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Speaking Notes Annette Frick Design features for an effective wind energy policy for Viet Nam

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

Workshop, 14-15 May, InterContinental Hotel Hanoi, Viet Nam Dear Mr Cuong, Distinguished guests, Ladies and Gentlemen,

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

private represented here, to discuss the policy framework for wind power in the next two days.

am glad to see all the government institutions as well as the energy industry, both public and

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 Vietnam’s “Green Growth Strategywe want to support especially the development of renewable energy technologies as well as energy efficiency.

renewable energy technologies as well as energy efficiency. Both, our financial cooperation through KFW, as well

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.

the short-term to cover the increase of electricity demand. BUT : renewable energy technologies, and wind

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

countries have made and thereby shorten the learning process Renewable energy markets around the world have

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 large- scale 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
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 %.

Wind power creates jobs and industrial development
Wind power creates jobs and industrial development

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)

– and this leads me to my third and last point: 3) From the perspective of

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.

to support the training of wind technicians, for example. Ladies and Gentlemen, let me conclude… The

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

Vietnam than for preceding countries to introduce wind power In this sense, I wish us a

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
Implemented by
Ministry of Industry and Trade
General Directorate of Energy
German Development Cooperation in Viet Nam
Energy Sector
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Implemented by

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

GIZ Energy Support Programme 3. GIZ support on wind power 2014-2018 4. Objectives of the workshop

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1. Context – Electricity Production historically

GER RE TAKE OFF EEG GLOBALLY 140 120 100 80 60 40 20 - Energy
GER
RE TAKE OFF
EEG
GLOBALLY
140
120
100
80
60
40
20
-
Energy Production (TWh)

Generation

according revised

PDP VII

2020:

258.8-278.9 TWh

2030:

515.7-632.1 TWh

Electricity production from oil sources Electricity production from natural gas sources Electricity production from coal
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*; Import; 5.0% 2.1% Gas/Oil ; 24.5% Coal
RE*;
Import;
5.0%
2.1%
Gas/Oil
; 24.5%
Coal

thermal

; 28.5%

Hydro**

; 39.9%

6.5% Import; RE*; 2.4% Gas/Oil; 14.8% Hydro**; 29.1% Coal thermal; 47.3%
6.5% Import;
RE*;
2.4%
Gas/Oil;
14.8%
Hydro**;
29.1%
Coal
thermal;
47.3%
Nuclear; Import; RE*; 3.0% 1.3% 10.2% Hydro**; 17.9% Gas/Oil; 17.1% Coal thermal; 50.4%
Nuclear;
Import;
RE*;
3.0%
1.3%
10.2%
Hydro**;
17.9%
Gas/Oil;
17.1%
Coal
thermal;
50.4%
Installed Capacity
Installed
Capacity

2014:

34 GW

2020:

61 GW

2030:

116 GW

* including SHP Source: GDE (2015) **including storage hydropower
* including SHP
Source: GDE (2015)
**including storage hydropower

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1. Barriers for investments into RE (and EE)

Implemented by 1. Barriers for investments into RE (and EE) Lack of national (comprehensive) law for

Lack of national (comprehensive) law

for RE

Low electricity price

national (comprehensive) law for RE Low electricity price Limited access to financing (equity & debt) Limited

Limited access to financing (equity & debt)

Limited capacities of the transmission and distribution grid

Limited data availability (and poor data quality)

grid Limited data availability (and poor data quality) Complex and unclear procedures for investments Difficult

Complex and unclear procedures for investments

Difficult access to information

and unclear procedures for investments Difficult access to information 2014 Portfolio Presentation GIZ in Vietnam Page
and unclear procedures for investments Difficult access to information 2014 Portfolio Presentation GIZ in Vietnam Page

2014 Portfolio Presentation GIZ in Vietnam

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Implemented by 2. Portfolio GIZ Viet Nam (from July 2013)
Implemented by
2. Portfolio GIZ Viet Nam (from July 2013)
GREEN GROWTH AS THE OVERARCHING FRAMEWORK PRIORITY AREA PRIORITY AREA PRIORITY AREA Vocational Training Environmental
GREEN GROWTH AS THE OVERARCHING FRAMEWORK
PRIORITY AREA
PRIORITY AREA
PRIORITY AREA
Vocational Training
Environmental Policy and
sustainable Use of
Natural Resources
Energy
Reform of
Renewable Energy
Technical and
Biodiversity and Forest
Support Project
Vocational
Education and
Training
Climate Change &
Coastal Ecosystemns
Upscaling Wind
Energy in Viet Nam
Hai Phong
Polytechnic College
Renewable Energy
and Energy Efficiency
Bach Nghe
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 Nam‘s 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

of social inclusion , (political) participation and partnership with private sectors into the priority areas Page

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2.

