the investor constructs
and operates a plant for a fixed
duration; upon expiry of the
duration, the investor transfers the
assets back to the State
• IPPs are companies who develop,
operate, and own an infrastructure
for an indefinite time
• Currently, IPPs are only
participating in small power
projects in Vietnam
Ownership / Financial Structure
Ownership
Through Joint
Stock Company
• EVN + Private
Investor
• Private
Investor(s)
Ownership
• Private
Investor(s)
Financing
• Equity
Financing
and/or Debt
Financing
Financing
• Equity
Financing
and/or Debt
Financing
Present developers
Present wind power developers
 Foreign Investors: Germany -
(WPD, EAB); Switzerland - (Aerogie Plus); Canada (Greta Energy); Argentina - (IMPSA); Hongkong (Enfinity Asia Pacific). These are
participating in 12 out of 42 projects with a total installed capacity of 1,366 MW.
 More foreign developers are coming (Germany, Spain, Belgium, South Korea, Japan…)
 Local investors are small, except two state corporations i.e., EVN and Petrovietnam.
The common feature of local investors is the lack of experience in wind energy project
development. Therefore, they are seeking partners with experiences and financial
capabilities.
Present developers
Foreign investors
Project
developer
Project location
Area
(ha)
Capacity
(MW)
Wind
meas.
Invest.
license
Included
in PDP
Development status
IR
WPD Energy
Vietnam
(Germany)
Song Cau, Phu Yen
900
50
Tien Thanh - Phan Thiet city, Ham Cuong
- Ham Thuan Nam dist., Binh Thuan
620
50
EAB
Vietwindpower
(Germany)
Phuoc Huu - Ninh Phuoc dist., Ninh
Thuan
453
40 (120)
Phuoc Thanh - Bac Ai dist., Ninh Thuan
600
18
Greta Energy
Inc. (Canada)
Cong Hai - Thuan Bac Dist., Ninh Thuan
310
66
Loi Hai, Bac Phong -Thuan Bac dist., Ninh
Thuan
900
90
Enfinity Asia
Pacific Limited
(Hong Kong)
Phuoc Minh - Thuan Nam dist., Ninh
Thuan
607
90
Quan The salt field and Phuoc Minh Thuan Nam dist., Ninh Thuan
200
41
Phuoc Huu, Phuoc Nam, Phuoc Dan Ninh Phuoc dist., Ninh Thuan
600
115
Aerogie.Plus
Solution AG
(Switzerland)
Phuoc Dinh - Thuan Nam dist., Ninh
Thuan
430
28.5(70)
Joint venture
PVN (Vietnam) IMPSA
(Argentina)
Hoa Thang, Hong Thai, Bac Binh dist,
Binh Thuan
Con Dao island, Ba Ria- Vung Tau
Phu Qui island, Binh Thuan
6
5700
165(600)
6
Status: IR = Investment Report; IP = Investment Project; TD= Technical Design; UC=Under Construction; IO= In Operation
IP
TD
UC
IO
Investment procedure
Investment procedure
Projects in the power development plan
Projects not in the power development plan
Site selection
Wind resource
assessment
-Study available data - Erection of one or
more wind
-Carry out site
measurement masts
survey
with sensors for
-Register the site
wind speed, wind
with the provincial
direction,
people’s committee
temperature,
-Obtain letter for
pressure…
acceptance of site
Preparing
investment
report
- Making
investment report
for proposing
project
- Asking for
inclusion of the
project in power
development plan
- MoIT will review
the project and
accordingly inform
the PM, who will
then approve the
development plan
and permit
investment.
Making
investment
project report
- Investor organizes
preparation of the
project investment
project report,
review, and
approval of wind
power investmentconstruction project
- MoIT will give
comments on basic
design of projects
of category A, DoIT
on project of
category B and C
Signing PPA
with EVN
- Investor signs
power purchasing
agreement with
EVN
Construction
- The project owner
prepares, organizes
review, approval of
technical design,
detailed construction
drawings and total
cost estimate based
on the approved
investment project.
