WS Presentations en Reduced

Speaking Notes Annette Frick
Design features for an effective wind energy policy for Viet Nam
Expert Workshop,
14-15 May, InterContinental Hotel Hanoi, Viet Nam
Dear Mr Cuong,
Distinguished guests,
Ladies and Gentlemen,
It is a great pleasure to welcome you all on behalf of the German Embassy to this workshop Design
features for an effective wind energy policy in Vietnam.
I am glad to see all the government institutions as well as the energy industry, both public and
private represented here, to discuss the policy framework for wind power in the next two days.
From our experience in renewable energy in Germany, I can tell you: dialogue between all
stakeholders is a critical element to make sure renewable energy markets develop at a rate that is
economically sustainable and acceptable to the entire society.
The German government is eager to share the German experience in the renewable energy sector
also through its development cooperation abroad. This is why we have committed ourselves to
making energy a priority sector in our cooperation with the government of Vietnam. On the basis of
Vietnams Green Growth Strategy we want to support especially the development of renewable
energy technologies as well as energy efficiency.
Both, our financial cooperation through KFW, as well as our technical cooperation through GIZ, are
working closely with the Ministry of Industry and Trade, as well as EVN and other institutions in the
energy sector. Projects and programmes are financed by a variety of German Federal Ministries (BMZ
/ BMUB / BMWi), all of them striving to design modern and sustainable energy policies on the basis
of their respective mandate
At this point, I would like to take the opportunity and thank you, Mr Cuong, and your Ministry and its
staff, for the fruitful and friendly cooperation in recent years, and also extend my word of thanks to
the colleagues from MOIT/GDE and GIZ for the organisation of this workshop!
As most of you know, the most prominent of the renewable energy technologies that we are jointly
working on, is wind power. Vietnam has an excellent potential for electricity generation from wind
resources. We acknowledge that Vietnam has a pressing need to expand its power generation
capacity. In the foreseeable future renewable energy alone is not sufficient in the short-term to
cover the increase of electricity demand.
BUT: renewable energy technologies, and wind power in particular, can make a big contribution to
meeting this need for power. In addition, renewable energy sources offer the opportunity to embark
on the transition to a more sustainable, green and CO2 neutral energy system that can even develop
a new industrial sector, and thereby create many new jobs.
To realise this potential, however, we need a conducive environment. Let me mention three brief
points which, judging from our experiences in Germany, may be decisive also for the development of
the RE sector in Vietnam.
The experience we have made in Germany has taught us that the transition of the energy system
towards renewables, which we call Energiewende (energy transition), is not an easy at times
even painful process as tough political decisions will have to be taken It is a challenge for an
industrialised country like Germany, and even more so for Vietnam. Nevertheless, I believe emerging
markets and economies such as Vietnam can benefit from experiences other countries have made
and thereby shorten the learning process
Renewable energy markets around the world have developed very quickly in the last few years.
Germany has been at the forefront, but so have Denmark, Spain, China, Brazil, and many others.
Most recently, South Africa, Egypt, and Morocco have made big steps forward and in this region,
the Philippines and Thailand present notable success stories.
While those countries differ widely in their economic structure and capacities, one thing they all have
in common is the following:
1) Renewable Energy deployment will not work without the private sector!
On the one hand, it is evident that the public sector does not have the capacity to cover the largescale investments that are required. We need private investors to step in, and provide capital for
wind power projects.
Neither has the public sector the flexibility, the entrepreneurial skills, and the innovative capacity
that is required to realise the energy transition.
Of course, the next point I am going to make, is one, that we all have heard a number of times, BUT,
in my view, it is still an important point to be made as long as it has not been achieved:
2) An attractive, and comprehensive, policy framework is needed to get the private sector on
board.
We, the public sector, have the responsibility to set the framework right. On the one hand, it should
ensure that the Government of Vietnam is not spending more on the development of a wind power
market than it has to. There should be no windfall profits for investors that eventually translate into
a loss for the tax-payer.
On the other, the framework provided, and the incentives given, have to be attractive enough for
investors to make a reasonable amount of profit from it.
This, of course, concerns the Feed-in Tariff, which GIZ has been working on closely with MOIT to help
adjust it to a reasonable level. And we will this discuss this in much greater detail later today.
At least as important, however, is to provide an overarching framework that defines all the processes
and procedures, regulations, and responsibilities of institutions in a clear and transparent way to
investors.
In Germany, we have done this in our Renewable Energy Law (Erneuerbare Energien Gesetz, EEG). It
clearly defines all mechanisms and regulations for renewable energy markets.
Before Germany started in 2000 implementing the first Law (EEG), there was no renewable energy
industry and the general know-how about wind energy was very limited. The only wind turbines that
had been installed were those of research institutes and private enthusiasts or environmentalists
from their private funds.
Since then, the electricity generation from wind power has increased tenfold! In 2014 alone, we have
installed nearly 5,000 MW (4,750 MW) of additional wind power capacity. The share of wind power
in overall electricity production is now 8.6 %.
Prices for wind power production have dropped substantially in Germany. The average
remuneration for wind energy is expected to be 9.6 EUR cents in 2015 and is expected to decline
further. However, the German market has also led to price reductions abroad, through learning
curves and significantly decreasing technology prices.
Now, of course we have our very own challenges in the energy sector in Germany with our aim to
phase out nuclear power by 2022, while reducing our CO2 emissions substantially at the same time.
However: to date, the Renewable Energy Law (EEG) has been a big success for us and has also
contributed to the development of an entire industry. The wind sector has increasingly
professionalised and on a macroeconomic level, Germany has profited substantially from it. We have
attracted lots of investment, have created thousands of jobs and have exported substantially and
this leads me to my third and last point:
3) Wind power creates jobs and industrial development
From the perspective of development cooperation, and indeed the perspective of a country on the
trajectory from a developing country towards an industrialised economy, I believe this is a critical
point.
With a clear policy framework, the wind power sector in Vietnam will be able to attract substantial
private investments, from both foreign as well as domestic capital investments that the public
sector does not have to make.
At the same time, if capacities and skills are build up at all levels, there will first be hundreds, and
later thousands of jobs in the wind industry. In the beginning, this will certainly involve construction,
as well as operation and maintenance. But once the market has been established, it will also move up
to the step of building up manufacturing capacities.
To support this process of local value creation, a highly technological sector such as wind power,
requires qualified people. For German Development Cooperation, this is a particularly fruitful field of
cooperation, linking our two priority areas Technical Vocational Training and Education (TVET) and
Energy. We very much look forward to working with the wind and the TVET sector to support the
training of wind technicians, for example.
Ladies and Gentlemen, let me conclude
The current situation provides an excellent opportunity for Vietnam to enter the wind market.
Vietnam will, in my view, benefit substantially in the medium- to long-term from the development of
a wind power market.
From the viewpoint of a development partner in Vietnam let me say that the indicator for successful
cooperation in the wind sector is not the construction and operationalization of a wind park, but
ultimately the up-scaling and widespread application of technologies. We are proven right when
whatever development impulse has been given by ODA will be up-scaled by market mechanisms on
the basis of sound regulatory frameworks.
Learning from international experiences in numerous other countries, Vietnam can avoid undesirable
developments that have taken place elsewhere (e.g. Germany). At a global level, the industry is well
established, the technology is proven, turbine prices are falling and the lessons of the economics of
the wind market have been learned elsewhere, all of this making it easier for Vietnam than for
preceding countries to introduce wind power
In this sense, I wish us a successful workshop and hope that the discussions taking place today and
tomorrow will lead to the conclusion of a regulatory framework that, this time, is attractive enough
to stimulate the wind energy market in Vietnam.
Thank you very much for your attention!
Implemented by
Ministry of Industry and Trade

General Directorate of Energy
German Development Cooperation in Viet Nam

Energy Sector
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Contents
1. Context of cooperation in the energy sector
2. GIZ Energy Support Programme
3. GIZ support on wind power 2014-2018
4. Objectives of the workshop
Page 2
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GER
EEG
RE TAKE OFF
GLOBALLY
Generation
according revised
PDP VII
120
100
80
2020:
258.8-278.9 TWh
60
40
2030:
515.7-632.1 TWh
20
1,200
1,000
800
600
400
200
1971
1973
1975
1977
1979
1981
1983
Electric P
(kW
1975: Unification
140
kWh per Capita
Energy Production (TWh)
1. Context Electricity Production historically
Electricity production from oil sources

Electricity production from natural gas sources
Electricity production from coal sources
Electricity production from hydroelectric sources
Electricity production from renewable sources, excluding hydroelectric
Source: WB (2015); IEA (2015); GDE (2015)

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1. Context Growth of sector revised PDP VII
RE*;
5.0%
Gas/Oil
; 24.5%
Import;
2.1%
* including SHP
**including storage hydropower
RE*; Import;
6.5% 2.4%
Hydro**
; 39.9%
Coal
thermal
; 28.5%
Installed
Capacity
Gas/Oil;
14.8%
2014:
34 GW
Hydro**;
29.1%
Coal
thermal;
47.3%
2020:
61 GW
Nuclear; Import;
RE*; 3.0%
1.3%
10.2%
Gas/Oil;
17.1%
Hydro**;
17.9%
Coal
thermal;
50.4%
2030:
116 GW
Source: GDE (2015)
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1. Barriers for investments into RE (and EE)

Lack of national
(comprehensive) law
for RE
Limited access to
financing (equity &
debt)
Low electricity price
Limited capacities of
the transmission and
distribution grid
Complex and unclear

procedures for
investments
Limited data
availability (and poor
data quality)
Difficult access to
information
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2014 Portfolio Presentation GIZ in Vietnam
Implemented by
2. Portfolio GIZ Viet Nam (from July 2013)

GREEN GROWTH AS THE OVERARCHING FRAMEWORK
PRIORITY AREA
Vocational Training
Reform of
Technical and
Vocational
Education and
Training
Hai Phong
Polytechnic College
Bach Nghe
PRIORITY AREA
PRIORITY AREA
Biodiversity and Forest
Renewable Energy
Support Project
Environmental Policy and

sustainable Use of
Natural Resources
Climate Change &

Coastal Ecosystemns
Energy
Upscaling Wind
Energy in Viet Nam
Renewable Energy
and Energy Efficiency
Vocational training
for subway
operation staff
Outside Priority Areas
Centre of
Excellence for
Green TVET
The Macroeconomic Reforms/Green Growth programme

and other supplementary activities form a substantive and
structural bracket over the entire portfolio, generate
synergies, pursue common goals
DOING MORE in LESS AREAS:

Selectivity: 3 priority areas
Selected alignment to Viet Nams

development priorities and goals
Central framework of reference is the
National Green Growth Strategy of
Viet Nam
Concentration on 1-2 strategic
regions in each sector
Strengthening of the policy dialogue
Embassy/VNM-Government
Integrated programmes instead of
projects: Technical and financial
cooperation under one programme
concept and set of goals
Integration of matters of social
inclusion, (political) participation and
partnership with private sectors into
the priority areas
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2. GIZ Energy Projects in Viet Nam I/II