GIZ Energy Projects in Viet Nam I/II

G 2 G Negotiations

(07/2013)

Smart Grid (BMZ/DKTI) RE+EE (BMZ) Wind II (BMZ/DKTI) Bioenergy I (BMUB/IKI) - RESP Wind I
Smart Grid (BMZ/DKTI)
RE+EE (BMZ)
Wind II (BMZ/DKTI)
Bioenergy I (BMUB/IKI) - RESP
Wind I (BMUB)
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Legend:
Preparation
Extension
Project Idea
Implementation
Energy
Renewable Energy
Efficiency

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2.

GIZ Energy Support Programme – areas of activity

GIZ Energy Support Programme
GIZ Energy Support Programme

Legal and Regulatory Frameworks

• Policy Strategies

• Support

Mechanisms

• Regulations

Guidelines

• Institution Building

Action Areas

Capacity

Development

• Government

Institutions

• Project Developers

and Investors/

Financial

Institutions

• TVET

Technology

Cooperation

• Research

• Education

• Private Sector

Knowledge Sharing; Thematic Studies; Pilot Projects
Knowledge Sharing; Thematic Studies; Pilot Projects

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3. GIZ Energy Support Programme – past activities

Biomass
Biomass
Solid Waste
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

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

Duration of PPA: 20 Years

• Duration of PPA: 20 Years
• Duration of PPA: 20 Years

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Implemented by

3. GIZ Energy Support Programme – past activities

Wind Power
Wind Power

Decision 37/2011/QD-TTg (29.06.2011)

Feed-in-Tariff for Wind Power

Tariff: 7,8 USCents/kWh (6.8+1)

Duration of PPA: 20 Years

Currently under revision

GIZ/MoIT Wind Measurement Campaign

Project from 2010-2015

10

sites in 8 provinces

80

m mast

High quality sensors (5 with GSM connection)

m mast High quality sensors (5 with GSM connection) • Windspeed (80m/60m/40m) [m/s] Climatological site

Windspeed (80m/60m/40m) [m/s]

Climatological site characteristics:

Weibull A-Parameter (80m/60m/40m)

• Temperature (14m) [°C]

Weigbull k-Parameter (80m/60m/40m)

• Air pressure (6m) [hPa]

Turbulence intensity (80m/60m/40m)

• 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
https://www.google.com/maps/d/viewer?mid=zKJFPJnc-KLQ.khKu-oq60D0w

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Implemented by

4. Support on wind power 2014-2018

Action Area 1: Action Area 2: Action Area 3: Legal and Regulatory Frameworks Capacity Development
Action Area 1:
Action Area 2:
Action Area 3:
Legal and Regulatory
Frameworks
Capacity Development
Technology Cooperation
Policy advice
Capacity Needs Assessment
Market information
Feed-in tariff
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
Vocational training for wind
Technical standards, guidelines, e.g.
ESIAs
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

FIT Result: GIZ Wind FIT Study (2014) calculation 10.4 US¢/kWh (o-s) All investor types must
FIT
Result:
GIZ Wind FIT Study (2014)
calculation
10.4 US¢/kWh (o-s)
All investor types
must be targeted
Qualitative:
PDP Targets:
1 GW by 2020:
Tariff-funded
with one FIT
• Interviews
1 GW Wind
• Ca. US$ 2.1
Power by 2020
billion over
 levy on the electricity
• Question-
Assumed IRR:
naires
next 5 years
price for 1GW by 2020
10% (internat.
Assessment of
At average debt
less than 5VND/kWh
experience)
existing
level of 70%
Framework
Assumptions
based on P/FS
questionnaires
and international
experience for:
US$ 630m
General
Basis for
equity
recommendations:
calculations:
Quantitative:
US$ 1.47b
• LEC (levelized
• CapEx
debt
• Wind data
costs of
•FIT payment system should be
one-stop-shop (not FiT+VNEPF)
• O&M
Assumed
• Pre-/feasibility
electricity)
•Government guarantee for
• Capacity
investor types:
studies
payments
Factor
• Highly-
Additional
International
•Better wind measurements and
subsidized
incentives like
comparison
improved standards
tax breaks etc.
• Strategic
•Enforce standard agreements
• Fully
(network connection and PPA)
commercial
Methodology
Basis for analysis
Required investment and
assumed investor structure

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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
• Conclusions of the workshop and recommendations for follow-up

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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

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20/05/2015

DỰ ÁN NHÀ MÁY ĐIỆN GIÓ PHÚ LẠC

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: Phú Lạc Commune, Tuy Phong District; Bình Thuận 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
TURBINES LAYOUT OF PHU LAC WIND FARM PROJECT
MEETING WITH KfW TO ARANGE THE LOAN FOR PHU LAC PROJECT
MEETING WITH KfW TO ARANGE THE LOAN FOR PHU LAC PROJECT

20/05/2015

CARRY OUT THE ESIA FOR PHU LAC PROJECT
CARRY OUT THE ESIA FOR PHU LAC PROJECT
PUBLIC CONSULTATION MEETING WITH LOCAL PEOPLE
PUBLIC CONSULTATION MEETING WITH LOCAL PEOPLE

20/05/2015

LAND COMPENSATION - CLEARANCE AT PHU LAC PROJECT
LAND COMPENSATION - CLEARANCE AT PHU LAC PROJECT
MINES CLEARANCE (PHASE 1)
MINES CLEARANCE (PHASE 1)

