1MW Wind Power Investment in Vietnam: Costs and Opportunities

The investment cost for a 1MW wind power project in Vietnam is about 2 million USD for onshore wind power, with major costs for wind turbines and infrastructure construction.

Cost of Equipment and Wind Turbines

The cost of equipment, particularly wind turbines, accounts for the majority of the 1MW wind power investment in Vietnam, about 60-70% of the total cost. Turbines are typically imported from developed countries like Denmark, Germany, or China, where there is advanced technology in wind turbine manufacturing.

When investing in a wind power system, the cost of equipment and wind turbines is a crucial factor for every business to carefully consider. Commercial wind turbines with capacities of 2-3 MW range from 2-4 million USD per turbine, equating to about 1.3 million USD for each MW capacity. For large projects, offshore turbines with capacities up to 16-18 MW, although more costly, help reduce the number of turbines needed.

Similarly, household wind turbines with capacities from 1kW to 10kW have reference price lists in the Vietnamese market as follows:

• 400W – 8,000,000 VND
• 1kW – 32,000,000 VND
• 2kW – 46,000,000 VND
• 3kW – 76,000,000 VND
• 5kW – 130,000,000 VND
• 10kW – 198,000,000 VND

The installation cost of turbines largely depends on the system size, tower height, and geographic location. The larger the turbine, the higher the installation cost. Household wind turbines typically have installation costs ranging from several thousand to tens of thousands of dollars.

Wind turbine maintenance is also a crucial factor. For commercial turbines, annual maintenance costs range from 42,000 to 48,000 USD, equivalent to 1-2 US cents per kWh of generated energy. However, household turbines with durable designs and corrosion-resistant materials often help minimize maintenance costs.

The total cost determinants not only lie in size and installation location but also in the technology used. Advanced technology such as efficient blade designs and modern generator systems can enhance performance and reduce maintenance costs. Turbines utilizing fiberglass blades and rust-resistant steel casings also contribute to the longevity of the equipment.

Household wind turbines with capacities from 5-15 kW have the potential to provide part or all of the electricity supply for a household. However, for effective operation, wind speed needs to reach a minimum of 4 m/s, and efficiency increases with higher wind speeds; for example, a wind speed of 7 m/s can generate about 80 watts of electricity.

Building Infrastructure and Installation in Wind Power

Building infrastructure includes activities from constructing electric transmission lines, electrical grids, access roads, to substations, contributing a significant part to the 1MW wind power investment in Vietnam. These are technically demanding tasks requiring substantial investment costs.

The development of a wind power project not only requires coordination between various technical components but also compliance with technical and legal requirements. Starting from terrain surveys and geotechnical assessments, these help establish a solid foundation for constructing turbine foundations. Next comes the detailed design phase of the foundation to ensure load-bearing capacity and durability of the turbine.

Infrastructure for wind power projects needs to be meticulously prepared from geotechnical surveys that help determine the optimal location for turbines, transformers, and substations according to regional wind maps. In the wind power project development process, this work is essential to ensure stability and operational efficiency.

Next is the foundation design, which includes factors such as size, material, and dynamic forces on the wind turbine. Particularly, the foundation needs to be maintained for at least two weeks before erecting the tower to ensure the concrete reaches the necessary stability.

The process of installing wind turbines is equally complex, requiring large cranes to erect each part of the tower. After the tower is complete, blades, generators, and auxiliary systems are constructed and connected coherently.

In terms of technical and legal requirements, a wind power project cannot lack wind measurement reports in the area and detailed project documentation. It must ensure that the system can connect to the electrical grid stably through the transmission system, ensuring not only transmission but also the grid’s absorption capability.

Finally, the supervision, trial operation, and maintenance stage is essential to verify performance before the project is commercially operational. Regular maintenance activities are a prerequisite to maintaining the lifespan and performance of the wind power system.

Offshore and Onshore Wind Power: Cost Comparison

Offshore wind power has much higher investment costs than onshore wind power due to more complex construction conditions, reaching 4-5 million USD/MW. The 1MW wind power investment cost in Vietnam is also significantly affected by location and construction conditions.

In the context of developing renewable energy, choosing between offshore wind power and onshore wind power becomes very important for investors and technical management. Onshore wind power currently outperforms in installation costs thanks to 20% lower costs compared to offshore. This advantage comes from leveraging existing infrastructure and less complex installation techniques.

Installation and Maintenance Costs

• Installation costs: Onshore wind power leverages existing transmission infrastructure, significantly reducing the cost of building new lines and substations. In contrast, offshore wind power requires investment in undersea transmission systems and high safety technology, leading to significantly higher investment costs.
• Maintenance costs: Another advantage of onshore wind power is lower maintenance costs due to favorable environmental and geographical conditions. Conversely, offshore wind power requires more complex and expensive maintenance, with annual maintenance costs possibly ranging from 67-118 USD/kW.