Energy
Efficiency
G 2 G Negotiations
(07/2013)
Smart Grid (BMZ/DKTI)
Renewable Energy
RE+EE (BMZ)
Wind II (BMZ/DKTI)
Bioenergy I (BMUB/IKI) - RESP
Wind I (BMUB)
2009
Legend:
2010
Preparation
2011
2012
Implementation
2013
Extension
2014
2015
2016
2017
2018
Project Idea
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2. GIZ Energy Support Programme areas of activity

GIZ Energy Support Programme
Action Areas
Legal and Regulatory
Frameworks
Capacity
Development
Technology
Cooperation
Policy Strategies
Government
Institutions
Research
Project Developers
and Investors/
Financial
Institutions
Private Sector
Support
Mechanisms
Regulations
Guidelines
Institution Building
Education
TVET
Knowledge Sharing; Thematic Studies; Pilot Projects

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3. GIZ Energy Support Programme past activities

Biomass
Solid Waste
Decision 24/2014/QD-TTg (29.06.2014)

FiT for electricity from CHP-Biomass
Power: 5.8 US-Cents/kWh
Avoided-Cost Tariff for electricity from
other Biomass plants
Annually calculated based on the
avoided cost for 1 kWh electricity from
imported coal
Duration of PPA: 20 Years
Decision: 31/2014/QD-TTg (05.05.2014)

Feed-in-Tariff for electricity from MSW
Incineration: 10.05 US-Cents/kWh
Landfill-Gas: 7.28 US-Cents/kWh
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3. GIZ Energy Support Programme past activities

Wind Power
GIZ/MoIT Wind
Measurement Campaign
Project from 2010-2015
10 sites in 8 provinces
80 m mast
Decision 37/2011/QD-TTg (29.06.2011)

Feed-in-Tariff for Wind Power
Tariff: 7,8 USCents/kWh (6.8+1)
Currently under revision
High quality sensors (5 with GSM connection)

Windspeed (80m/60m/40m) [m/s]
Weibull A-Parameter (80m/60m/40m)
Weigbull k-Parameter (80m/60m/40m)
Turbulence intensity (80m/60m/40m)
Climatological site characteristics:

Temperature (14m) [C]
Air pressure (6m) [hPa]
Relative humidity (14m) [%]
DATA will be published in the Framework of the WB Renewable

Energy Resource Mapping in Open Source Format soon
https://www.google.com/maps/d/viewer?mid=zKJFPJnc-KLQ.khKu-oq60D0w
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4. Support on wind power 2014-2018

Action Area 1:
Legal and Regulatory
Frameworks
Action Area 2:
Capacity Development
Policy advice
Capacity Needs Assessment
Feed-in tariff
Action Area 3:
Technology Cooperation
Market information
Support to local banks

Investment Guidelines
Regulation, licensing
Support to local project developers
Strategic advice (local value creation)

Support to wind power association
Support to private sector partnerships
Systems analysis
Technical standards, guidelines, e.g.
ESIAs
Vocational training for wind
Vietnamese German research

cooperation
Short-term training courses
Update wind data quality
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4. Support on wind power 2014-2018 adjustment FIT
Quantitative:
Wind data
Pre-/feasibility
studies
International
comparison
PDP Targets:
1 GW Wind
Power by 2020
Assumptions
based on P/FS
questionnaires
and international
experience for:
CapEx
O&M
Capacity
Factor
Required investment and

assumed investor structure
Qualitative:
Interviews
Questionnaires
Assessment of
existing
Framework
Basis for analysis
Methodology
GIZ Wind FIT Study (2014)

1 GW by 2020:
Ca. US$ 2.1
billion over
next 5 years
At average debt
level of 70%
US$ 630m
equity
US$ 1.47b
debt
Assumed
investor types:
Highlysubsidized
Strategic
Fully
commercial
FIT
calculation
All investor types
must be targeted
with one FIT
Assumed IRR:
10% (internat.
experience)
Basis for
calculations:
LEC (levelized
costs of
electricity)
Additional
incentives like
tax breaks etc.
Result:
10.4 US/kWh (o-s)
Tariff-funded
levy on the electricity
price for 1GW by 2020
less than 5VND/kWh
General
recommendations:
FIT payment system should be
one-stop-shop (not FiT+VNEPF)
Government guarantee for
payments
Better wind measurements and
improved standards
Enforce standard agreements
(network connection and PPA)
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5. Objectives of the workshop
Discuss elements of a comprehensive policy for wind power
One comprehensive policy that integrates individual regulation
What does it need to address barriers?
How can we monitor wind power deployment effectively?
Regulation, PPAs, licensing procedures
Local value creation and capacity development
Develop vision for wind power (as part of the wider electricity sector)
In 2030, the wind energy sector in Viet Nam will.
Dialogue between government and private sector => issues of concern
Conclusions of the workshop and recommendations for follow-up

Page 13
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Thank you for your attention!!

Ingmar Stelter
Programme Director, GIZ Energy Support Programme
ingmar.stelter@giz.de
+84 (0) 4 39 41 26 05
Page 14
20/05/2015
D N NH MY IN GI PH LC
PHU LAC WIND FARM
Hanoi 5/2015
Managing Agency: MoIT;

Project Proposing Agency: EVN;
Financing Agency: KfW;
Investment Owner: Thuan Binh Wind
Power JSC (TBW)
20/05/2015
Main Parameters
Capacity: 24 MW;
Wind Speed: 6.7m/s (60 m);
Location: Ph Lc Commune, Tuy Phong
District; Bnh Thun Province;
Volume: VND 1,089 bil.
Project Progress
Feasibility Study (FS): approved Jan 2010;
Loan Agreement Signing: 04 July 2013;
Local construction activities: 2013-2014;
Selection of consultants: contract signature Nov
2013;
EPC procurement: 2014-2015;
Expected Start: 6/2015
20/05/2015
TURBINES LAYOUT OF PHU LAC WIND FARM PROJECT
MEETING WITH KfW TO ARANGE THE LOAN FOR PHU LAC PROJECT
20/05/2015
CARRY OUT THE ESIA FOR PHU LAC PROJECT
PUBLIC CONSULTATION MEETING WITH LOCAL PEOPLE
20/05/2015
LAND COMPENSATION - CLEARANCE AT PHU LAC PROJECT
MINES CLEARANCE (PHASE 1)
20/05/2015
NG VO D N TRC KHI XY DNG
NG VO D N HIN TI
20/05/2015
20/05/2015
Main barriers to wind power development in VN

Category
1. Information:
Barriers
Lack of reliable information on: wind
measurement, operations
2.
High costs;
Economic/Financial: Intensive capital;
High domestic loan interest
3. Technical:
Insufficient human resource;

Poor infrastructure: roads, bridges,
ports, lines;
Lack of domestic technologies;
15
After-sales
market, O&M (-)
Biggest barrier:
wind power purchase price!
20/05/2015
EXPERIENCE & RECOMMENDATIONS

FOR INVESTORS:
Decision of financing sources: pros & cons;

Good understanding of current regulations:
rights & obligations;
FOR STATE MANAGEMENT AGENCIES:
Policies: extremely important;
Directions for financing sources.
VI HNH NH V CNG TY CP
PHONG IN THUN BNH (TBW)
SOME PICTURES ABOUT US
20/05/2015
KONG CHRO
PROJECT
3900 ha
EAH LEO
PROJECT
1920ha
LOI HAI PROJECT
523 ha
VINH HAO
PROJECT
572 ha
PHU LAC PROJECT

400ha
THE WIND FARM PROJECTS DEVELOPED BY EVNTBW
TBW TEAM at PHU LAC WIND FARM
10
20/05/2015
AFTER WORKING HOUR
11
20/05/2015
COLLECTING RUBBISH AT THE LOCAL BEACH
CHARITABLE ACTIVITIES TOWARD LOCAL PEOPLE
12
20/05/2015
THANK YOU FOR YOUR ATTENTION!
EVNTBW: Clean Energy Friendly People!

25
13
12/05/2015
Best Practices in Wind Energy

by Gilles Beau 24 May 2015
2015 The Blue Circle Pte Ltd. All rights reserved.
Contents
Presentation of The Blue Circle

Presentation of Phuoc Minh & Dam Nai Projects
Best Practices in Wind Energy Industry
Other recommendations
12/05/2015
Introduction The Blue Circle
The Blue Circle is an Independent Power Producer:

100% based on Renewable Energies, with a main focus on Wind Power
Strong Team Experience in the Wind, Hydro and Solar Sector
Based in Southeast Asia (Headquarters in Singapore, Subsidiaries in Vietnam
and Thailand, and with presence in Cambodia Phnom Penh)
Initial Focus on Mekong River region (Thailand, Cambodia, Laos and Vietnam)
expanding into Indonesia in 2015
Vertically integrated with wind engineering team based in Singapore
Targeting Electricity Sales, not services or equipment

Independent Power Producer model
Partnership with Armstrong Asset Management
International Expertise
Wind
Solar
1,260 MW pipeline developed in France, USA, Vietnam and French West Indies
100 MW pipeline developed in France and USA
218m EUR of equity and bank project financing raised in France, Spain and the USA
7.5m EUR of project financing raised in France and 6m USD in Thailand
Project finance advisory on 500 MW in China, USA and Thailand
Project finance advisory on 37 MW in Thailand, Vietnam and Bangladesh
Wind Engineering experience of 950MW in North America, Australia and South Africa
Biomass
Hydro
12 MW acquired in the USA
2.5m EUR of equity financing raised in the USA
50 MW pipeline acquired in France
Project finance advisory on 110 MW in China
50m EUR of debt financing raised in France and UK
12/05/2015
TBC Milestones
The Blue Circle is the only wind focused developer in the Region with:
Development, financing and operating experience;

Local and international experience;
Financing capabilities;
Current portfolio under development of 600MW
Rolling out of Project Portfolio in Vietnam
March 2015: Policy awarded to develop

Dam Nai Wind Project in Ninh Thuan,
Vietnam
June 2014: Policy awarded to develop

Phuoc Minh Wind Project in Ninh Thuan,
Vietnam
Private Equity Investment Armstrong

Asset Management
Incorporation of
The Blue Circle
May 2014: Minority Investment from Armstrong Asset

Management
USD 40 million commitment for the construction of wind and solar
projects in Southeast Asia
SCAF Funding for project development
600 MW pipeline of wind projects under development in
Thailand, Vietnam and Cambodia
Nov 2013
Development of Project pipeline and

team building
2012-2013
Phuoc Minh Project
Phuoc Minh Project Location
Expected Capacity of About

30MW
100m Monitoring Mast installed on 14th September 2014
12/05/2015
Phuoc Minh Project
Phuoc Minh Project Location
Dam Nai Project
Dam Nai Location
Good proximity to the Substation

Relatively good winds expected
100m Monitoring Mast to be installed by End of May 2015
Or Beginning of June 2015
Expected total Capacity is about

40 to 60MW
12/05/2015
Best Practices Residential Areas
Example of Regulations or Best practices for Residential areas setback distance (m)
in Wind industry in different countries
The limit of 10dBA increase by the wind farm

is generally accepted in Europe for the night
time which is roughly equivalent to the
proposed 500m setback.
The Blue Circle Recommendation
500m buffer from residential area seems to be an appropriate setback

distance to minimize potential noise, shadow flicker issues
Best Practices Transmission Line

Example of Regulations or Best practices for High Voltage Transmission setback
distance (m) in Wind industry in different countries
Example for HV line >110 KV

-High Tension Power lines (>110Kv) should have a limit of 1.1 x hub height + blade length
from right of way or 200 meters,
-Low tension Power lines (<110Kv) should have a limit of blade length + 10 meters of right of
way.
10
12/05/2015
Best Practices Highway/ Railway

Example of Regulations or Best practices for Highway / Railway setback distance
(m) in Wind industry in different countries

-Highways, Primary Roads and Railways should have a limit of 1.1 x hub height + blade length
from right of way or 200 meters,
-Other Public Roads excepting Highways should have a limit of blade length + 10 meters from
right of way.
11
Best Practices Distance between

Wind Power plants
There is no real regulations nor best practices to the date on the minimum distance
between wind power projects.
However, The limit for wake loss effect generally accepted internationally between
wind turbines is 7 x rotor diameter in the main wind direction. This distance is also
recommended by turbine manufacturers for fatigue mitigation. Nevertheless, wind
turbines could be much closer if not in the main direction.