20/05/2015

ĐƯỜNG VÀO DỰ ÁN TRƯỚC KHI XÂY DỰNG ĐƯỜNG VÀO DỰ ÁN HIỆN TẠI
ĐƯỜNG VÀO DỰ ÁN TRƯỚC KHI XÂY DỰNG
ĐƯỜNG VÀO DỰ ÁN HIỆN TẠI
20/05/2015 ĐƯỜNG VÀO DỰ ÁN TRƯỚC KHI XÂY DỰNG ĐƯỜNG VÀO DỰ ÁN HIỆN TẠI 6

20/05/2015

20/05/2015 7
20/05/2015 7

20/05/2015

 

Main barriers to wind power development in VN

 

Category

 

Barriers

1.

Information:

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!

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.

VÀI HÌNH ẢNH VỀ CÔNG TY CP PHONG ĐIỆN THUẬN BÌNH (TBW)

SOME PICTURES ABOUT US

20/05/2015

KONG CHRO PROJECT 3900 ha EAH’ LEO PROJECT 1920ha LOI HAI PROJECT 523 ha VINH
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
TBW’ TEAM at PHU LAC WIND FARM

20/05/2015

AFTER WORKING HOUR
AFTER WORKING HOUR
20/05/2015 AFTER WORKING HOUR 11

20/05/2015

COLLECTING RUBBISH AT THE LOCAL BEACH
COLLECTING RUBBISH AT THE LOCAL BEACH
CHARITABLE ACTIVITIES TOWARD LOCAL PEOPLE
CHARITABLE ACTIVITIES TOWARD LOCAL PEOPLE

20/05/2015

THANK YOU FOR YOUR ATTENTION! EVN TBW: Clean Energy – Friendly People! 25
THANK YOU FOR YOUR ATTENTION!
EVN TBW: Clean Energy – Friendly People!
25

12/05/2015

Best Practices in Wind Energy by Gilles Beau – 24 May 2015 © 2015 The
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
Contents
Presentation of The Blue Circle
Presentation of Phuoc Minh & Dam Nai Projects
Best Practices in Wind Energy Industry
Other recommendations
© 2015 The Blue Circle Pte Ltd. All rights reserved.
2

12/05/2015

Introduction The Blue Circle The Blue Circle is an Independent Power Producer: 100% based on
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
© 2015 The Blue Circle Pte Ltd. All rights reserved.
3
International Expertise Wind Solar 1,260 MW pipeline developed in France, USA, Vietnam and French West
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
12 MW acquired in the USA
Hydro
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
© 2015 The Blue Circle Pte Ltd. All rights reserved.
4

12/05/2015

TBC Milestones The Blue Circle is the only wind focused developer in the Region with:
TBC Milestones
The Blue Circle is the only wind focused developer in the Region with:
 Development, financing and operating experience;
 Local and international experience;
 March 2015: “Policy” awarded to develop
Dam Nai Wind Project in Ninh Thuan,
Vietnam
Rolling out of Project Portfolio in Vietnam
 Financing capabilities;
 Current portfolio under development of 600MW
 June 2014: “Policy” awarded to develop
Phuoc Minh Wind Project in Ninh Thuan,
Vietnam
May 2014: Minority Investment from Armstrong Asset
Management
USD 40 million commitment for the construction of wind and solar
projects in Southeast Asia
Private Equity Investment Armstrong
SCAF Funding for project development
Asset Management
600 MW pipeline of wind projects under development in
Thailand, Vietnam and Cambodia
Incorporation of
The Blue Circle
 Nov 2013
Development of Project pipeline and
team building
2012-2013
© 2015 The Blue Circle Pte Ltd. All rights reserved.
5
Phuoc Minh Project Phuoc Minh Project Location Expected Capacity of About 30MW 100m Monitoring Mast
Phuoc Minh Project
Phuoc Minh Project Location
Expected Capacity of About
30MW
100m Monitoring Mast installed on 14 th September 2014
© 2015 The Blue Circle Pte Ltd. All rights reserved.
6

12/05/2015

Phuoc Minh Project Phuoc Minh Project Location © 2015 The Blue Circle Pte Ltd. All
Phuoc Minh Project
Phuoc Minh Project Location
© 2015 The Blue Circle Pte Ltd. All rights reserved.
7
Dam Nai Project Dam Nai Location Good proximity to the Substation Relatively good winds expected
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
© 2015 The Blue Circle Pte Ltd. All rights reserved.
8

12/05/2015

Best Practices – Residential Areas Example of Regulations or Best practices for Residential areas setback
Best Practices – Residential Areas
Example of Regulations or Best practices for Residential areas setback distance (m)
in Wind industry in different countries
The Blue Circle Recommendation
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.
500m buffer from residential area seems to be an appropriate setback
distance to minimize potential noise, shadow flicker issues
©
2015 The Blue Circle Pte Ltd. All rights reserved.
9
Best Practices – Transmission Line Example of Regulations or Best practices for High Voltage Transmission
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
The Blue Circle Recommendation
-High Tension Power lines (>110Kv) should have a limit of 1.1 x
from right of way or 200 meters,
hub height + blade length
-Low tension Power lines (<110Kv) should have a limit of blade length + 10 meters of right of
way.
© 2015 The Blue Circle Pte Ltd. All rights reserved.
10

