USD 6.7 billion in wind power investment in Vietnam at risk without COVID-19 relief

The Global Wind Energy Council (“GWEC”) and the global wind industry is calling on the Vietnamese government to postpone the FiT deadline for wind projects by at least six months as a COVID-19 relief measure for the wind sector in Vietnam. Due to pandemic-related obstacles and delays, most onshore wind projects currently in the pipeline will not complete construction in time to meet the 1 November 2021 deadline for tariff access. Without a deadline Postponement, these projects will be unable to progress, adversely impacting local economic growth and the wider renewable energy investment environment in Vietnam. 

Over the last few years, Vietnam has emerged as a top market for wind and renewable energy investment in Asia, and particularly South East Asia. The ambitious targets proposed in the draft PDP8 master energy plan have reflected the government’s commitment to long-term decarbonization of the energy system and strengthening Vietnam’s regional competitiveness. It is vital that policymakers act to prevent pandemic-related difficulties from reversing this progress.

The COVID-19 situation in Vietnam has created many hardships for the industry. This extends to supply chain bottlenecks for wind project components, workers prevented from reaching project sites for crucial inspections and activities, travel restrictions for foreign personnel, and other issues. As of August 2021, an industry survey conducted by GWEC estimates that 4,000MW of mainly onshore wind projects in Vietnam are severely challenged by these extenuating circumstances and are now at risk of missing the November deadline for the wind FiT.

Using standard industry calculations based on global and Vietnam averages, 4,000MW of wind projects translates to around USD 6.7 billion in investment that would significantly benefit local authorities and communities. This includes USD 6.51 billion in capital expenditures, and an additional USD 151 million in operating expenditures per year across an average 25-year lifetime of projects. Approximately 21,000 jobs could be created from these wind projects, sustaining coastal populations and supporting a blue economy in Vietnam. Much of this investment and workforce expansion would be locally focused at province level, including in transport, installation and operations and maintenance activities.

Ben Backwell, CEO of GWEC said, “Pandemic-related disruptions to travel, worker mobility and supply chains have reverberated across different countries over the last 1.5 years. In recognition of these disruptions, many countries like the US, UK, Germany, India and Greece have implemented COVID relief packages or deadline extensions for projects to reach their commissioning date. This support is crucial to ensuring investment and development in wind power can continue amid the harsh realities of the pandemic, which are beyond the control of individual project developers. In Vietnam, similar relief measures will be needed to support the nascent onshore wind industry which has been heavily impacted by COVID-19.” 

Wind energy will make a strong contribution to Vietnam’s energy future, and action to support the renewables sector is needed to safeguard the country’s attractiveness as an FDI destination. 

Mark Hutchinson, Chair of GWEC’s South East Asia Taskforce, said, “Vietnam is one of the most promising wind markets in South East Asia. But this is the make-or-break moment for onshore wind, which reached more than 500MW by end of 2020. The Government must introduce a FiT time postponement that will allow these 4,000MW of otherwise viable and economic wind projects to complete on a reasonable deadline. This is not just a marginal issue: Losing this volume of wind projects would strike a blow to the renewable energy investment environment, initiating a “bust” cycle in Vietnam’s wind market which may take years to recover.”

A FiT postponement will not only ensure the health of the onshore wind pipeline but also support future investment in the offshore wind sector. The first generation of offshore wind projects are undergoing different stage to close project finance right now. A similar group of international investors is anxiously watching the destination of the current onshore projects at risks. Thus, the project at risk now is not just 4,000MW projects and the investments behind it, but a burgeoning offshore wind industry, which is positioned to become a sustainable, affordable, reliable and indigenous energy solution for Vietnam.