These strengths reflect the financial benefits of onshore wind power. In the marine environment, offshore wind power construction requires highly specialized labor and construction techniques and demands high operating costs, evidently affecting the sustainable development potential of offshore projects.

Development Potential and Future Trends

Onshore wind power requires wide land space and locations near sparsely populated areas, but offshore wind power takes advantage of the sea space more optimally with stronger wind speeds, enhancing electricity production efficiency. However, one noteworthy point is that offshore wind power costs are currently decreasing rapidly, with a reduction of up to 32% in 2019. It is predicted that by 2038, these costs could compete with or be lower than fossil energy costs, narrowing the cost gap with onshore wind power.

In conclusion, considering energy comparisons between offshore and onshore wind power needs to consider not only costs but also long-term benefits and feasibility in the context of sustainable development.

FIT Pricing Mechanism for Wind Power in Vietnam

Vietnam applies an attractive FIT pricing mechanism for wind power: 8.5 US cents/kWh for onshore projects and 9.8 US cents/kWh for offshore projects, according to Decision 39. This creates a major incentive for investors in the renewable energy sector.

The FIT pricing mechanism for wind power in Vietnam was introduced to strongly encourage investment in renewable energy. This mechanism establishes a fixed electricity purchasing price, ensuring financial feasibility for wind energy projects.

According to Decision 37/2011/QD-TTg, the initial FIT price for wind power was 7.8 US cents/kWh, excluding VAT, laying the foundation to attract investors to the new energy market [1]. With adjustments from Decision 39/2018/QD-TTg, wind power projects with commercial operation dates before 01/11/2021 are applied a new electricity purchase price – 8.5 US cents/kWh for onshore wind power and 9.8 US cents/kWh for offshore wind power. These changes reflect higher investment and operational costs, especially in offshore projects [1][2][3].

Projects not operational by the above deadline must apply the new FIT price according to Decision 21/QD-BCT January 2023, with prices reduced to 6.8 US cents/kWh for onshore wind power and 7.8 US cents/kWh for offshore wind power. The goal of this adjustment is better financial management of the program and preparation for a more competitive pricing mechanism in the future.

The stable electricity price over 20 years, paid at the delivery point, shows long-term commitment and attracts investment, while being converted to VND at the current exchange rate, excluding VAT [1][4]. The Ministry of Industry and Trade states that this mechanism is based on international experience, aiming to promote renewable energy development in the context of higher costs from traditional electricity sources [4].

The FIT mechanism has made significant strides in increasing wind power capacity in Vietnam, particularly after the 2018 adjustment, proving effective in encouraging investment in the wind power sector.

Improving the FIT pricing mechanism for wind power in Vietnam not only supports the sustainable development of renewable energy but also opens a more competitive path for the energy market in the future [1][2][3][4].

Time and Maintenance Costs in Wind Power

Maintenance costs for a wind turbine in Vietnam range from 42,000 to 48,000 USD per year. Project implementation time, including licensing and measurement phases, directly influences investment effectiveness.

In the wind power industry, maintenance costs and time are key roles in ensuring the performance of wind turbine systems. A significant part of total energy production costs – Levelized Cost of Energy (LCOE) – comes from operation and maintenance activities (O&M costs). Maintenance costs can range from 11% to 25% of these total costs. For a standard wind turbine with a capacity of 2 to 3 MW, maintenance costs are typically around 42,000 – 48,000 USD annually.

These costs depend on various factors such as turbine size, equipment used, system complexity, and geographic location. Larger turbines often incur higher costs. However, maintaining a regular maintenance schedule and having a clear plan (Scheduled maintenance) helps minimize undesirable downtimes (Downtime reduction) and avoids major repair costs.

During maintenance, basic activities include general inspection, lubricant oil replacement, tightening of mechanical connections, blade condition assessment, and addressing minor issues immediately to prevent more severe damage. In particular, recovery maintenance methods usually only suit short-term cost savings goals but can lead to greater long-term expense losses if there is no regular maintenance plan.

Regular maintenance not only extends the lifespan of equipment but also reduces the risk of serious incidents. Conversely, establishing a specific cost framework for wind power plant operation and maintenance is regulated based on maintenance cost ratios relative to investment value and standard installed capacity, typically 50MW under Vietnamese legal standards. This ensures that wind turbine operating costs are sustainably controlled over time.

In summary, maintaining a well-planned and rigorous wind power maintenance process not only optimizes performance and safety but also serves as a strategic factor in the overall energy cost management and economic effectiveness of the project.

Investing in wind power projects in Vietnam brings numerous economic and environmental benefits, with favorable support conditions such as an attractive FIT pricing mechanism and great development potential. Investment in infrastructure and wind turbines is the determinant of the project’s success.

Contact QuangAnhcons now through Hotline: +84 9 1975 8191 for detailed consultation on investing and implementing wind power projects in Vietnam.

QuangAnhcons provides comprehensive services from consultancy, design to construction of wind power projects, ensuring quality and investment efficiency according to international standards.