12/05/2015

Best Practices – Highway/ Railway Example of Regulations or Best practices for Highway / Railway
Best Practices – Highway/ Railway
Example of Regulations or Best practices for Highway / Railway setback distance
(m) in Wind industry in different countries
The Blue Circle Recommendation
-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.
© 2015 The Blue Circle Pte Ltd. All rights reserved.
11
Best Practices – Distance between Wind Power plants There is no real regulations nor best
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.
The Blue Circle Recommendation
7 x rotor diameter exclusion unless negotiated by the new project with a Consent Letter from
the existing project
© 2015 The Blue Circle Pte Ltd. All rights reserved.
12

12/05/2015

Best Practices – Airport / Airfield / Airbase Each country has its own Aviation Authority
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
The Blue Circle Recommendation
15 km round buffer from Major Airport like HCM, Ha Noi
5 km Elliptical buffer along main run way for secondary airport / military airbase
© 2015 The Blue Circle Pte Ltd. All rights reserved.
13
Other Recommendations • Some logistics concerns that can have strong impacts on projects financing (roads,
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
© 2015 The Blue Circle Pte Ltd. All rights reserved.
14

12/05/2015

Contact Details
Contact Details
Thank You for your attention
Thank You for your attention
12/05/2015 Contact Details Thank You for your attention 51 Goldhill Plaza #12-11 Singapore, 308900 128 Payatai

51 Goldhill Plaza #12-11 Singapore, 308900

128 Payatai Plaza Building #12-C Phayathai Road

Bangkok, 10400 Thailand

Tel (SG): +65 6259 4921

12

th Floor, Vincom Center, Crosscoop

72

Le Thanh Ton, District 1

Ho Chi Minh City Vietnam

72 Le Thanh Ton, District 1 Ho Chi Minh City Vietnam © 2015 The Blue Circle

© 2015 The Blue Circle Pte Ltd. All rights reserved.

15

Implemented by Ministry of Industry and Trade General Directorate of Energy Best Practices for PPAs
Implemented by
Ministry of Industry and Trade
General Directorate of Energy
Best Practices for PPAs and Licensing
Page 1
Implemented by
Implemented by

Best Practices for PPAs and Licensing

The fundamental function of a well-designed PPA is to mitigate risk.

function of a well-designed PPA is to mitigate risk . Graph demonstrates the risk premiums for

Graph demonstrates the risk premiums for different components of infrastructure projects in the developed vs. developing world

Source: Deutsche Bank 2011
Source: Deutsche Bank 2011

14/05/2015

Page 2

Implemented by Risks Description & Examples Economic Risk Risk that economic factors beyond the control
Implemented by
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 gov’t, 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)

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Implemented by
Implemented by

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.

schedule for delivery of electricity, penalties for under delivery, payment terms, and termination. 14/05/2015 Page 4

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Implemented by

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.

given project, plus a reasonable return on investment. This is what constitutes a “ bankable ”

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Implemented by

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 project’s useful life

Risk-adjustment: areas with higher risk generally require a higher rate of return in order to attract investment

: areas with higher risk generally require a higher rate of return in order to attract

14/05/2015

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Implemented by

Key Requirements for Bankable PPAs

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 project’s debt obligations.

that the cash flows from the project will be sufficient to honor the project’s debt obligations.

14/05/2015

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Implemented by

Key Requirements for Bankable PPAs

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 project’s cash flows is materially depreciated over the course of the project’s 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).

inflation risk facing the proportion of project expenditures incurred locally (e.g. O&M expenses). 14/05/2015 Page 8

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Key Requirements for Bankable PPAs

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.

will be unable to confirm that the revenues from power sales will be sufficient to cover

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Key Requirements for Bankable PPAs

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.

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

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Key Requirements for Bankable PPAs

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.

outline (or better, negotiate) what risks the developer or investor is responsible for assuming. 14/05/2015 Page

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Key Requirements for Bankable PPAs

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.

dispute resolution mechanisms should be provided that ensure a neutral and impartial arbitration. 14/05/2015 Page 12

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Key Requirements for Bankable PPAs

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 outstanding debt owed
 The termination payment should be equal, at a minimum, to the
outstanding debt owed by the project developer.

14/05/2015

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Implemented by

Key Requirements for Bankable PPAs

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 other equipment required to connect the facility.

point, and for building any substations or other equipment required to connect the facility. 14/05/2015 Page

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Key Requirements for Bankable PPAs

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 well- capitalized entity. This reduces counterparty risk.