7 x rotor diameter exclusion unless negotiated by the new project with a Consent Letter from
the existing project
12
12/05/2015
Best Practices Airport / Airfield /

Airbase
Each country has its own Aviation Authority Regulations with fairly different
recommendations of setbacks depending of importance of the Structure (how
high is the building/tower/wind turbine) and the type of Airport (major,
secondary, local, small airfield - civil, military, small private airfield, VOR or not
(VOR : VHF Omnidirectional Range) )
Generally Runway are oriented along the prevailing main Wind Direction
For Major Civil Airport, a setback distance of around 15km is generally used as
guide for Exclusion area
For secondary Civil airport / Military, a range from 5 to 10km round or elliptical
buffer (along the prevailing Wind direction/runway) are mentioned, though
some turbines have been located much closer at a few airports.
Example for Dam Nai site

15 km round buffer from Major Airport like HCM, Ha Noi
5 km Elliptical buffer along main run way for secondary airport / military airbase
13
Other Recommendations
Some logistics concerns that can have strong impacts on projects

financing (roads, bridge, cranes, )
Grid which may be too weak in some areas to support good
integration and may therefore impacts financing
Permitting Process to be reviewed (for ex : showing proof of
debt financing before Investment Certificate Issuance and
therefore Final Feasibility Studies)
Financing difficult due to Lack of state Warranty on PPA offtaker
The Blue Circle is committed to make Wind Energy become a reality in Vietnam
14
12/05/2015
Contact Details
Thank You for your attention
51 Goldhill Plaza #12-11

Singapore, 308900
Email: contact@thebluecircle.sg
128 Payatai Plaza Building #12-C

Phayathai Road
Bangkok, 10400
Thailand
12th Floor, Vincom Center, Crosscoop

72 Le Thanh Ton, District 1
Ho Chi Minh City
Vietnam
Tel (SG): +65 6259 4921

http://www.thebluecircle.sg
15
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Best Practices for PPAs and Licensing
Page 1
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The fundamental function of a well-designed PPA is to mitigate
risk.
Graph demonstrates the risk premiums for different components

of infrastructure projects in the developed vs. developing world
Source: Deutsche Bank 2011
14/05/2015
Page 2
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Risks
Description & Examples
Economic Risk
Risk that economic factors beyond the control of the project impact revenues, or
profitability: e.g. recessions, macroeconomic shocks, etc.
Political Risk
Risk of political instability, change of govt, etc.
Performance Risk
Risk that the wind or solar resource will fluctuate beyond projections, or
underperform: particularly disruptive if this occurs in the early years
Regulatory Risk
Risk that regulators change the rules of the game (e.g. Spain, Czech Republic with
FIT contracts). Investment performance relies on a stable regulatory regime.
Off-taker Risk
Risk that the buyer (e.g. utility) experiences financial difficulties, and can no longer
honor the PPA, or other obligations.
Technology Risk
Risk of technological malfunction, or higher-than-projected downtime, repairs, etc.
Construction Risk
Risk that construction faces local opposition, or delays due to operational or project
management failures
Revenue Risk
Fluctuations in revenues due to fluctuating prices of green certificates, variable

electricity pool prices for power plants that sell directly into the market, etc.
Currency Risk
Risk that the currency in which sales are denominated changes abruptly or
significantly over time in relation to the currency in which the project was financed
(e.g. EUR, USD)
14/05/2015
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What is a PPA?
A power purchase agreement (PPA) is a contract between two parties,
one who generates electricity for the purpose (the seller) and one who
is looking to purchase electricity (the buyer).
The PPA defines all of the commercial terms for the sale of electricity
between the two parties, including when the project will begin
commercial operation, schedule for delivery of electricity, penalties for
under delivery, payment terms, and termination.
14/05/2015
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What is a PPA?
Goal:
The goal of good PPAs is to provide a revenue stream to the
developer that is sufficient to recover their costs for a given project, plus
a reasonable return on investment. This is what constitutes a
bankable PPA.
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14/05/2015
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Key Requirements for Bankable PPAs

1. A fixed cost-reflective, risk-adjusted tariff:
Tariff offered ($/kWh) to cover costs of building and operating the
electricity plant over its useful life, while allowing for a reasonable
rate of return
Tariff should provide sufficient revenues, or cash flow, to allow for
decommissioning at the end of the projects useful life
Risk-adjustment: areas with higher risk generally require a higher rate
of return in order to attract investment
14/05/2015
Page 6
Implemented by

2. Exchange rate:
For countries with more volatile currencies, it is advisable to index the

power purchase agreement in a major currency (EUR, USD, or Yen) in
order to eliminate currency risk.
Major developers will normally prefer to receive their payments in the same
currency as the one their debt payments are due.
This avoids friction losses due to currency exchange fees, and helps
reassure lenders that the cash flows from the project will be sufficient
to honor the projects debt obligations.
Page 7
14/05/2015
Implemented by

3. Inflation risk :
A bankable PPA should ideally include some degree of inflation indexation

to take into account inflation and to mitigate the risk that the real value of
the projects cash flows is materially depreciated over the course of the
projects life.
For solar and wind projects an inflation indexation of 5-20% of the tariff
value is generally recommended
should ideally offset, at a minimum, the inflation risk facing the
proportion of project expenditures incurred locally (e.g. O&M
expenses).
14/05/2015
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Implemented by

4. Dispatch risk:
Require utilities to purchase all power produced by the project. This is often
referred to as a take and pay arrangement.
particularly important for wind and solar projects, as these incur large
fixed costs that can only be recovered from power sales, which are
predicated on a certain number of full load hours per year, based on
the local solar or wind resource.
Without a guarantee that the power will be purchased when it is
produced, lenders and investors will be unable to confirm that the
revenues from power sales will be sufficient to cover debt payments.
Page 9
14/05/2015
Implemented by

5. Regulatory or Legal Risk :
Clearly stipulate what happens if the laws or regulations change
Clearly stipulate who is responsible for any loss revenues that result
applies to any additional or retroactive taxation that were not part of
the original agreement.

Most lenders require that the utility, or off-taker, assumes any legal or
regulatory risk.
14/05/2015
Page 10
Implemented by

6. Force Majeure Risk :
Include clear provisions describing what happens in the event of a major

event that is beyond the control of the project owner or developer (e.g.
tsunami, lightning strike, etc.)
In some cases, these factors will be covered by insurance; in other

cases they will not.
The PPA should clearly outline (or better, negotiate) what risks the
developer or investor is responsible for assuming.
Page 11
14/05/2015
Implemented by

7. Dispute resolution mechanism :
Include a dispute resolution mechanism in the event of a disagreement on

the terms of the contract, or agreement.
For major projects, this can occur in an international forum; for smaller
projects, alternative dispute resolution mechanisms should be provided
that ensure a neutral and impartial arbitration.
14/05/2015
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Implemented by

8. Termination clauses:
Outline the specific conditions under which the off-taker or the project owner
can terminate the PPA
Any termination should provide for sufficient grace period to both
parties, as well as cure rights.
Termination clauses should also include specification of a
methodology for determining the total amount of any termination

payment, so that the value of the assets can be compensated.
The termination payment should be equal, at a minimum, to the
14/05/2015
outstanding debt owed by the project developer.
Page 13
Implemented by

9. Interconnection risk :
clearly stipulate which party is responsible for connecting the facility to the
network
clearly stipulate how the costs of any additional network upgrades beyond
the connection point with be shared.
In many cases, the costs of any upstream upgrades are assumed by
the utility, and not by the project developer
The project developer is responsible for connecting the facility to the
network at an agreed-upon point, and for building any substations or
14/05/2015
other equipment required to connect the facility.
Page 14
Implemented by

10. Counterparty risk :
It is critical to identify the counterparty to the PPA (the entity purchasing the
power) and to ensure that it is sufficiently capitalized to make all payments
to IPPs as stipulated in the PPAs.
It is advisable to reduce the complexity of the revenue streams as much as

possible (e.g. the Env. Fund): cash flows should come from one wellcapitalized entity. This reduces counterparty risk.
Also, the entity should be provided with implicit or explicit backing (i.e.
guarantee) from the government of Vietnam.
Page 15
14/05/2015
Implemented by
FIT Licensing Procedures: Ontario, Canada

Example of the Generation License Application Process
Online form submitted detailing location, connection point, etc.
Signed application form (via post)
Check or money order to pay for the license (via post)
A non-refundable application fee of:
$100 for projects of 10.0 megawatts or less;

OR
$1000 for projects of more than 10.0 megawatts;
Also, unless exempt, projects >10MW must pay an annual registration fee of
$800.
Process is simple and streamlined, and uses standard documents and forms
14/05/2015
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Implemented by
Overview of Licensing Procedure in Viet Nam (1)

Preliminary Study, Approval to Conduct Wind
Measurements: ~21 days total
Site Permit, Land Allocation: ~50 days
Location Registration and Wind Resource Data:
~15 days after receiving application
Market Study, Investment License, Grid
Connection Agreement, PPA Discussion: ~45 days
Preparation of the Site for Wind Construction: 1030 days
Source: AHK Study 2015 Page 17
14/05/2015
Implemented by
Overview of Licensing Procedure in Viet Nam (2)

Investment Report
PPA Contract Agreement
Construction Permit, Ownership Title:
~65 days
Grid Interconnection Contract
Generation License
14/05/2015
Source: AHK Study 2015 Page 18
Implemented by
Comments on Vietnam PPA and Licensing

