Biomass: Viet Nam sets clear signal for renewable energy development

As an agricultural country, Vietnam has great potential for for the use of biomass. The increase in the feed-in tariff is intended to promote the energetic utilisation of bagasse from sugar cane production.

As an agricultural country, Viet Nam has a great potential for biomass, including woody residues, rice husks, coffee husks, rice straw and bagasse from the sugar cane production. However, only 350 gigawatt-hours (GWh) were produced from bagasse in 2019. This is nevertheless about to change.

After intensive efforts from the Vietnamese Government and with support from the International Climate Initiative (IKI) GIZ project “Climate Protection through Sustainable Bioenergy Markets in Viet Nam (BEM)”, the revision of the feed-in tariff (FIT) for biomass power was approved in early March 2020. Prime Minister Nguyen Xuan Phuc signed the agreement on March 5, 2020 to increase the FIT from 5.8 US cents/kWh to 7.03 US cents/kWh for co-generation (electricity and heat production) and 8.47 US cents/kWh for electricity only.

Feed-in tariffs as an incentive for sustainable use of biomass

“This is a very positive move for biomass energy development in Viet Nam. The revised feed-in tariff is attractive to investors as well as an incentive for sugar-producing companies to expand their bagasse-fired co-generation power projects,” said Tobias Cossen, Director of the project. “With the project’s support to our political partner, the Ministry of Industry and Trade, we aim to improve the preconditions for a sustainable use of biomass in order to enable bankable investment projects for electricity and heat generation.”

Working closely with the Vietnamese Ministry, GIZ implements activities such as facilitating and supporting the adjustment of the regulatory framework on planning and licensing of biomass energy projects; improving the private sector’s and financial institutions’ capacities and facilitating technology cooperation and networks between Vietnamese and international partners.

The BEM project has and will continue to support amongst others the improvement of the legal and regulatory framework for bioenergy such as the FIT, until March 2023 and therewith supporting Viet Nam´s ambitions to improve the development of renewable energies.