• Also, the entity should be provided with implicit or explicit backing (i.e. guarantee) from the government of Vietnam.

should be provided with implicit or explicit backing (i.e. guarantee) from the government of Vietnam. 14/05/2015

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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
 Process is simple and streamlined, and uses standard documents and forms

14/05/2015

Page 16

Implemented by Overview of Licensing Procedure in Viet Nam (1)
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
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: 10-
30 days

14/05/2015

Source: AHK Study 2015

Page 17

Implemented by Overview of Licensing Procedure in Viet Nam (2)
Implemented by
Overview of Licensing Procedure in Viet Nam (2)
Investment Report PPA Contract Agreement Construction Permit, Ownership Title: ~65 days Grid Interconnection Contract
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
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

dispute resolution mechanism is still lacking: this can significantly deter foreign investors 14/05/2015 Page 19

14/05/2015

Page 19

Implemented by Best Practices for PPAs and Licensing
Implemented by
Best Practices for PPAs and Licensing

- 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
- Dispute resolution mechanism

14/05/2015

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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

government agency, or department, and cultivate clear institutional roles and responsibilities 14/05/2015 Page 21

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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

the government 4. Clarify responsibilities 5. Build capacities amongst institutions 14/05/2015 Page 22

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Implemented by Sample PPAs
Implemented by
Sample PPAs

World Bank, PPP in infrastructure resource center, http://ppp.worldbank.org/public-

NREL 2010, Power Purchase Agreement Checklist for State and Local Governments

Ferrey, Steven; Moreno, Alejandro. 2013. Small scale generation : issues in standardizing power purchase agreements. View point ; no. 337. Washington DC :

Example Wind Power (Sri Lanka): http://www.ceb.lk/download/db_sppa/windpower.pdf

• Example Wind Power (Sri Lanka): http://www.ceb.lk/download/db_sppa/windpower.pdf 14/05/2015 Page 23

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Implemented by

Thank you for your attention!

Toby D. Couture

Founder & Director of E3 Analytics

www.e3analytics.eu

by Thank you for your attention! Toby D. Couture Founder & Director of E3 Analytics www.e3analytics.eu
Page 25
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20/05/2015

MINISTRY OF INDUSTRY AND TRADE General Department of Energy

CURRENT STATUS OF WIND POWER DEVELOPMENT IN VIETNAM

Phạm Thùy 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
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
PhamPham ThuyThuy DungDung
Pham Thuy Dung
May 2015
Hanoi,Hanoi, 1414--1515 May,May, 20152015

20/05/2015

1. Development policies and targets • 2012 National Green Growth Strategy goal: “Development of a
1. Development policies and targets
• 2012 National Green Growth Strategy goal: “Development of a low-
carbon 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: Vietnam’s 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%.
PhamPham ThuyThuy DungDung
Hanoi,Hanoi, 1414--1515 May,May, 20152015
1. Development policies and targets RE Share in power generation and import mix up to
1. Development policies and targets
RE Share
in power generation and import mix up to 2030
(PDP VII -2011)
2.10%
2020
3%
4.50%
2030
4%
19.60%
9%
Hydro power
10%
24%
6%
Coal
Natural gas
46.80%
15%
RE
Nuclear
56%
Imported
Pham Thuy Dung
Hanoi, 14-15 May, 2015

20/05/2015

1. Development policies and targets  Targets for RE utilization up to 2030 2020: RE
1. Development policies and targets
 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)
2.1. Potentials for windpower
Theoretical Potential for Wind Power
Mean speed at
80m height
(m/s)
Estimated Developable
Theoretical
Land Area
Potential
(km2)
(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
1
10
Tổng
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 District Speed (m/s) Area (km²) Potential (MW)
Technical Potential –
MoIT 2012 Assessment
No.
Province
District
Speed (m/s)
Area (km²)
Potential (MW)
6.0 – 6.5
6.5
- 7.0
> 7.0
1
Hà Tĩnh
Kỳ Anh
3.9
0
0
3.9
15.6
Quảng Ninh
7.9
0
0
2
Quảng Bình
19.8
79.2
Lệ Thủy
11.9
0
0
3
Kon Tum
KonPlông
3.9
0
0
3.9
15.6
Phù Mỹ
7.9
0
0
4
Bình Định
Phù Cát
11.9
0
0
31.7
126.8
Quy Nhơn
11.9
0
0
TP Pleiku
11.9
0
0
Mang Yang
39.6
0
0
5
Gia Lai
Krong Cho
15.8
0
0
213.9
855.6
Chư Sê
63.4
0
0
Chư Prong
83.2
0
0
TX Tuy Hòa
7.9
0
0
6
Phú Yên
19.8
79.2
Tuy Hòa
11.9
0
0
Ea H'leo
55.5
0
0
Krong Năng
7.9
0
0
7
Daklak
126.8
507.0
Krong Buk
47.5
0
0
Cư M'gar
15.8
0
0
PhamNgo ThiThuyToDungNhien
Hanoi,Berlin,141--155 JulyMay,20132015
Technical Potential - 2012 Potential No. Province District Speed (m/s) Area (km²) (MW) 6.0 -
Technical Potential - 2012
Potential
No.
Province
District
Speed (m/s)
Area (km²)
(MW)
6.0
- 6.5
6.5 - 7.0
> 7.0
8
Khánh Hòa
Cam Ranh
32
0
0
320
128.0
Ninh Hải
7.9
11.9
0
9
Ninh Thuận
Phan Rang
31.7
0
0
237.7
950.6
Ninh Phước
126.8
59.4
0
TP Phan Thiết
83.2
19.8
4.0
Tuy Phong
75.3
59.4
27.7
10
Bình Thuận
Bắc Binh
114.9
51.5
11.9
534.7
2138.6
Hàm Thuận Bắc
7.9
0
0
Hàm Thuận Nam
67.3
7.9
3.9
11
Bà Rịa Vũng Tàu
7.9
31.6
Đất Đỏ
7.9
0
0
Bình Đại
7.9
0
0
12
Bến Tre
Ba Tri
4.0
0
0
43.6
174.3
Thạnh Phú
31.7
0
0
Châu Thành
3.9
0
0
13
Trà Vinh
71.2
284.9
Duyên Hải
67.3
0
0
14
Sóc Trăng
Vĩnh Châu
16
0
0
16.0
64.0)
Area (km²)
1,105
210
47
1.363
5,451
PhamNgo ThiThuyToDungNhien
Hanoi,Berlin,141--155 JulyMay,20132015

