In its latest document, the Global Wind Energy Council (GWEC) said that onshore wind power projects in Vietnam cannot avoid being delayed due to social distancing measures applied to control the Covid-19 epidemic.
Firstly, Covid-19 pandemic limits traveling and stops local workers from going to work.
Since July 2021, extremely strict social distancing measures have been applied in 19 southern provinces of Vietnam, which have directly affected nearly 2,800MW of wind power projects that are in the process of being deployed throughout this region.
The actual figure for wind power capacity affected by strict epidemic prevention measures is much larger as the authorities of other provinces including Lam Dong, Binh Thuan, Ninh Thuan, and Quang Binh also decided to apply Directive 16. Thus, most localities with large-scale onshore wind power projects were in a period of strict social distancing and restrictions on intra-provincial and/or inter-provincial travel.
So far, drastic epidemic prevention and control measures are still being carried out, causing many difficulties in labor and travelling.
Secondly, foreign experts have also been unable to work due to such strict social distancing measures.
Some wind power development companies have reported that after their foreign experts complete isolation as the prescribed time, their visas are only valid for 1-2 months, which means there is not enough time to finish the work assigned.
In recent times, some wind power companies have also said that foreign experts and technical workers have refused to move to work on site to avoid troubles caused by administrative procedures, and to avoid contracting Covid-19 while Vietnam is experiencing a serious outbreak.
Finally, disruptions in production and supply of orders have contributed to slowing the progress of wind power projects.
According to reports from many enterprises, Vietnam’s wind power industry has encountered disruption in supply chain for some important construction materials including iron, steel, raw materials, sand, crushed stone and cement.
Shipments of wind turbines – indispensable and often imported equipment – have also been delayed because foreign manufacturers have reduced capacity.
Delays in imports of equipment due to disruptions in international transport, and delays in customs clearance, as well as disruptions in inland transport, have caused delays in the deployment of wind power projects.
According to GWEC, by the end of August 2021, it was estimated that there had been up to 4,000MW of onshore wind power in Vietnam, equivalent to more than 70% of the installed capacity of projects registered for grid connection, which may not be operated before November 2021. This means they cannot enjoy the fixed electricity price (FIT) mechanism.
According to professional calculations based on international and Vietnamese averages, the financial risk of the above onshore projects is equivalent to 6.7 billion USD. This includes 6.51 billion USD in fixed asset costs and 151 million USD in operating costs over the 25-year lifecycle of wind power projects.
Not only will investment be affected, the domestic job market will also suffer heavy losses if onshore wind power projects do not come into operation.
It is estimated that during the 25-year project cycle, 4,000MW of onshore wind power can create nearly 21,000 jobs, most of which are for domestic workers, distributed across the value chain, including development projects, transportation, construction, operation and maintenance.
In addition, if such difficulties faced by the wind power industry are not resolved, GWEC believes that it will be inevitable that investors and project developers will gradually withdraw from the Vietnamese market.
Facing risks and not having a clear direction in the near future, if the necessary support is not received, project developers will tend to re-evaluate the feasibility of the project and compare economic benefits with immediate risks.
The unpredictable factors of the pandemic, along with an unfavorable investment environment, will increase cause difficulties to the wind power industry and reduce investor confidence.