-
No wind PPA has yet been signed in Vietnam with foreign investors
Process to discuss the contract and PPA issues is time-consuming

and unclear
The process for obtaining an investment license as well as

construction and interconnection-related permits differs by province
and is also often unclear
Tax issues (namely the application of VAT) in the SPPA should be

further clarified
An independent dispute resolution mechanism is still lacking: this

can significantly deter foreign investors
Page 19
14/05/2015
Implemented by

-
Clear responsibilities within agencies for different stages of the contracting

process: Permits, licenses, grid connection, etc.
Clear coordination between different levels of government
Clear rules at each step of the process: grid code, licensing, environmental
approvals, etc.
One-Stop-Shop for all permits and licensing requirements
Well trained, dedicated agency staff
Clear and standardized online forms and procedures
Sovereign guarantee for the counterparty
Stakeholder feedback forums (e.g. conferences, roundtables, etc.)
Dispute resolution mechanism

14/05/2015
Page 20
10
Implemented by
Concluding Remarks
-
Connecting the PPA procedures with the licensing procedures in a coherent

way is important to streamline project approvals
The process for licensing should be clearly published on a website
The list of required documents should be clear upfront to avoid delays
Many countries moving to a one-stop-shop approach

-
This helps concentrate expertise within a particular government agency, or

department, and cultivate clear institutional roles and responsibilities
14/05/2015
Page 21
Implemented by
Recommendations for the PPA and Licensing Aspects

1.
Provide a clear online portal with a description and diagrams of the

licensing process
2.
Establish a one-stop-shop for for all PPA and licensing-related aspects
3.
Strengthen the PPA counterparty structure by consolidating payment

responsibilities under one entity and providing sovereign backing from the
government
4.
Clarify responsibilities
5.
Build capacities amongst institutions
14/05/2015
Page 22
11
Implemented by
Sample PPAs
World Bank, PPP in infrastructure resource center, http://ppp.worldbank.org/publicprivate-partnership/sector/energy/energy-power-agreements/power-purchaseagreements#key_features
NREL 2010, Power Purchase Agreement Checklist for State and Local Governments
http://www.nrel.gov/docs/fy10osti/46668.pdf
Ferrey, Steven; Moreno, Alejandro. 2013. Small scale generation : issues in

standardizing power purchase agreements. View point ; no. 337. Washington DC :
World Bank. http://documents.worldbank.org/curated/en/2013/03/17760146/smallscale-generation-issues-standardizing-power-purchase-agreements
http://www.epa.gov/greenpower/buygp/solarpower.htm
Example Wind Power (Sri Lanka): http://www.ceb.lk/download/db_sppa/windpower.pdf
14/05/2015
Page 23
Implemented by
Sample PPAs
RCREEE 2012, Power Purchase Agreement Model for Electricity Generated From
Renewable Energy in RCREEE Member States, http://www.rcreee.org/wpcontent/uploads/2013/03/ModelsGuides_PowerPurchaseAgreementModelForElectricity
GeneratedFromRenewableEnergyInRCREEEMemberStates_2012_EN.pdf
http://mfin.gov.mt/en/home/enemalta/Documents/World%20Bank%20ppa%205.pdf
http://ppp.worldbank.org/public-private-partnership/sector/energy/energy-poweragreements/power-purchase-agreements#key_features
Example Wind Power (Sri Lanka): http://www.ceb.lk/download/db_sppa/windpower.pdf
California (solar): https://ucmshare.ucmerced.edu/docushare/dsweb/Get/Document129839/SOLAR+POWER+PURCHASE+AGREEMENT.pdf
Kenya (larger 10 MW):

http://www.erc.go.ke/images/docs/Standardized_PPA_for_Large_Scale_Generators_M
ore%20than_10MW.pdf
14/05/2015
Page 24
12
Implemented by
Thank you for your attention!

Toby D. Couture
Founder & Director of E3 Analytics
www.e3analytics.eu
Page 25
13
20/05/2015
MINISTRY OF INDUSTRY AND TRADE

General Department of Energy
CURRENT STATUS OF WIND

POWER DEVELOPMENT IN
VIETNAM
Pham Thuy Dung
Lead Specialist, Department of New and Renewable Energies
May 2015
AGENDA
1. Policies and targets for renewable energy
(RE) development
2. Potentials for wind energy resources and
current development of wind power
projects
3. Support policies and mechanisms for
development
4. Constraints, shortcomings and solutions

Pham Thuy Dung Pham Thuy Dung
May 2015
Hanoi, 14-15 May, 2015
20/05/2015
1. Development policies and targets
2012 National Green Growth Strategy goal: Development of a lowcarbon economy on a sustainable basis, reduced GHG emissions and
increased GHG absorption
Reduced GHG emissions to 266 mil. tons of CO2

For energy sector: reduced GHG emissions to 141.1 mil. tons of CO2 (53%) by 2020.
Promotion of effective exploitation and increased RE share as one of key solutions.
PDP VII:
2011-2015: Vietnams power demand continues to increase at 14.1%/year

2016-2020: Reduce to 9.9%/year
2021-2025: Grow at 8.1%/year
2016-2030: Grow at 7.2%/year
In response to this, the GoV plans to increase the RE share in the national
energy mix (Decision 1208/QD-TT):
2020 : RE share of 4.5%
2030 : RE share of 6%.
Pham Thuy Dung
Hanoi, 14-15 May, 2015

RE Share
in power generation and import mix up to 2030
(PDP VII -2011)
2.10%
3%
4.50%
2020
6%
24%
46.80%
2030
4%
19.60%
10%
9%
15%
56%
Pham Thuy Dung
Hydro power
Coal
Natural gas
RE
Nuclear
Imported
Hanoi, 14-15 May, 2015
20/05/2015

Targets
for RE utilization up to 2030
2020: RE power will account for

approx. 5.6% of total installed
capacity:
RE Capacity (MW)
1000MW from wind power,

500MW from biomass and 2700
MW from other RE types.
2030: RE power will account for
approx. 9.4% of total installed
capacity:
6200MW from wind power,
2000MW from biomass and
5600MW from other RE types.
Pham Thuy Dung
Hanoi, 14-15 May, 2015
2.1. Potentials for windpower

Theoretical Potential for Wind Power
Mean speed at
80m height
(m/s)
Estimated Developable
Land Area
(km2)
Theoretical
Potential
(MW)
<4
95,916
959,161
4-5
70,868
708,678
5-6
40,473
404,732
6-7
2,435
24,351
7-8
220
2,202
8-9
20
200
>9
10
Tng
209,933
2,099,333
Source: Wind Resource Atlas of Vietnam, WB report 2010

(assumed average density of 10MW/km2)
Pham Thuy Dung
Hanoi, 14-15 May, 2015
20/05/2015
Technical Potential
MoIT 2012 Assessment
No.
Province
H Tnh
Qung Bnh
Kon Tum
Bnh nh
Gia Lai
Ph Yn
Daklak
District
Speed (m/s)
6.0 6.5
6.5 - 7.0
> 7.0
K Anh
3.9
Qung Ninh
7.9
L Thy
11.9
KonPlng
3.9
Ph M
7.9
Ph Ct
11.9
Quy Nhn
11.9
TP Pleiku
11.9
Mang Yang
39.6
Krong Cho
15.8
Ch S
63.4
Ch Prong
83.2
TX Tuy Ha
7.9
Tuy Ha
11.9
Ea H'leo
55.5
Krong Nng
7.9
Krong Buk
47.5
C M'gar
15.8
Area (km)
Potential (MW)
3.9
15.6
19.8
79.2
3.9
15.6
31.7
126.8
213.9
855.6
19.8
79.2
126.8
507.0
Pham
Ngo Thi
Thuy
ToDung
Nhien
Hanoi,
Berlin,14-15
1-5 July
May,2013
2015
Technical Potential - 2012

No.
8
9
10
Province
Khnh Ha
Ninh Thun
Bnh Thun
11
B Ra Vng Tu
12
Bn Tre
13
Tr Vinh
14
Sc Trng
Area (km)
Pham
Ngo Thi
Thuy
ToDung
Nhien
District
Speed (m/s)
6.0 - 6.5
6.5 - 7.0
> 7.0
Cam Ranh
32
Ninh Hi
7.9
11.9
Phan Rang
31.7
Ninh Phc
126.8
59.4
TP Phan Thit
83.2
19.8
4.0
Tuy Phong
75.3
59.4
27.7
Bc Binh
114.9
51.5
11.9
Hm Thun Bc
7.9
Hm Thun Nam
67.3
7.9
3.9
7.9
Bnh i
7.9
Ba Tri
4.0
Thnh Ph
31.7
Chu Thnh
3.9
Duyn Hi
67.3
Vnh Chu
Area (km)
Potential
(MW)
320
128.0
237.7
950.6
534.7
2138.6
7.9
31.6
43.6
174.3
71.2
284.9
16
16.0
64.0)
1,105
210
47
1.363
5,451
Hanoi,
Berlin,14-15
1-5 July
May,2013
2015
20/05/2015
2.2. Current development of wind power projects
Local wind power development plans

Bnh Thun, July 2012: 700MW up to 2020;
Ninh Thun, April 2013: 220 MW up to 2020;
Sc Trng, May 2014: 200MW up to 2020;
Bn Tre, March 2015: 150 MW up to 2020.
Wind measurement programs
2009 2010: 3 sites (MOIT/WB)
2012 2014: 10 sites (MOIT/GIZ)
2016 1018: 20 sites (MOIT/KfW)
Pham Thuy Dung
Hanoi, 14-15 May, 2015
2.2. Current development of wind power projects
Registration, preparation, deployment and

operation:
Number of projects registered: 48, total capacity of
4,876MW
Number of projects put into operation: 03 (52MWFurlander1.5, GE1.6, Vestas2.0)
Financing sources:
ODA: 02 projects (PhuLac- KfW, LoiHai- Danida)
State budget: 01 project (Ph Qu Island)
Government guarantee: 01 project (Bc Liu
Project, financed by US Eximbank)
IPP: remaining projects
Pham Thuy Dung
Hanoi, 14-15 May, 2015
20/05/2015
3. Support mechanisms for wind power project

development
Decision No.37/2011/QD-TTg dated 29 July 2011 on the promulgation of

support mechanisms for the development of wind power projects in Vietnam:
Wind power development planning
Support mechanisms for the development of wind power projects:
-
Power purchase responsibility: EVN shall be required to purchase all power generated
from RE sources on the basis of SPPA.
Price support to grid-connected wind power projects:

-
7.8 US$/kWh (VAT exclusive; subject to VND/USD fluctuation)
Infrastructure/land incentives
Subsidies for off-grid wind power projects
Decision No.130/2007/QD-TTg dated 02 August 2007 on several financial

mechanisms/policies for CDM investment projects. Products from CDM
projects shall be subsidized by VEPF.
Decree No. 75/2011/ND-CP dated 8 August 2011 on investment credit: The

development of and investment in wind power projects shall be entitled to the
state support to investment credits.
Pham Thuy Dung
Hanoi, 14-15 May, 2015

development
Circular No. 32/2012/TT-BCT by MOIT dated 12 Nov 2012 stipulating the

development of wind power projects and SPPA for wind power projects:
Procedures for development of wind power projects: project proposal, wind
measurement report, project preparation, feasibility study results, preliminary
implementation solutions, decommissioning conditions, operating and reporting
mechanism, justifications for project effectiveness, equipment, safety regulations
during construction stage, land use issues, environmental protection, etc.
Application for price support from VEPF.
Registration sequence for the development of off-grid wind power projects.
SPPA for wind power projects
Circular No. 06/2013/TT-BCT by MOIT dated 8 March 2013 stipulating

contents, sequence, procedures for appraisal and approval of wind power
development plans.
National Wind Power Development Plan
Provincial Wind Power Development Plan
Budget for planning exercise
Pham Thuy Dung
Hanoi, 14-15 May, 2015
20/05/2015

development
Supplementary instruments:
Import tax: Import tax exemption for equipment which is

not domestically manufactured.
Corporate income tax:

Tax rate: 10% for the first 15 years, possible extension up to 30 years
Tax exemption for the first 4 years, 50% reduction for next 9 years
Fast depreciation: 1.5 times faster than normal projects.
Exempt land-use tax/charges.
Exempt environmental protection fees.
Pham Thuy Dung
Hanoi, 14-15 May, 2015
4. Constraints and shortcomings

1.
National reliable, systematic and consistent database.
2.
Economic and financial aspects: Investment costs for RE projects

are higher than those for conventional energy projects in Vietnam.
3.
Technical human resource: At present, no RE discipline can be

found in universities TVET institutions, creating a big gap of human
resources for this new green technology area.
4.
Technical infrastructure: Vietnams infrastructure (roads, bridges,

power system, traffic equipment, etc.) is out of date. Goods
transportation is of great difficulties.
5.
National grid connection
6.
Supply of auxiliary equipment and services: most main and

auxiliary equipment for RE is not localized. For wind power, some
manufacturers can be found in the domestic market, such as GE US,
CS Wind Tower Korea, etc., but all their products are exported to the
world market.
7.
Implementation arrangements
Pham Thuy Dung
Hanoi, 14-15 May, 2015
20/05/2015
4. Solutions
Management
Focal points for planning management, technical assistance
for the development of RE support/policy mechanisms; ODA
sources for development support or RE projects;
Resource mapping and RE database;
Establishment of national standards for wind power
technology equipment;
Development of support mechanisms for domestic equipment
manufacturing and service industry in the wond power sector;
Organization of capacity development programs for
universities TVET institutions;
Considerations on the possible promulgation of RE Law.
Pham Thuy Dung
Hanoi, 14-15 May, 2015
4. Solutions
RE Potential Maps
RE potential maps
Wind
Solar energy
Biomass energy
Hydro power
Database of hydro power,

wind, solar and biomass
projects
Planning management
Mapping of RE pipeline,
approved, on-going and gridconnected projects.
Management of licensing
procedure
Pham Thuy Dung
Hanoi, 14-15 May, 2015
20/05/2015
4. Solutions
RE Database
RE-related mechanisms/policies
National and provincial RE
development strategies and goals
Financial mechanisms for and
interest support to RE
development
Database of RE pipeline,
approved, on-going and gridconnected projects
Legal and
policy
frameworks
Integrated
Database on
Renewable
Energy
Database of RE projects
GIS map(s) and reports on RE
potential assessment reports
Information on RE technologies,
enterprises/research institutions
RE-related training/capacity
building materials/handbooks
Pham Thuy Dung
Strategy
and targets
Local Skills
Financing
resources
R&D
innovation
RE
Database
(potentials,
projects,...)
Hanoi, 14-15 May, 2015
Implemented by
Wind in Viet Nam

A Vision for a Sectorial Development
Page 1
Implemented by
Agenda
Development of the global wind market
Wind energy in Viet Nam benefits
Decentralised deployment
Energy security
Value creation and jobs
Wind in 2030: a vision for the sector
15/05/2015
Page 2
Implemented by
Deployment of Renewable Energy globally

Renewables as a share of global capacity additions
90%
80%
Non-Renewables
(Coal, Gas Nuclear, Oil)
81%
70%
Renewable
energy
expanding
quicker than
conventional
energy
58%
60%
50%
40%
30%
20%
Renewables
42%
19%
10%
0%
Total net capacity
added per year [GW]
Renewables
Non-renewables (Coal,
Gas, Nuclear, Oil)
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
104
134
150
153
134
180
200
174
185
232
234
233
207
20
22
34
36
41
47
56
67
85
94
115
116
120
84
111
116
116
93
133
145
107
100
138
118
117
87
Source: IRENA database
15/05/2015
Page 3
Implemented by
Overview development of the global wind energy

sector (I/II)
Global Cumulative Installed Wind Capacity 1997-2014
400,000
MW
369,553
350,000
318,596
300,000
283,068
238,139
250,000
197,953
200,000
159,089
150,000
120,725
100,000
50,000
0
47,620
31,100 39,431
17,400 23,900
7,600 10,200 13,600
59,091
73,959
93,911
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Source: GWEC (2015)
15/05/2015
Page 4
Implemented by
Overview development of the global wind energy

sector (II/II)
Source: GWEC (2015)
15/05/2015
Page 5
Implemented by
Costs of wind power

0.4
4500
0.35
4000
0.3
3500
0.25
3000
0.2
2500
0.15
2000
0.1
1500
0.05
1000
India
China
Brazil
United
States
Germany
CAPEX
Europe
Vietnam (23 Vietnam

Western
projects) (Nearshore) Europe
(offshore)
LCOE [US$/kWh]
CAPEX [US$/kW]
Comparison of Wind Power CAPEX and LCOE

5000
LCOE
Overall steadily decreasing costs and increasing efficiency

Regional differences
15/05/2015
Page 6
Implemented by
Wind energy in Viet Nam

Technical Potential
Economic Potential
Decentralised Deployment
Installation Times
CO2 Neutral
Industrial Development
()
Source: AWS Truepower (2011)
15/05/2015
Page 7
Implemented by
Benefits wind
Decentralised deployment
South and centre (close to load centres)
Capital requirements for transmission
Regional development (investments,
jobs)
Local ownership
Electrification of remote areas/islands
Source: ECNmag (2011)
15/05/2015
Page 8
Implemented by
Benefits wind
Security of supply
Increase generation capacity quickly

Medium-term costs of energy
Reduce dependence on foreign imports
Decrease dependence on volatility of
world markets (e.g. coal)
Foreign reserves
Increase overall energy independence
15/05/2015
Page 9
Implemented by
Benefits wind - Job effects of wind energy

Potential jobs per megawatt technology
15/05/2015
Page 10
Implemented by
Benefits wind - Jobs in wind energy

Project
Realisation
Supporting
Processes
Project
Development
Policy
Making
Manufacturing
Grid
Connection
Installation
Financial Services
Education
Reconstruction/
Recycling
O&M
R&D
Consulting
Policy-makers
Legal advisers
Project developers
Wind power technicians (Inst., O&M)
Site engineers
Operations managers
Environmental consultants
Financial advisers
Construction engineers
(foundations, roads, etc.)
Manufacturing
Procurement specialists
Researchers
15/05/2015
Page 11
Implemented by
Benefits - Job effects of wind (e.g. South Africa)

Renewable Energy Programme launched 2011/12
Investment of more than USD 14 billion
4000 MW of RE capacity, 64 new IPPs
1984 MW of wind; 32 IPPs

Investment into wind USD 4.7 billion
Source: PPIAF, 2014
15/05/2015
Page 12
Implemented by
Benefits - FDI in Wind

FDI in installed generation capacity
FDI in manufacturing
Source: Krueger (2011)
15/05/2015
Page 13
Implemented by
Regional shifts from developed to emerging countries continued

in wind and solar technologies, predominantly in the manufacturing
and installation segments of the value chain IRENA (2015)
5/12/2015
Page 14BWE/Tim Riediger

Source:
Implemented by
Vision 2030 Installations and Market

Added capacity p.a. surpasses 1GW in 2030
for the third time
Large amounts of FDI attracted; but 60% of
financing from Viet Nam
Second reduction in feed-in tariff (after first
one in 2025)
Wind power contributes positively to lowering
average generation costs
Regional deployment in Vietnam leads to
reduced investment costs for transmission
Commissioning times for new wind parks are
amongst the quickest in the world
15/05/2015
Page 15
Implemented by
Vision 2030 a vibrant industry

Local banks offer attractive conditions for
financing wind power
With fifth international turbine manufacturer
building up manufacturing facilities, Viet Nam is
the leading producer of equipment in Southeast
Asia
VietWIND 2030 (leading industry event in the
region, organised by the VN Wind Association)
attracts more than 1,000 visitors
The first graduates of the Vietnam Excellence
Center for Vocational Training in Wind Power
celebrate their 10th year after graduation
15/05/2015
Page 16
Implemented by
Vision 2030 a vibrant industry

Local banks offer attractive conditions for
financing wind power
With fifth international turbine manufacturer
building up facilities in Vietnam, country is the
leading producer of wind power equipment in
Southeast Asia
VietWIND 2030 (leading industry event

organised by the VN Wind Association)
attracts more than 1,000 visitors
The first graduates of the wind power
vocational training school celebrate their 10th
year after graduation
15/05/2015
Page 17
Implemented by
Thank you for your attention
Peter Cattelaens
Technical Advisor
GIZ Up-Scaling of Wind Power Project

peter.cattelaens@giz.de
+ 84 4 3941 2605 (ext 122)
Source: BWE/Tim Riediger
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Policy design
A comprehensive framework for wind power
Page 1
Implemented by
Current Status
-
Attractive wind resource
Growing number of developers securing land and licenses
Feed-in tariff policy in place
However, wind development so fallen short of Viet Nams potential

As a result: Viet Nam is not on track to reach its RE targets
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Current Status
Primary issues holding back wind development:
-
Tariff price too low based on the available wind resources
Lack of clarity regarding long-term vision
Lack of capacity to monitor development and implement the

strategy
Permitting processes and licensing remain unclear
Power Development Plan (PDP) continues to focus heavily

on fossil fuels (notably, coal)
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Implemented by
Current Status
Two step process is underway:
1) Improving the investment and regulatory conditions to enable
the first 1.000MW of wind power to be developed and
integrated into the network
2) Create the experience and momentum required to achieve Viet
Nams longer term RE target of over 6.000MW of wind by 2030
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Best Practices in RE Policy Support

-
Success is about more than just the tariff
It requires a holistic approach. This includes:
A clear planning regime,
Clear licensing procedures,
Clear permitting processes,
Transparent grid access framework,
Guaranteed purchase (must-take)
Clear curtailment rules
Long-term contracts or PPAs
Independent dispute resolution mechanism

Page 5
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Implemented by
Creating the Conditions for Wind Investment
Wind power is now broadly competitive with conventional supply

options (coal, natural gas, and nuclear)
The challenge is how to foster, and finance, an increasingly

renewable electricity supply mix
Two main options:
1. Government financed, or
2. Via a greater involvement of the private sector: Independent
Power Producers (IPPs)
Most countries are opting for the latter: IPPs
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Creating the Conditions for Wind Investment
However, in order to attract a wider variety of actors into the

market (e.g. IPPs), electricity markets need to adopt new
rules to govern this new activity
Governments must also adopt clear regulations and institutional

procedures (permitting, licensing, etc.)
In order to have successful IPP-based wind development, it is

necessary for institutional structures to evolve along with the
evolution of the new electricity market structure
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RE Technologies
RE projects are capital intensive: high ratio of fixed to variable

costs
When private actors enter the market to finance wind projects,

they need long-term certainty (to recover high upfront costs)
This requires clarity on rules and procedures, counterparty risk,

purchase price, curtailment, etc.
The goal is to create an attractive regulatory and policy

environment
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Source: E3 Analytics 2014, EIA 2013
Page 9
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Implemented by
RE Finance
Financing is often highly leveraged (70:30 to 80:20 capital

structure common)
Non-recourse, cash-flow based lending
Typically linked to a PPA, FIT, or off-taker agreement ($/kWh)
Long amortization periods (8-25 years)
Often highly reliant on legal and regulatory frameworks, and

therefore, on policy stability
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RE Finance
Governments and regulators can help reduce the cost to

ratepayers by reducing the cost of capital that lenders and
investors require to finance RE projects.
How can governments are regulators achieve this?