20/05/2015

2.2. Current development of wind power projects • Local wind power development plans – Bình
2.2. Current development of wind power projects
• Local wind power development plans
– Bình Thuận, July 2012: 700MW up to 2020;
– Ninh Thuận, April 2013: 220 MW up to 2020;
– Sóc Trăng, May 2014: 200MW up to 2020;
– Bến 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
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 (52MW-
Furlander1.5, GE1.6, Vestas2.0)
• Financing sources:
– ODA: 02 projects (PhuLac- KfW, LoiHai- Danida)
– State budget: 01 project (Phú Quý Island)
– Government guarantee: 01 project (Bạc Liêu
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
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
3. Support mechanisms for wind power project development • Circular No. 32/2012/TT-BCT by MOIT dated
3.
Support mechanisms for wind power project
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

3. Support mechanisms for wind power project development Supplementary instruments: • Import tax: Import tax
3. Support mechanisms for wind power project
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
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: Vietnam’s 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
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 ◦
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 grid-
connected 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
4. Solutions
RE Database
 RE-related mechanisms/policies
 National and provincial RE
development strategies and goals
Legal and
policy
 Financial mechanisms for and
interest support to RE
development
frameworks
Strategy
Local Skills
and targets
 Database of RE pipeline,
approved, on-going and grid-
connected projects
Integrated
Database on
Renewable
 Database of RE projects
Energy
 GIS map(s) and reports on RE
potential assessment reports
R&D
Financing
innovation
resources
 Information on RE technologies,
enterprises/research institutions
RE
Database
(potentials,
projects,
)
 RE-related training/capacity
building materials/handbooks
Pham Thuy Dung
Hanoi, 14-15 May, 2015
projects, )  RE-related training/capacity building materials/handbooks Pham Thuy Dung Hanoi, 14-15 May, 2015 9
Implemented by Wind in Viet Nam A Vision for a Sectorial Development Page 1
Implemented by
Wind in Viet Nam
A Vision for a Sectorial Development
Page 1
Implemented by
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

deployment • Energy security • Value creation and jobs • Wind in 2030: a vision for

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Implemented by
Implemented by
Deployment of Renewable Energy globally Renewables as a share of global capacity additions 90% Non-Renewables
Deployment of Renewable Energy globally
Renewables as a share of global capacity additions
90%
Non-Renewables
80%
81%
(Coal, Gas Nuclear, Oil)
70%
58%
60%
50%
40%
Renewables
42%
30%
19%
20%
10%
0%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013

Renewable

energy

expanding

quicker than

conventional

energy

Total net capacity added per year [GW] 104 134 150 153 134 180 200 174
Total net capacity
added per year [GW]
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
Renewables
Non-renewables (Coal,
Gas, Nuclear, Oil)
84
111
116
116
93
133
145
107
100
138
118
117
87
Source: IRENA database

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Implemented by
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
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
7,600
10,200 13,600 17,400 23,900 31,100 39,431 47,620 59,091 73,959 93,911
0
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Source: GWEC (2015)
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Implemented by
Implemented by

Overview development of the global wind energy sector (II/II)

Source: GWEC (2015)
Source: GWEC (2015)

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Implemented by

Costs of wind power

Comparison of Wind Power CAPEX and LCOE

5000 0.4 4500 0.35 4000 0.3 3500 0.25 3000 0.2 2500 0.15 2000 0.1 1500
5000
0.4
4500
0.35
4000
0.3
3500
0.25
3000
0.2
2500
0.15
2000
0.1
1500
0.05
1000
0
India
China
Brazil
United
Germany
Europe
Vietnam (23
Vietnam
Western
States
projects)
(Nearshore)
Europe
(offshore)
CAPEX
LCOE
CAPEX [US$/kW]
LCOE [US$/kWh]

