Vietnamese government introduces new feed-in tariff system (FIT system)

The “Revised 7th National Electricity Master Plan (Revised PDP7)” decided by the Prime Minister of Vietnam in 2016 stipulates a policy of actively promoting renewable energy development toward 2030, and the renewable energy power source by 2030. There is a plan to increase the composition ratio to 21.0%, which is an increase of 13.8% from 2018.

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The Vietnamese government has introduced various incentives to encourage investment in the renewable energy sector. In addition to corporate tax, import tax, tax exemption on land acquisition, and tax exemption, we have introduced a feed-in tariff system (FIT system) that obliges electric power companies to purchase all of their electricity from power generation companies. In recent years, the FIT prices for wind power generation, biomass power generation, and solar power generation have been revised, attracting the attention of domestic and foreign investors.

Wind power has been significantly raised from the old FIT price by the 2018 Prime Minister’s decision (No.39 / 2018 / QD-TTg). The new FIT price is 9.8 cents / kWh for offshore wind and 8.5 cents / kWh for onshore wind.

For biomass power generation, the old FIT price for cogeneration was 5.8 cents / kWh, and the old FIT price for non-cogeneration was 7.4 to 7.6 cents / kWh, which differed depending on the region. However, due to the Prime Minister’s decision (No. 8/2020 / QD-TTg) in March 2020, 7.03 cents / kWh for cogeneration and 8.47 cents / kWh for non-cogeneration will be the new FIT from April 25. It will be applied as a price. The new FIT price will also apply to biomass power plants already in operation before March 5.

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Vietnam as a biomass resource powerhouse

Looking at this, biomass power generation, whose FIT price was significantly raised in March this year, will have significantly more investment opportunities than before.

According to the statistics of the Ministry of Commerce and Industry of Vietnam, the annual amount of biomass fuel that can be used in Vietnam as of 2015 is about 32 TWh in terms of power generation amount, and the amount of biomass fuel that can be used will continue to increase until 2035. It’s a prospect. According to the Ministry of Commerce and Industry, 38 TWh in 2025 and 41 TWh in 2035 will be generated annually.

The types of major biomass fuels in Vietnam were mentioned in the previous article, but looking at the breakdown as of 2015, forestry biomass fuels account for 65.2% (20.8TWh) of the total. In particular, the possibility of utilizing wood chips and wood fuel is very high. On the other hand, agricultural biomass fuel accounts for 34.8% (11.1TWh) of the total. Rice husks occur mainly in the Mekong Delta region, where rice cultivation is particularly active, and rice husks are also considered to be one of the promising biomass fuels.

Due to the significant increase in FIT price due to the new FIT price and the favorable conditions of abundant and diverse biomass fuels, biomass power generation will surely become the most noticeable field of renewable energy in Vietnam in 2020.

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