Catch 22: Covid and FIT deadline put $7bn Vietnam wind plans in peril, industry warns
4GW of projects could miss 1 November 2021 support cut-off date amid construction delays due to impacts of the pandemic
A paradox combination of Covid-19 impacts and a looming expiry of feed-in tariffs (FITs) are putting a massive volume of wind power projects at risk that represent investments of $6.7bn, the Global Wind Energy Council (GWEC) has warned.
Developers are rushing to get the projects operational before a 1 November 2021 cut-off date for FITs, but as the pandemic has caused significant delays for construction due to supply chain bottlenecks, limited worker mobility and other issues, 4GW of projects are likely to miss the deadline.
Without a Covid-19 relief measure to extend the FIT for wind projects by at least six months, these projects will become collateral damage of the pandemic, which could translate into delayed progress towards Vietnam’s renewables targets and a bust cycle in the wind sector that may take years to recover, GWEC describes what appears to be a Catch-22 situation.
“Vietnam is one of the most promising wind markets in South East Asia. But this is the make-or-break moment for onshore wind, which reached more than 500MW by end of 2020,” said Mark Hutchinson, chair of GWEC’s South East Asia taskforce.
“The Government must introduce a FIT time postponement that will allow these 4GW of otherwise viable and economic wind projects to complete on a reasonable deadline.”
Inaction by the government could put some 21,000 jobs at risk that could be created from these wind projects, GWEC added.
The policies triggered an enormous investment pipeline of more than 140 wind projects signing power purchase agreements (PPAs) with the country's state-owned grid operator Electivity Vietnam (as of August 2021).
According to a GWEC survey, more than 70% of wind projects which had submitted grid connection requests by August 2, 2021, will not achieve commercial operations by the deadline, risking projects to be left outside the FIT scheme and become stranded assets.
Vietnam through strict measures came relatively unscathed through the first waves of the novel coronavirus last year, and even stood out as an example of effective pandemic control. But the South-East Asian country amid low vaccination levels has been hit hard by the Delta variant, with 322,133 cases in the past 28 days and more than 9,400 deaths in that period, according to data by the Johns Hopkins University.
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