Overall steadily decreasing costs and increasing efficiency

Regional differences
Regional differences

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Implemented by Wind energy in Viet Nam Technical Potential Economic Potential Decentralised Deployment Installation
Implemented by
Wind energy in Viet Nam
Technical Potential
Economic Potential
Decentralised Deployment
Installation Times
CO 2 Neutral
Industrial Development
(…)
Source: AWS Truepower (2011)

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Implemented by
Implemented by

Benefits wind

Implemented by Benefits wind Decentralised deployment • South and centre (close to load centres) • Capital

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)
Source: ECNmag (2011)

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Implemented by
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

on volatility of world markets (e.g. coal) • Foreign reserves • Increase overall energy independence 15/05/2015
on volatility of world markets (e.g. coal) • Foreign reserves • Increase overall energy independence 15/05/2015

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Implemented by
Implemented by

Benefits wind - Job effects of wind energy

Potential jobs per megawatt technology

Implemented by Benefits wind - Job effects of wind energy Potential jobs per megawatt technology 15/05/2015

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Implemented by
Implemented by

Benefits wind - Jobs in wind energy

DevelopmentImplemented by Benefits wind - Jobs in wind energy Project Manufac- turing Recon- Grid Installation O

Project Manufac- turing
Project
Manufac-
turing
Recon- Grid Installation O & M struction/ Connection Recycling
Recon-
Grid
Installation
O & M
struction/
Connection
Recycling

MakingInstallation O & M struction/ Connection Recycling Policy Financial Services Education R & D

Policy

Financial Services

Education

R & D

ConsultingMaking Policy Financial Services Education R & D • Policy-makers • Legal advisers • Project

Policy-makers

Legal advisers

Project developers

Wind power technicians (Inst., O&M)

Site engineers

Operations managers

Environmental consultants

Financial advisers

Construction engineers

Manufacturing

(foundations, roads, etc.)

Researchers

• Procurement specialists • …
Procurement specialists

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Implemented by
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

new IPPs • 1984 MW of wind ; 32 IPPs • Investment into wind USD 4.7
Source: PPIAF, 2014
Source: PPIAF, 2014

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Implemented by
Implemented by

Benefits - FDI in Wind

FDI in installed generation capacity

FDI in manufacturing

Benefits - FDI in Wind FDI in installed generation capacity FDI in manufacturing Source: Krueger (2011)
Source: Krueger (2011)
Source: Krueger (2011)

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Implemented by “Regional shifts from developed to emerging countries continued in wind and solar technologies,
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
Source: © BWE/Tim Riediger
Page 14
Implemented by
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

Vietnam leads to reduced investment costs for transmission • Commissioning times for new wind parks are
• Commissioning times for new wind parks are amongst the quickest in the world
• Commissioning times for new wind parks are
amongst the quickest in the world

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Implemented by
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 10 th year after graduation

Center for Vocational Training in Wind Power celebrate their 10 t h year after graduation 15/05/2015
Center for Vocational Training in Wind Power celebrate their 10 t h year after graduation 15/05/2015

15/05/2015

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Implemented by
Implemented by
Vision 2030 – a vibrant industry • Local banks offer attractive conditions for financing wind
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 10 th
year after graduation

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Implemented by Thank you for your attention Peter Cattelaens Technical Advisor GIZ Up-Scaling of Wind
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
Page 18
Implemented by Ministry of Industry and Trade General Directorate of Energy Policy design A comprehensive
Implemented by
Ministry of Industry and Trade
General Directorate of Energy
Policy design
A comprehensive framework for wind power
Page 1
Implemented by
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 Nam’s potential

As a result: Viet Nam is not on track to reach its RE targets

short of Viet Nam’s potential  As a result: Viet Nam is not on track to

15/05/2015

Page 2

Implemented by
Implemented by

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)

unclear - Power Development Plan (PDP) continues to focus heavily on fossil fuels (notably, coal) 15/05/2015

15/05/2015

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Implemented by
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 Nam’s longer term RE target of over 6.000MW of wind by 2030

and momentum required to achieve Viet Nam’s longer term RE target of over 6.000MW of wind

15/05/2015

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Implemented by
Implemented by

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
- Long-term contracts or PPAs
- Independent dispute resolution mechanism

15/05/2015

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Implemented by
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
• Most countries are opting for the latter: IPPs

15/05/2015

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Implemented by
Implemented by

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

for institutional structures to evolve along with the evolution of the new electricity market structure 15/05/2015

15/05/2015

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Implemented by
Implemented by

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
• The goal is to create an attractive regulatory and policy
environment

15/05/2015

Page 8

Implemented by Source: E3 Analytics 2014, EIA 2013
Implemented by
Source: E3 Analytics 2014, EIA 2013

15/05/2015

Page 9

Implemented by
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

• Often highly reliant on legal and regulatory frameworks, and therefore, on policy stability 15/05/2015 Page

15/05/2015

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Implemented by
Implemented by

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.)