- The project investor
is permitted to to
start project
construction when at
least those items of
technical design,
whose construction
will be started, have
been approved.
Available service suppliers
Available service suppliers
No
Major project
development phase
Requirement
Available service
suppliers
Remark
Business
opportunity
Which site is suitable Power
Engineering  The site selection is mainly based on Yes
for a wind farm?
and
Consulting
wind atlas of the World Bank
Area:
Company (PECC3)
 It is recommended that a - Site evaluation
professional consultant work with
PECC3 on the site selection
1
Site selection
2
Wind
resource Install
bankable PECC3 (Vietnam);
assessment
measurement
mast
and produce bankable
report
 PECC3 is not really familiar with the
common standards/guidelines of
measurement and reporting
 Profect Gmbh is providing training to
PECC3
on
bankable
wind
measurement under GIZ wind
energy project
 Ammonit – wind measurement
equipment supplier has sold more
than 10 measurement sets to
Vietnam
 Masts for wind measurement can be
purchased locally. Common mast in
Vietnam is lattice of triangular type.
Yes
Areas:
- Consultancy on
wind
resource
assessment
Wind
measurement
equipment
supply
Available service suppliers
Available service suppliers (cont’)
No
3
Major project
development phase
Technical planning
Requirement
Available service
suppliers
Remark
Business
opportunity
Determine ideal wind PECC3, Institute of  PECC3 and IE use WASP and WINPRO Yes
farm
configuration, Energy (IE)
to aid micrositing. However, they are Area:
taking a wide range of
both lack of experience using them. Feasibility study
parameters
into
 Local can handle investment report
consideration
(pre-feasibility study). While the
purpose of this report is to propose
project, such a work arrangement
would save cost.
 The grid connection report can be
also conducted by PECC3 or IE. These
two firms specialize in planning
provincial power grid works thus
they could conduct the work at
reasonable cost.
 CAVICO – local developer has
recently commissioned Altus AG to
conduct feasibility study for their
wind project in Lam Dong, Province.
Available service suppliers
Available service suppliers (cont’)
4. Financing
• Debt financing
Financial institution
The World Bank
Financing instrument
Refinancing of ODA fund
Remarks
- Only renewable-based projects of less than 30 MW are eligible.
- Acceptance of loan depends on project feasibility and support policies.
ADB
- Loans
- Presently no project on wind energy investment support.
- Co-financing facilities
- The bank recently committed technical assistance worth USD 600,000
to EVN to prepare an investment report.
- Guarantees
KfW
Initiative for Climate and
Environment Protection
(IKLU)
- Up to USD 50 million can be lent.
VDB
Refinancing of ODA
USD 10 million available for lending to renewable energy projects.
Dragon Capital
Co-financing
Up to USD 7 million can be provided.
- Phase I focused on small and medium hydro power plants.
- Phase 2 (2010/2011) will consider wind energy projects.
• Equity financing:
• IPPs join together to set up joint stock companies
• Suppliers: Suppliers might help to get loans from bank of supplier’s host country. Sometimes they
are asked to commit 1-2% of the stake in the project
Available service suppliers
Available service suppliers (cont’)
5. Wind turbine suppliers
• Furhlaender:
 Supplier of the first 20 wind turbines Model FLMD 77 with capacity of 1.5
MW/turbine to REVN
 Have signed MoUs on turbine supply with a number of other wind energy developers
 In the preparation process for construction of a wind turbine manufacturing plant in
Tuy Phong, Binh Thuan province
• GE:
 A wind turbine factory with an investment capital of 61 million USD in Hai Phong City
 Achieved agreements on turbine supply with a number of wind energy developers
1
• IMPSA:
2
 Supplier from
Argentina
 Signed a strategic
cooperation agreement for wind power development of 600 MW in
3 4
Vietnam5 with Petrovietnam in Bac Binh, Binh Thuan
6
• Others: 987
1110
12 Avantis, Sany, Shangshai Electric….

Available service suppliers
Available service suppliers (cont’)
6. Contractor
• Participation of local EPC companies and state owned enterprises is encouraged by the
government
• Main EPC companies for hydro projects include Song Da corporation, Licogi, Vinaconex,
Lilama corporation and Cavico
• Power construction –investment Joint Stock Company No. 5 is the construction –
installation contractor of REVN’s 30 MW capacity Tuy Phong wind farm
• It is difficult to judge local contractors’ qualifications/suitability for wind power project
development.
• There is only one crane suitable for erecting wind turbines. It was imported from Germany
by REVN for their project.
Available service suppliers
Available service suppliers (cont’)
7. Management and Operation
• Fuhrlaender is the first and only firm of its kind in Vietnam but is just running its wind parks
• More firms with management and operation function would step in as new wind projects
are developed
Barriers to wind energy development
Barriers to wind energy development
Category
Barriers
Remarks
Economic
Difficult access to
financial resources
Limited finance is available from international financial institutions and is granted
depending on the project’s feasibility.
and financial
Local commercial banks are quite small and a single bank is not able to supply
sufficient finance for a wind power project. Furthermore, most domestic banks
lack experience in assessing and appraising RE projects.
Technical
Lack of qualified
personnel/businesses
PECC3 is a leading consultant on wind power development, but its cap abilities are
limited to conducting wind resources assessments and preparing investment
reports.
Underdeveloped
infrastructure
Including roads, bridges and transportation facilities for the transportation and
installation of wind turbines and other equi pment.
1
2
3
4
No indigenous
5
technologies
6
7
1110
12
8
9
In the case of REVN, it took them more than two months to transport the first five
wind turbines over a distance of 200 km from Phu My seaport to the project site.
And as there was no suitable crane available for erecting the wind turbine in the
country, REVN had to buy a crane from abroad. All this increased the project’s
investment cost and the impacts on project feasibility.
Wind turbines and other related equipment must be imported. Viet Nam does
manufacture wind tow ers, but by 100% foreign -owned enterprises with 100%
products for export. REVN, the developer of the first grid -connected wind farm in
Viet Nam, is constructing its own wind tower plant but the products were only
available at the end of 2010.
Likewise, the GE plant in Hai Phong is just starting the production.
Barriers to wind energy development
Barriers to wind energy development
(cont’)
Category
Barriers
Remarks
Institutional
No planning is available
The common situation in the provinces is actually ‘first come, first served.’
Investors tend to reserve places first, and develop projects later. It is thus difficult
for newcomers to find suitable sites.
As sites may not be officially planned for wind power development, it might be
risky for project developers as the sites might be reclaimed f or other activities
during the evaluation process.
The wind energy projects in Binh Thuan are examples of such land -use conflict.
The majority of wind farm projects lay in areas with titanium reserves, and were
therefore halted.
Inadequate policies and
mechanisms to support
wind energy1
2
3 4
1110
12
7 6
8
9
5
REVN’s wind power project has been generating electricity to the national power
grid since September 2009, but there is no agreement yet on the electricity sale
price with EVN.
Incentives provided by Decision No. 37/2011/QD-TTg seem not adequate.
Conclusions
Conclusions
•
•
•
•
Quite good wind potential
Wind power market is being shaped
The government supports wind power projects
 The government issued Decision 37/2011/QD-TTg on preferential policies for
wind power project
The government sets the target for wind energy project in the Power
Development Plan 7.
=> The government will enhance support policies for wind energy to attract
investment in this sector
Surpassable barriers
Is it the right time to participate ?
 Wind power project development ?
 Service supply?
- Wind resource assessment
- Feasibility study
 Equipment supply?
Contact
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Ha Noi, Vietnam
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