Now is the right time for Vietnam to seriously think about changing the status of wind power from an alternative to a more mainstream source of energy, experts say.
Authorities in the south-central province of Ninh Thuan last week approved the construction of a US$250 million 124.5 megawatt wind farm by Belgian renewable energy company Enfinity Corp. A local hydropower producer Thac Mo has also expressed interest in developing a wind power project, also in Ninh Thuan.
By mid 2010, the coastal province had already licensed 13 wind power projects out of a total of 37 in Vietnam. Once all the wind farms, mainly in southern and south-central coastal areas, have started operating, they will produce a total 3,837 megawatts for the power-hungry nation.
Duong Duy Hoat, senior consultant with the Institute of Energy Science, said solar and wind power are the best solutions to the energy problem in Vietnam.
Coal-powered thermal power plants will soon face a shortage of cheap material as the country is set to start importing it in 2015, he said.
State-owned mining group Vinacomin on March 1 hiked prices for coal products delivered to power plants by 5 percent. The move was part of a government plan to let prices of essentials like water, power and coal be determined by market forces. Vinacomin is reportedly selling coal to the power sector at 32 to 37 percent lower than production cost.
Meanwhile, hydropower has not proved to be a stable source of energy either, even though it is now responsible for up to 40 percent of Vietnam's electricity demand.
Hoat said the dependence on hydropower comes "with a high price" and the country has struggled with power shortages for years. Record-low levels at water reservoirs are hurting the operation of many plants, especially those in central and Central Highlands provinces, leading to a shortfall of around three billion kilowatt-hours for this year's dry season.
That leaves nuclear power.
Always a controversial energy source, the ongoing nuclear crisis in Japan, called the worst accident since Chernobyl, has stirred up fears about nuclear power plants around the world.
Tran Viet Ngai, chairman of the Vietnam Energy Association, said the incident in Japan has raised safety concerns about nuclear power.
Many countries are rethinking their nuclear plants as well as plans, Ngai said, adding that it is prudent to do so. China, for instance, has recently suspended approval for proposed nuclear power plants, he said.
According to the World Bank, southern and south-central coastal areas in Vietnam have exceptional wind-energy potential. The bank said even using less than 8 percent of its total land area for this energy source, Vietnam can produce 102,716 megawatts of power.
But wind power has only added a mere 7.5 megawatts to Vietnam's generation portfolio. That compares to the total power production of 19,000 megawatts, which is expected to rise further to 50,000 megawatts by 2015.
The 7.5 megawatts of wind power came from five turbines built by the Vietnam Renewable Energy Joint Stock Company (REVN) in Ninh Thuan's neighboring Binh Thuan Province. The Hanoi-based company is working on 15 turbines to complete a 30 megawatt wind farm.
Pham Van Minh, chairman of REVN, said pricing was an obstacle for the development of wind energy.
The Ministry of Industry and Trade, in a proposal, set purchase prices for wind power at 8 cents per kilowatt-hour, and Minh said it was too low to encourage investment. REVN wants 12 cents for each kilowatt-hour of wind power.
Many other wind power projects are ready to be linked to the system, but investors have not agreed on the prices offered by state utility EVN.
Ngai calculated that it now costs at least 16 US cents to generate a kilowatt hour of wind energy but the monopoly utility is only willing to pay 6 cents. "That price can't even offset production costs, let alone make profit," he said.
EVN itself has been complaining that it has sold electricity at below cost prices. After a recent price hike early this month, the average power price in Vietnam is VND1,241 per kilowatt-hour, or nearly 6 US cents.
Ta Van Huong, former director of the Energy Department under the Ministry of Industry and Trade, said wind power investors need greater support from the government.
"If investors are left to fend for themselves, there's no way they will spend their money on clean energy if they are going to have difficulties selling it later," he said.
European countries are subsidizing their wind power producers on every kilowatt-hour they can generate, Huong said.
"If [Vietnam] can't offer that kind of subsidy at this point, at least give investors other tax and land incentives and set a clear price," he said.
Hoat of the Institute of Energy Science said it's time to adopt a strategy for new energy sources to "ease the dependence on weather-reliant power production."
"But to do so, we may need a new law, like a Law on Renewable Energy. Maybe then we can hope for giant leaps," he said.