(e.g. long term PPAs, binding RE targets, priority dispatch, inflation coverage, interconnection, etc.) 15/05/2015 Page 11

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Implemented by Lower cost of capital means lower LCOE
Implemented by
Lower cost of capital means lower LCOE
Source: UNDP 2013, Derisking RE Investment
Source: UNDP 2013, Derisking RE Investment

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Implemented by Risks Description & Examples Economic Risk Risk that economic factors beyond the control
Implemented by
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 gov’t, 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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Implemented by
Implemented by

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

the changes required are relatively small  What is required is an evolutionary approach 15/05/2015 Page

15/05/2015

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Implemented by
Implemented by

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

and under what terms) 4. Streamline RE-related administrative procedures under one agency, or entity 15/05/2015 Page

15/05/2015

Page 15

Implemented by
Implemented by

Thank you for your attention!

Toby D. Couture

Founder & Director of E3 Analytics

www.e3analytics.eu

by Thank you for your attention! Toby D. Couture Founder & Director of E3 Analytics www.e3analytics.eu
Page 16
Page 16
Implemented by Ministry of Industry and Trade General Directorate of Energy Policy design A comprehensive
Implemented by
Ministry of Industry and Trade
General Directorate of Energy
Policy design
A comprehensive framework for wind power
Page 1
Implemented by
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

and under what terms) 4. Streamline RE-related administrative procedures under one agency, or entity 15/05/2015 Page

15/05/2015

Page 2

Implemented by
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

(e.g. every 3 years) of the policy and regulatory framework to provide a clear timeframe for

15/05/2015

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Implemented by
Implemented by

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

the government 4. Clarify responsibilities 5. Build capacities amongst institutions 15/05/2015 Page 4

15/05/2015

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Implemented by
Implemented by

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

Implementation:

Governmental agency

Escrow account

Trust fund

Tax ODA Tariff FiT paying agency Wind farm operator
Tax
ODA
Tariff
FiT paying agency
Wind farm operator
• May reside with EVN, ERAV, etc.
• May reside with EVN, ERAV, etc.

15/05/2015

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Implemented by
Implemented by

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.

local consulting and engineering capacity and logistics 7. Integrate tax-break opportunities to developers and

Integrate tax-break opportunities to developers and manufacturers etc.

15/05/2015

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Implemented by
Implemented by

Open Discussion

Implemented by Open Discussion 15/05/2015 Page 7

15/05/2015

Page 7
Page 7
Implemented by
Implemented by

Thank you for your attention!!

Toby D. Couture Founder & Director of E3 Analytics

www.e3analytics.eu

Dr. Dominik Dersch Managing Director Matobis AG Dominik.Dersch@matobis.de

Analytics www.e3analytics.eu Dr. Dominik Dersch Managing Director Matobis AG Dominik.Dersch@matobis.de 15/05/2015 Page 8

15/05/2015

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Implemented by Ministry of Industry and Trade General Directorate of Energy Monitoring Overall costs and
Implemented by
Ministry of Industry and Trade
General Directorate of Energy
Monitoring
Overall costs and geographic distribution of the deployment of wind power
Page 1
Implemented by
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)

(South Africa) • Implementing and communicating adjustments to the policy (UK, Ontario, Spain) 15/05/2015 Page 2

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Implemented by

Monitoring Wind Power Development

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,
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

15/05/2015

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Implemented by
Implemented by

Monitoring Wind Power Development

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

geographic dispersion: this is required to avoid regional “hot spots” and ease grid integration 15/05/2015 Page

15/05/2015

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Implemented by
Implemented by

Monitoring Wind Power Development

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.

on the market: electricity rates, job creation, avoided fossil fuel imports, GHG reductions, etc. 15/05/2015 Page

15/05/2015

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Implemented by

Monitoring Wind Power Development

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

See: Kreycik, C., Couture, T., Cory, K., (2011). Innovative FIT Designs that Limit Policy 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

15/05/2015

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Implemented by
Implemented by

Monitoring Wind Power Development

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

See: Kreycik, C., Couture, T., Cory, K., (2011). Innovative FIT Designs that Limit Policy 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

15/05/2015

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Implemented by

Ensuring Balanced Geographic Dispersion

Two primary approaches:

1.

Tariff-based approaches

a. Germany

b. France

c. Denmark

2.

Regulatory approaches

a. Cape Verde

b. Ontario

c. South Africa
c. South Africa

15/05/2015

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Implemented by

Tariff-based Approaches

Mostly applied for wind energy (Germany, France, Switzerland, Denmark, and China) but also for solar (France and China)

Primary Reasons:

but also for solar (France and China) • Primary Reasons: • Reduce accumulation of wind power

• 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)

fair compensation for projects across regions (avoiding “excess profits” in the windiest regions) 15/05/2015 Page 9

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Implemented by
Implemented by

1a. Germany’s 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

wind projects are benchmarked against this reference yield Source: Couture et al. 2010:
Source: Couture et al. 2010: http://www.nrel.gov/docs/fy10osti/44849.pdf See also:
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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Implemented by
Implemented by

1a. Germany’s Reference Turbine Model

- 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)

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

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