1. Financial De-risking: low-interest loans, currency risk
guarantees, risk insurance, etc.
2. Policy De-risking: stronger, stable policy environments (e.g.
long term PPAs, binding RE targets, priority dispatch,
inflation coverage, interconnection, etc.)
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Lower cost of capital means lower LCOE
Source: UNDP 2013, Derisking RE Investment

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Risks
Description & Examples
Economic Risk
Risk that economic factors beyond the control of the project impact revenues, or
profitability: e.g. recessions, macroeconomic shocks, etc.
Political Risk
Risk of political instability, change of govt, etc.
Performance Risk
Risk that the wind or solar resource will fluctuate beyond projections, or
underperform: particularly disruptive if this occurs in the early years
Regulatory Risk
Risk that regulators change the rules of the game (e.g. Spain, Czech Republic with
FIT contracts). Investment performance relies on a stable regulatory regime.
Off-taker Risk
Risk that the buyer (e.g. utility) experiences financial difficulties, and can no longer
honor the PPA, or other obligations.
Technology Risk
Risk of technological malfunction, or higher-than-projected downtime, repairs, etc.
Construction Risk
Risk that construction faces local opposition, or delays due to operational or project
management failures
Revenue Risk
Fluctuations in revenues due to fluctuating prices of green certificates, variable

electricity pool prices for power plants that sell directly into the market, etc.
Currency Risk
Risk that the currency in which sales are denominated changes abruptly or
significantly over time in relation to the currency in which the project was financed
(e.g. EUR, USD)
Source: E3 Analytics 2015

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Concluding Remarks
To achieve strong, robust

wind market development,
the current framework in Viet
Nam needs to change
Fortunately, the changes

required are relatively small
What is required is an
evolutionary approach
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Policy Framework Recommendations

1. Formulate overarching policy document clarifying objectives,
regulation, procedures, and responsibilities (incl. for monitoring)
2. Strengthen the purchase tariff (current tariff is too low, and
the 1 cent contribution from the VNEPF is too uncertain)
3. Clarify the counterparty structure (who purchases the power,
and under what terms)
4. Streamline RE-related administrative procedures under one
agency, or entity
Page 15
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Implemented by

Toby D. Couture
www.e3analytics.eu
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Implemented by

Policy design
A comprehensive framework for wind power
Page 1
Implemented by
Recommendations for the Policy Framework

1. Formulate overarching policy document clarifying objectives,
regulation, procedures, and responsibilities (incl. for monitoring)
2. Strengthen the purchase tariff (current tariff is too low, and the
1 cent contribution from the VNEPF is too uncertain)
3. Clarify the counterparty structure (who purchases the power,
and under what terms)
4. Streamline RE-related administrative procedures under one
agency, or entity
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Recommendations for Monitoring-related Aspects

1. Establish a process for publishing annual RE market reports
(via MOIT, or a government research institute)
2. Organize an annual conference to bring stakeholders together
to discuss issues, and find common solutions
3. Adopt a regulation-based approach to geographic dispersion
(with regional planning for different provinces)
4. Introduce periodic revisions (e.g. every 3 years) of the policy
and regulatory framework to provide a clear timeframe for
adjustments
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Recommendations for PPA and Licensing Aspects

1.
Provide a clear online portal with a description and diagrams of the

licensing process
2.
Establish a one-stop-shop for for all PPA and licensing-related

aspects
3.
Strengthen the PPA counterparty structure by consolidating

payment responsibilities under one entity and providing sovereign
backing from the government
4.
Clarify responsibilities
5.
Build capacities amongst institutions
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Recommendations for funding mechanism

Desirable properties of FiT paying agency
One-stop-shop
Low credit risk
Low liquidity risk
FiT payments legally enforceable
Governmental secured or backed
Tax
Tariff
ODA
FiT paying agency
Implementation:
Governmental agency
Escrow account
Trust fund
May reside with EVN, ERAV, etc.
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Wind farm operator
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Recommendations (continued)
1. Redesign of FiT distribution payment as one-stop-shop
2. Government guarantee for FiT of sufficient level: 10.4 UScents/kWh
3. Provide better quality wind speed measurements & improved
standards
4. Provide comprehensive information on wind power planning at
provincial and national level
5. Remove current uncertainties regarding overlapping land use
planning
6. Address present limits in local consulting and engineering
capacity and logistics
7. Integrate tax-break opportunities to developers and manufacturers
etc.
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Open Discussion
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Thank you for your attention!!

Toby D. Couture
Dr. Dominik Dersch
Founder & Director
Managing Director
of E3 Analytics
Matobis AG
www.e3analytics.eu
Dominik.Dersch@matobis.de
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Monitoring
Overall costs and geographic distribution of the deployment of wind power
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Implemented by
Monitoring Wind Power Development

Primary challenges for policymakers emerge in a few key areas:
Controlling policy costs (Spain, Czech Republic, US, etc.)
Meeting targets on time (many countries)
Ensuring project development and transmission construction

are aligned (China)
Grid integration (South Africa)
Implementing and communicating adjustments to the policy

(UK, Ontario, Spain)
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Several different components to monitor:
Project applications / project pipeline
Project interconnections
Installed capacity / monthly and annual output
Etc.
Two of the main issues in Viet Nam currently are ensuring

balanced wind power development across the regions, and
controlling costs
See: Kreycik, C., Couture, T., Cory, K., (2011). Innovative FIT Designs that Limit Policy Costs,
National Renewable Energy Lab (NREL), Available at: http://www.nrel.gov/docs/fy11osti/50225.pdf
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This presentation will therefore focus on:
1) Monitoring and controlling the total cost of procurement: this is
necessary to give policymakers the confidence to continue
scaling up wind power development in Viet Nam
2) Ensuring balanced geographic dispersion: this is required to
avoid regional hot spots and ease grid integration
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Cost Monitoring:
Most countries produce annual reports summarizing the total

incremental (i.e. additional) costs of RE procurement
Additional costs are often bundled into a fixed charge ($/kWh)

and passed onto ratepayers:
US: Public Benefit Charges
Germany: EEG-Umlage (EEG Surcharge)
France: CSPE (Contribution to the Public Service of Electricity)
Also analyse the impacts on the market: electricity rates, job

creation, avoided fossil fuel imports, GHG reductions, etc.
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Cost Monitoring:
Monitoring RE development costs is almost universal
Different countries use different methodologies
Virtually all calculation methodologies have flaws (even in

Germany!)
The important aspect is to consider (and quantify) both the

positive effects of RE development (jobs, reduced fossil imports,
long-term price stability, etc.) as well as the costs (e.g. small
additional surcharge on customer rates)
Only in this way can decision makers make balanced decisions
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Policymakers also control costs via mechanisms like degression

(annual % decrease in PPA prices offered: more common for solar
PV), and by the use of caps to control market growth (almost
universal in FIT policies)
Caps (MW) can be technology specific, and even region-specific
However, Viet Nam remains far from achieving its RE targets: caps
should therefore not act to restrict wind power development, particularly
in the early stages
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Ensuring Balanced Geographic Dispersion

Two primary approaches:
1.
2.
15/05/2015
Tariff-based approaches
a.
Germany
b.
France
c.
Denmark
Regulatory approaches
a.
Cape Verde
b.
Ontario
c.
South Africa
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Tariff-based Approaches
Mostly applied for wind energy (Germany, France,

Switzerland, Denmark, and China) but also for solar
(France and China)
Primary Reasons:
Reduce accumulation of wind power plants in certain

areas: hot spots
Reduce grid congestion issues / ease grid integration
Increase public acceptance
Minimize visual impact
Ensure fair compensation for projects across regions

(avoiding excess profits in the windiest regions)
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1a. Germanys Reference Turbine Model

-
A theoretical reference turbine has been established:

- Hub height: 30m
-
Average wind speed of 5.5m/s
This reference turbine will produce a certain

reference yield (kWh/yr)
All wind projects are benchmarked against this

reference yield
Source: Couture et al. 2010: http://www.nrel.gov/docs/fy10osti/44849.pdf

See also: https://www.diw.de/documents/publikationen/73/diw_01.c.466289.de/dp1387.pdf
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-
First 5 years: all wind projects receive the same

flat initial rate:
Initial Tariff Value: EUR 89,3/MWh (in 2012)
Base Tariff Value: EUR 48,7/MWh (in 2012)
Source: Couture and Gagnon 2010

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After the initial 5-year period:
Highest and lowest production years are
removed
Average of the three (3) middle years is taken
This average is then compared to the
reference yield
If this is above 150% of the reference yield,
the payment level drops automatically to the
lower base tariff value after year 5 (60
months).
For every 0.75% shortfall, projects receive an
additional 2 months of compensation at the full
initial tariff (EUR 89,3/MWh):
e.g. 60 months + 2 months, etc.
Note: If a project cannot demonstrate that it will achieve an average of 60% of

the reference yield, the grid operator (BNetzA) is not required to pay the FIT.
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Example: Project with >150% of the reference yield (2012)

First 5 years
(Initial 60 months)
Years 6 20
(Remaining 180 months)
EUR 89.3/MWh
EUR 48.7/MWh
Example: Project with 135% of the reference yield (2012)

FIT for initial 100 months
(i.e. 5 years + 40 months)
FIT for remaining 100 months

240 months
EUR 89.3/MWh
EUR 48.7/MWh
Source: Couture et al. 2010: http://www.nrel.gov/docs/fy10osti/44849.pdf

See also: https://www.diw.de/documents/publikationen/73/diw_01.c.466289.de/dp1387.pdf
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Map of the
geographic
spread of wind
farms in Germany
(2012)
Source:
http://www.bbsr.bund.de/BBSR/DE/Veroeffentlichungen/AnalysenKompakt/2014/DL_01_201
4.pdf?__blob=publicationFile&v=3
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1b. Monitoring Wind Power Development: France

France adopts a different approach:
No reference turbine
Based on the number of full load hours (FLH)
All producers receive the same payment for the first 10 years
For years 10-15, the tariff depends on the number of average

full load hours during the previous 10 years.
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France: Wind Tariff Differentiation

-
After year 10, all wind projects in France will fall somewhere on
this curve, and receive the corresponding tariff for the remaining
5 years of the FIT contract. .
Source: Couture et al. 2010. http://www.nrel.gov/docs/fy10osti/44849.pdf

