Asia > South-Eastern Asia > Vietnam > Investing in Geothermal Power Project in Vietnam

Vietnam: Investing in Geothermal Power Project in Vietnam

2015/02/20

Introduction

The geothermal energy in Vietnam has great potential, up to date, the researched have showed that Vietnam has additional than 200 sources of hot water at temperatures of 40-100 degrees centigrade that provides this Southeast Asian country necessary basis for developing prospective geothermal energy projects. However the geothermal energy industry of Vietnam is still under-developed, and mostly remains at the researching stage.

Huge potential but largely untapped

Compared with other south-east Asian nations like Indonesia or the Philippines, Vietnam has limited potential for geothermal energy and Vietnam has so far not been on the map for geothermal development. However, geothermal energy has potential throughout Vietnam and the this energy sources particularly focus in Phu Tho, Quang Binh and Quang Tri, etc… Vietnam is estimated to have a geothermal potential of up to 400 MW power generation.

While the geothermal energy resources are being entirely used in a lot of nations, Vietnam still lacks the science and technology resources to perform an entire assessment on the potential of this energy.

Until presently, only leading US geothermal group, Ormat Technologies who is widely known having been actively spending large efforts in research and coordination with the national bodies in Vietnam to plan for the geothermal energy plant projects. Ormat has applied for a license to build five geothermal energy plants in Le Thuy (Quang Binh), Mo Duc, Nghia Thang (Quang Ngai), Hoi Van (Binh Dinh), and Tu Bong (Khanh Hoa) with the proposed capacity of these plants of 150-200MW and in April 2012, it is reported that Vietnam Geothermal energy Corp. has chosen Ormat as the major technical partner for two projects in Mo Duck and Tu Nghia district, Quang Ngai province with a designed capacity of each 18.7 MW.

In 2013, Quang Tri Province granted investment certificate and construction permit for a geothermal energy plant with a capacity of 25MW at Dakrong and according to press, the project’s price tag has been stated as US$46.3 million. This will be the initial geothermal energy plant project and a stepping stone for next development of geothermal energy projects in Vietnam

No specific regulatory framework for geothermal energy projects

Even though Vietnam has potentials in geothermal energy industry but the increase of this industry still remains limited due to a lot of reasons, in which the lack of specific regulatory framework for renewable energy plays a significant part. At present, the major regulatory frameworks on geothermal energy are the laws governing renewable energy, e.g the Law on Electricity and Law on the Economical and Effective Use of Energy and their guiding documents. In term of the feed-in tariff, until presently, Vietnam has only promulgated one decision No. 31/2011/QD-TTG regulate on the mechanism supporting the development of wind power projects, however this supporting tariff is still much lower than what the investors expect .

As well with the lack of legal framework, pricing mechanism in Vietnam’ electricity market is as well a large hindrance for the foreign firms investing in the geothermal energy projects. Currently, the Electricity of Vietnam (EVN) is the sole off-taker and buys electricity at very low prices, and the competitiveness in this market is not from presently on realizable.

Conclusion

Even though having not from presently on had specific legal framework for geothermal project development and the hindrances in the electricity market, with the largely untapped remain of geothermal resources, Vietnam has necessary ground for developing power investment projects.

Recently, Vietnam has issued a lot of regulations and policies for facilitating and promoting the investment into the renewable energy sector, particularly, under the national master plan for power development, Vietnam prioritize the development of renewable energy sources for electricity production, raising the rate of electricity produced from these energy sources.

Moreover, the investment regulatory framework of Vietnam is presently in process of amendment and development. With current general rules on investment , inclunding power projects, it is believed that the investors who is interested in geothermal energy projects, could succeed in accessing into this sector in Vietnam.

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