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Green Finance / Treasury & Capital Markets
Vietnam launches US$120 million intertidal wind project
International-backed facility part of nation’s aims to double power generation over next decade
Nguyen Tuong Thuy 29 Nov 2021

Phase 1 of the 48-megawatt Korea-Tra Vinh nearshore wind farm was inaugurated on November 23 in Vietnam, an energy-thirsty country with a commitment to renewable energy sources where possible.

The project is valued at US$120 million and is jointly developed by Singapore-headquartered TWPC, Korean firm Samtan, and Netherlands-based Climate Investor One, a finance facility funded by a number of high-profile investors that includes the European Union. The project’s financial organisation is managed by Climate Fund Managers, which is jointly owned by the Dutch Entrepreneurial Bank and Sanlam InfraWorks, part of the Sanlam Group of South Africa.

Located in the southern province of Tra Vinh, the intertidal wind farm covers 1,209 hectares of water surface and 2 hectares of land, with a total of 12 turbines. Construction started in April 2019 and the project started commercial operations early this October, ahead of Vietnam’s current wind feed-in tariff (FiT) deadline of October 31 2021.

Danish firm Vestas Wind Systems, which provided the project with a turnkey solution that includes, among other things, delivery, installation and the commissioning of wind turbines, has a 10-year service agreement for the project.

Vietnam looks to more than double its power generation capacity over the next decade with a focus on renewable energy. In 2018, the national government set the FiT at 8.5 and 9.8 US cents/kilowatt-hour, inland and offshore respectively, for wind energy projects able to start commercial operations before November this year.

This September, the Global Wind Energy Council, an international trade association for the wind power industry, called on the Vietnamese government to postpone the date for wind project-related tariffs by at least six months as a Covid-19 relief measure. The association noted that, due to pandemic-related obstacles and delays, most wind projects in the pipeline would not complete construction in time to meet the deadline for tariff access.

Responding to the association, Vietnam’s ministry of industry and trade (MIT) said there would be no extension and that there would be a switch to a new mechanism to set the wind power prices through bidding processes. “Shifting from a mechanism of fixed prices to a bidding mechanism is the global trend and is in line with Vietnam’s legal system,” says Hoang Tien Dung, head of the MIT’s department of electricity and renewable energy.

As of the end of October, 84 of the 146 wind power projects that have power purchase and sale contracts with Vietnam Electricity have begun commercial operations, according to the state utility. The remaining 62 projects, with a total capacity of 3,479 megawatts, could not turn operational before November 1. Restriction measures induced by the outbreaks of the Covid-19 pandemic have affected the pace of construction of many wind power plants, states Vietnam Electricity.

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