Vietnamese project gets higher tariff than regulated FiT

Price rise agreement propels wind power growth

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The domestically-owned Cong Ly Company has received support from the Ministry of Industry and Trade to sell electricity from its Bac Lieu wind power project at a price higher than regulated by the government.

The Ministry of Industry and Trade (MoIT), in a document sent to the prime minister late July which has been seen by VIR, proposed that the power tariff at the Bac Lieu project should be set at 11.5 US cents for 1 kilowatt per hour during the first ten years and 9.8 US cents during the four following years. From the fifteenth year of the project, the power tariff should be at 6.8 US cents.

The proposed tariff is much higher than the 7.8 US cents fixed by the government under Decision 37/2011/QD-TTg.

According the MoIT, the higher tariff would make the Bac Lieu project effective given its expensive initial investment costs. However, the tariff that the MoIT proposed is still lower than Cong Ly’s original demand. The power investor previously proposed a tariff of 12 US cents for the first ten years and 10 US cent for four following years.

Cong Ly’s general director To Hoai Dan told VIR that although the MoIT’s proposed tariff was lower than he had hoped he thought it was an “acceptable” level. “We understand that we also have to share the burden with the government,” he said.

The wind power project, situated in southern province of Bac Lieu, is the second wind power connected to the national grid and follows in the footsteps of the Binh Thuan 1 wind power project in the central province of Binh Thuan.

The Bac Lieu project has total investment capital of around $45.8 million and a design capacity of 99.2 megawatts. Cong Ly has installed 10 turbines in the first phase and is planning to install an additional 52 turbines during the second phase.

“As this project is located on the coastline we had to spend lots of money on constructing the foundations for the turbines. We also used the most advanced turbines, which pushed up our investment costs,” said Dan.

He revealed the second phase of the project would start in May, 2014 and be completed in April, 2015.

“This is the first wind power project to be implemented on the coastline and is the first project of its kind in the Mekong Delta. Its success will pave the way for the development of more wind-power projects in the region,” Dan said.

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