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1c. Monitoring Wind Power Development: Denmark

Between 2000 and 2002, Denmark used a unique policy approach:
- No reference turbine
- Like France, also based on the number of full load hours (FLH)
- All producers receive the same FIT payment (EUR cents 5.8/kWh) for
the first 22,000 full load hours of output.
- On high quality wind sites, this could be reached in 6-7 years; on less
productive sites, this could take 10 years or more.
- Afterwards, they received a fixed premium of EUR cents 1.6/kWh on

top of the spot market price until year 20.
Source: Munksgaard & Morthorst 2008
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1c. Monitoring Wind Power Development: Denmark

Denmarks approach has a number of
advantages:
- It ensures that all wind power projects, even
at less windy sites, will ultimately receive
sufficient revenues to pay off their debt
- After the 22,000 FLH are reached, the policy
moves producers into the spot market,
fostering market integration
- It treats all projects equally, while avoiding
windfall profits
- It is also far easier to design and implement
than either France or Germanys approach
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2. Regulatory Approaches
All countries use regulation, land-use planning, permitting, etc.

to regulate the geographical location of wind projects
a.
Cape Verde
b.
Ontario
c.
South Africa
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2a. Cape Verde
-
Established Renewable Energy Development Zones in

collaboration with local stakeholders and different levels of
government
This enabled the national government and the utility to identify

suitable areas for RE project development
Different sites were designated for wind, for solar, etc.
Maps that defined the zones were published
Access rights are granted to developers who win the competitive

solicitations
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10
Implemented by

2b. Ontario
-
Established three different zones based on the available

transmission capacity:
1. Green zones: where adequate transmission capacity is
available for new RE projects
2. Yellow zones: where some transmission capacity is available,
but not in great quantities
3. Red zones: where little to no transmission capacity is available
for new RE development
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2c. South Africa
-
Established Renewable Energy Development Zones:

-
Areas with lowest environmental impact while yielding the highest

social and economic benefit to the country
Good wind/solar resources
Environmental and other authorizations already secured based

on pre-assessment and pre-planning
Goal: Time efficient infrastructure development
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Implemented by

2c. South Africa
-
Public consultation process
Terrestrial and aquatic biodiversity assessment
Agricultural impact assessment
Bird and bat assessments
Heritage assessments
Landscape/visual assessment
Socio-economic assessment
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Monitoring Wind Power Development: South Africa
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Source: https://redzs.csir.co.za/wp-content/uploads/2014/06/SEA-Phase-2-Presentation.pdf
Page 24
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Implemented by
Monitoring Wind Power Development: South Africa
15/05/2015
Source: https://redzs.csir.co.za/wp-content/uploads/2014/06/SEA-Phase-2-Presentation.pdf
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Concluding Remarks
Oversight is a continuous process. It requires:
-
Strong and competent administration
A commitment to periodic reporting (e.g. annual reports)
A flexible implementation strategy (adapting to changing market

circumstances)
A layered approach
Clear strategy with targets
Transparent rules
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Implemented by
Concluding Remarks
- There are no major challenges integrating low shares (<10%)
of variable RE (vRE) technologies (IEA 2014)
- However, avoiding hot spots remains important
- A sound planning and monitoring regime is therefore required
- New inverter and control technologies (e.g. reactive power
supply) can also help stabilize the grid and improve system
integration of wind power
-
These are now required for all large wind plants in Germany
15/05/2015
Source: http://www.iea.org/textbase/npsum/givar2014sum.pdf
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Most successful wind power strategies have a few shared
elements:
1. Strong political support;
2. High level of awareness;
3. A solid base of actors engaged in implementation of the strategy;
4. Well-staffed agencies for administration, permitting, licensing, etc.
5. Stable, long-term policies and regulations
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14
Implemented by
Recommendations for Monitoring-related Aspects

1. Establish a process for publishing annual RE market reports (via
MOIT, or a government research institute)
2. Organize an annual conference to bring stakeholders together to
discuss issues, and find common solutions
3. Adopt a regulation-based approach to geographic dispersion
(with regional planning for different provinces)
4. Introduce periodic revisions (e.g. every 3 years) of the policy and
regulatory framework to provide a clear timeframe for adjustments
Page 29
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Implemented by

Toby D. Couture
www.e3analytics.eu
Page 30
15
Implemented by

Local value creation
Wind power is more than power generation
Page 1
Implemented by
Agenda
Local value creation introductory remarks
Local/domestic value creation along the value chain for wind energy
projects
Examples for deployment of wind energy through joint efforts of policy,

industry, training institutions and research: China and Brazil
Summary
Remarks for discussion
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Why do we discuss in this workshop the question of local

value creation (potentials) in the wind sector?
Besides clean energy, deployment of wind energy creates value
through income generation,

through additional knowledge in a high tech sector and
through better air quality among others
Potential domestic value creation depends on
political strategies
capability of the industrial sector
specific knowledge of wind energy experts
ability to cooperate internationally
structure of the conventional power sector
access to fossil fuels
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We distinguish between
Direct, indirect and induced jobs
Jobs in the renewable energy sector itself are classified as direct,

whereas jobs in supporting industries, such as steel or software, are
referred to as indirect. Jobs in all other sectors that benefit from any
of the various macroeconomic feedbacks (for example, consumption
expenditures by employees in the direct or indirect industries) are defined as induced (The Socio-economic Benefits of Solar and Wind Energy, IRENA,
2014, p. 26).
Value creation can be measured e.g. by counting the number of jobs

created or hours worked, net income of the employees involved, or
the equipment manufactured, or as a percentage of investment, or
taxes levied.
Value creation can be analyzed at regional, provincial or national as

well as on sector levels.
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Added value considerations on GDP level

Ernest &Young compared wind energy with CCGT (combined cycle gas
turbine) in different European countries.
From the perspective of a domestic economy, higher capital expenditure
(CAPEX) and higher operational expenditure (OPEX) costs for wind lead to a
higher contribution to GDP compared to CCGT,
more wind energy system components are produced domestically and
the more fossil fuels (coal, oil, gas *) have to be imported.
*) Imported fuels, products or services, e.g. through external expertise in project development or imported material
do not add to local value!
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Value creation along the value chain
Project Planning/Development
Project
Realisation
Supporting
Processes
Project
Development
Policy
Making
Manufacturing
Installation
Financial Services
(*):
Grid
Connection
Education
O&M
R&D
Reconstruction/
Recycling
Project
Realisation
Pro
Develo
Supporting
Processes
P
M
Consulting
resource and energy yield assessments

feasibility studies
environmental impact assessments
legal activities/approval process
infrastructure planning
technical, financial and economic project planning/ project design etc.
(*) A value chain reflects most of the life-cycle of a wind energy project
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Value creation along the value chain:

Project
Realisation
Supporting
Processes
Project
Development
Policy
Making
Manufacturing
Installation
Financial Services
Manufacturing
Grid
Connection
Education
O&M
R&D
Reconstruction/
Recycling
Consulting
sourcing of raw materials

component manufacturing and assembly
manufacturing of subcomponents, such as
rotors,
blades,
nacelles,
generators,
brakes,
towers,
cables, etc.
in supplying industry like steel industry
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Value creation along the value chain: Installation

Project
Realisation
Supporting
Processes
Project
Development
Policy
Making
Manufacturing
Installation
Financial Services
Grid
Connection
Education
O&M
R&D
Reconstruction/
Recycling
Consulting
Installation phase: labour-intensive works (can be carried out by local

engineering and construction companies)
civil engineering
infrastructure works
side preparation
access roads
cranes and transport*)
Foundation
and assembling of wind farm.
*) For a project of 150 MW, transportation requirements could be as much as 689 truckloads,
140 railcars and 8 ships
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Project
Realisation
Supporting
Processes
Project
Development
Policy
Making
Manufacturing
Installation
Financial Services
Grid Connection
Grid
Connection
Education
Reconstruction/
Recycling
O&M
R&D
Consulting
Requires highly skilled grid operators responsible for integrating

fluctuating wind electricity (grid planning and grid management)
(wind prediction becomes an issue)
local companies to prepare the infrastructure to facilitate grid

connection (underground cabling, cabling work within the wind farm
itself (between turbines) connecting the farm to the grid, substation)
Grid extension may be required.
Development and upgrading of grid infrastructure to integrate renewables can contribute to broader value
creation in terms of improving the reliability of electricity supply.
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Value creation along the value chain: O & M

Project
Realisation
Supporting
Processes
Project
Development
Policy
Making
Manufacturing
Installation
Financial Services
Grid
Connection
Education
O&M
R&D
Reconstruction/
Recycling
Consulting
Long-term activity offering opportunities for domestic value creation,

regardless of a countrys local renewable energy technology manufacturing capabilities.
2015-05-14
regular plant monitoring

equipment inspections
repair services and management of spare parts
commercial management
(but some investors provide service personnel)
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Project
Realisation
Supporting
Processes
Project
Development
Policy
Making
Manufacturing
Installation
Financial Services
Decommissioning
Grid
Connection
Education
O&M
R&D
Reconstruction/
Recycling
Consulting
At the end of a wind farm:
deconstruction,
recycling, disposal or reselling of components
refurbishing of equipment
And a process for repowering can be started with additional value added
along the value chain.
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Project
Realisation
Supporting
Processes
Project
Development
Policy
Making
Manufacturing
Installation
Financial Services
Policy Making (I/III)

Grid
Connection
Education
O&M
R&D
Reconstruction/
Recycling
Consulting
Cross-cutting policy instruments stimulate deployment of wind energy

and foster building of a domestic wind energy industry by encouraging
investments (real, immaterial and financial)

technology transfer/international cooperation
by investing in technical infrastructure
strengthening firm-level capabilities
by providing financing
by providing legal and economic frame work
by providing and promoting education and training
by stimulating research and innovation.
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Project
Realisation
Supporting
Processes
Project
Development
Policy
Making
Manufacturing
Installation
Financial Services
Policy Making (II/III)

Grid
Connection
Education
O&M
R&D
Reconstruction/
Recycling
Consulting
Policy has to set long term targets for a permanent increase of the share
of wind energy on the general energy mix
and guarantee legal frame work conditions to create a calculable basis for
long term planning for
Investors
Developers
Manufacturers
Operators
education and training centers, training departments of the industry
but also for the personal career planning of wind energy experts
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Project
Realisation
Supporting
Processes
Project
Development
Policy
Making
Manufacturing
Installation
Financial Services
Policy Making (III/III)

Grid
Connection
Education
O&M
R&D
Reconstruction/
Recycling
Consulting
To protect an infant industry local content requirements can be useful

(as many European have done in their early stages, but local players now request that this
should be consistent with international trade agreements).
In designing such a strategy
2015-05-14
existing areas of expertise should be considered

a learning-by-doing process should be initiated
but strategy should be time-bound and accompanied by measures
that facilitate financing of the industry, the creation of a strong
domestic supply chain and a skilled workforce.
Page 14
Implemented by

Project
Realisation
Supporting
Processes
Project
Development
Policy
Making
Manufacturing
Financial Services
Installation
Financial Services
Grid
Connection
Education
O&M
R&D
Reconstruction/
Recycling
Consulting
Create financing schemes for Government funds and prepare for

financial services from domestic bank sector
Insufficient funds to finance necessary expansion of power capacity
at all and also for large scale wind energy deployment
Investment is required from official development aid or through foreign
direct investment.
Funds may also come from private investors (green funds) and from
municipalities.
2015-05-14
Page 15
Implemented by
Education & Training (I/II)

Project
Realisation
Supporting
Processes
Project
Development
Policy
Making
Manufacturing
Installation
Financial Services
Grid
Connection
Education
O&M
R&D
Reconstruction/
Recycling
Consulting
Education and training are
key elements for the development of a sustainable energy sector

essential for creating value
should be part of an integrated planning for national renewable energy
strategies
Training of trainer for schools, technical universities, vocational training

centers or in training departments of industries generates value,
Communication skills to overcome hierarchical barriers important
2015-05-14
Page 16
Implemented by
Education & Training (II/II)

Project
Realisation
Supporting
Processes
Project
Development
Policy
Making
Manufacturing
Installation
Financial Services
Grid
Connection
Education
Reconstruction/
Recycling
O&M
R&D
Consulting
Value generated by providing the skills:

necessary to support the development of the industry
to upgrade the knowledge of project developer, approval authorities,
banking sector, grid operator, operation and maintenance personal,
political decision makers, consultants, financing experts, etc.
Besides individual skills and experiences, learning processes for and inside
of institutions and organizations have to be considered; Organizations
often fail at transformational learning
Opportunities to gain practical experience (on-the-job-training) requested
2015-05-14
Page 17
Implemented by

Research & Development
Project
Realisation
Supporting
Processes
Project
Development
Policy
Making
Manufacturing
Installation
Financial Services
Grid
Connection
Education
Reconstruction/
Recycling
O&M
R&D
Consulting
Research & development : Value created through

knowledge that can lead to technological breakthroughs
improvements of products and services
increasing the applicability of technologies to local conditions.
Work in research institutions creates value.
Spin-offs often create additional value (production of inverter).
International cooperation and joint ventures in research & development
(home and abroad) have been successful.
2015-05-14
Page 18
Implemented by
Value creation along the value chain: Consultancy

Project
Realisation
Supporting
Processes
Project
Development
Policy
Making
Manufacturing
Installation
Financial Services
Grid
Connection
Reconstruction/
Recycling
O&M
Education
R&D
Consulting
Consultancy is required in all parts along the value chain, i.e.
technical expertise
legal competence
Lawyers to assist in drafting and reviewing contracts and legal structures, including
tax legislation or financial issues
Technical consultants to evaluate the wind potential on a specific site
Economists to prepare bankable business plans

Environmental engineers to assess the environmental impacts of a project
2015-05-14
Page 19
Implemented by
Potential domestic value creation (I/II)

Development status
Value Chain
Beginning of
wind energy
development
First projects
realized, local
industries
suitable for
participating
Many projects
realized, national
wind industry
developing
Project
development
medium if PD are
available
otherwise low
medium to high
high
Manufacturing
Rather low, few

local components
Local components
high if systems &

components are
locally produced
Installation
Low to medium
medium
high
Grid connection
high
high
high
Operation &
maintenance
Low to medium
high
high
The Potential domestic value creation in a country depends much on its status
of wind energy sector development
Page 20
10
Implemented by
Potential domestic value creation (II/II)

Development status
Value Chain
Beginning of
wind energy
development
First projects
realized, local
industries
suitable for
participating
Many projects
realized, national
wind industry
developing
Consulting
medium if consultants available
medium to high
high
Capacity
Building
medium if trainer
available
Medium to high
high
Research &
development
low
medium
high
Financial
services
medium
increasing
high
Policy making
required
required
required
The Potential domestic value creation in a country depends much on its status
of wind energy sector development
The Socio-economic Benefits of Solar and Wind Energy, Irena 2014/revised KK
Page 21
Implemented by
Rapid deployment through joint efforts of policy,

industry, training institutions and research (I/III)
China:
Cooperation between Chinese and German university

Joint training program of NWPU and CDG/GIZ for stakeholder along the
value chain
Support for the partner university to become an excellence center for
wind energy through special training for the lecturers of the university
Start with license production
Renewable Energy Law 2006 (REL): based on bid prices from
government tenders
Use of unilateral CDM
WEC manufacturing industries are state-owned,
Preferential loans, tax benefits and funding from the Renewable Energy
Development Fund for renewable energy projects.
High tech center in Baoding for renewable energy technologies
20.05.2015
Page 22
11
Implemented by

industry, training institutions and research (II/III)
China:
Student exchange with German universities

Organization of world conferences on wind energy
Expert discussions among high level political decision makers,
parliamentarians, researcher, industry, wind farm operator,
education, utilities bilateral
Year long training programs for O&M-personal (GTZ)
Capacity building on grid connection and grid management (GTZ)
Clear government targets: economic growth not at the expense of the
environment : Producing at least 15% of its overall energy output from
renewable energy sources by 2020
Bidding procedures for foreign investors and manufacturers only open
for WECs China has not felt competitive at the time
20.05.2015
Page 23
Implemented by

industry, training institutions and research (III/III)
China:
Steady increase in developing knowledge inside the industries/own

development departments;
Development departments installed in G together with German licensor
Intensified contacts between NDRC, industry and universities

Support for translation and editing of technical books
Supporting participation of trained experts in international conferences
Presentation of the findings to state secretaries and ministers
Wind Turbine Test Lab IEC61400
Introduction of new grid code (+LVRT)
Support for wind power prediction system
Wind Turbine Training Test Bench
Newly designed train-of-trainer program.
20.05.2015
Page 24
12
Implemented by
Moderate deployment through joint efforts of policy,

industry, training institutions and research
Brazil:
Participating in the German ELDORADO program: 1st wind farm in Fortaleza

High tech knowledge given (Embraer aircraft industry) but no WEC manufacturer
Own research department for RET as department of state owned electricity
holding
Long term training in Germany combined with expert workshops (utilities,
researcher and government) (most wind experts came from hydro power sector)
Wind farm as a joint venture between German manufacturer and Brazilian utility
Curricula for wind course at university in Rio, support for training material
Specialist workshops on economics and on financing schemes
Intensive discussion on Feed-in-law and auction scheme
Expert training from Wind measurement to Due Diligence
Capacity building on grid connection and grid management
LCR failed (monopoly position, export of blades as result, few installations in B.
Finally, Argentinean WEC manufacturer started production and installation in B.
20.05.2015
Page 25
Implemented by
Summary I/III
Development of wind energy can create high economic values and social
and environmental benefits for Vietnam but he potential of domestic value
creation depends on:
the political support resp. on the legal, economic and financial framework conditions,
on the development status of the domestic renewable energy sector,
and to a very great extent on the knowledge and experience of
experts along the renewable energy value chain
The more services performed on the different levels of the value chain
nationally, the higher the national value added (direct added value, indirect
and induced values)
To add local value, employment opportunities have to be extended on all
relevant sectors. This needs capacity building and international
cooperation
2015-05-14
Page 26
13
Implemented by
Summary II/III
Vietnam can import high technology at reasonable prices and thus contribute
to possibly lower prices for wind electricity
if negotiations with deliverers are favorable,
but without direct added local economic value.
Or Vietnam tries to develop the wind energy sector on all levels as fast as
possible. Increasing economic added value can then be realized,
but it may need some time to reach international quality level and low
costs for the equipment,
but an increasing number of Vietnamese experts are gaining also
knowledge and experience in a high tech sector useful also for other
technical developments, needed on Vietnams planned way to become
a industrialized country by 2020.
2015-05-14
Page 27
Implemented by
Summary III/III
Environmental and socio-economic advantages
Environmental benefits can be achieved even when most of the components
or the complete wind farm equipment is imported and project developing is
done by foreign experts. But, as said, there is hardly any economic direct
domestic value added!
Socio-economic and environmental advantages of wind energy deployment:
increasing air quality
less acid rain
reduced costs for unemployment
a more balanced trade balance and balance of payment (saving foreign
currency and reduce dependency from fluctuating exchange rates and
increasing dependency from import of fossil fuels).
Technical, managerial knowledge will increase as well as environmental
sensibility and better understanding of climate issues are possible
2015-05-14
Page 28
14
Implemented by
Thank you very much for your attention

and please share with us your ideas on which sector
you feel capacity building to create jobs and value is
needed next (i.e. project developers, manufacturing
sector, O&M)
and how GIZ could support you offering adequate
capacity building
Klaus Knecht
Consultant
Mail.: Kknecht-frb-Ber@t-oneline.de
Tel.: +49 (0)30 392 49 79
15/05/2015
Page 29
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Speaking Notes Annette Frick

3) Wind power creates jobs and industrial development

Ladies and Gentlemen, let me conclude

Thank you very much for your attention!

Ministry of Industry and Trade

German Development Cooperation in Viet Nam

4. Objectives of the workshop

kWh per Capita

Energy Production (TWh)

1. Context Electricity Production historically

Electricity production from oil sources

Source: WB (2015); IEA (2015); GDE (2015)

1. Context Growth of sector revised PDP VII

1. Barriers for investments into RE (and EE)

Low electricity price

Complex and unclear

2014 Portfolio Presentation GIZ in Vietnam

2. Portfolio GIZ Viet Nam (from July 2013)

Biodiversity and Forest

Environmental Policy and

Climate Change &

Outside Priority Areas

The Macroeconomic Reforms/Green Growth programme

DOING MORE in LESS AREAS:

Selected alignment to Viet Nams

2. GIZ Energy Projects in Viet Nam I/II

Smart Grid (BMZ/DKTI)

2. GIZ Energy Support Programme areas of activity

Knowledge Sharing; Thematic Studies; Pilot Projects

3. GIZ Energy Support Programme past activities

Decision 24/2014/QD-TTg (29.06.2014)

Decision: 31/2014/QD-TTg (05.05.2014)

3. GIZ Energy Support Programme past activities

Decision 37/2011/QD-TTg (29.06.2011)

High quality sensors (5 with GSM connection)

Climatological site characteristics:

DATA will be published in the Framework of the WB Renewable

4. Support on wind power 2014-2018

Capacity Needs Assessment

Support to local banks

Support to local project developers

Strategic advice (local value creation)

Support to private sector partnerships

Vocational training for wind

Vietnamese German research

Short-term training courses

Update wind data quality

4. Support on wind power 2014-2018 adjustment FIT

Required investment and

Basis for analysis

GIZ Wind FIT Study (2014)

5. Objectives of the workshop

Discuss elements of a comprehensive policy for wind power

One comprehensive policy that integrates individual regulation

What does it need to address barriers?

How can we monitor wind power deployment effectively?

Regulation, PPAs, licensing procedures

Local value creation and capacity development

In 2030, the wind energy sector in Viet Nam will.

Dialogue between government and private sector => issues of concern

Conclusions of the workshop and recommendations for follow-up

Thank you for your attention!!

Managing Agency: MoIT;

TURBINES LAYOUT OF PHU LAC WIND FARM PROJECT