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The New Wind Energy Market in Vietnam

From the Perspective of a Turbine Manufacturer

© Copyright ENERCON GmbH. All rights reserved. Steffen Brauns, Deputy Regional Sales Manager 2

1 ENERCON GmbH

2 New Markets and South-East Asia Experiences

3 Wind power in Vietnam

Agenda


ENERCON – overview

• Headquarter Aurich, Germany

• Employees > 17,000

• Production facilities (national) Aurich, Emden, Magdeburg, Haren

• Production facilities (international) Sweden, Brazil, Turkey, Portugal, Canada,

Austria, France

• Production area 870,000 m² (as of 2013)

• Sales offices 8 domestic; 24 international

• Service stations more than 300 worldwide

• Logistics - E-Ship 1 (transport ship)

- e.g.o.o. Eisenbahngesellschaft Ostfriesland-Oldenburg mbH

- Mobile cranes up to 1,600 t

- Hundreds of service vehicles


Market share by installed capacity worldwide, 2014 in %

ENERCON is the fifth largest manufacturer of wind turbines worldwide.

source: Navigant Research (03/2015): “World Wind Energy Market Update 2015”

Vestas 12.3%

Siemens 9.9%

GE Wind 9.1%

Goldwind 9.0%

ENERCON 7.8%

Suzlon Group 5.8%

United Power 5.1%

Gamesa 4.7%

Mingyang 4.4%

Envision 3.8%

Others 28.2%


Market share by installed capacity in Europe, 2014 in %

Also on an European level, ENERCON is among the leading manufacturers.


ENERCON 28.7%

Vestas 25.8%

Siemens 16.4%

Suzlon Group 12.1%

Nordex 8.7%

GE Wind 4.7%

Gamesa 2.1%

Goldwind 0.4%

Acciona 0.4%

Others 0.4%


Market share by installed capacity worldwide, 2014 in %

ENERCON is the fifth largest manufacturer of wind turbines worldwide.


Vestas 12.3%

Siemens 9.9%

GE Wind 9.1%

Goldwind 9.0%

ENERCON 7.8%

Suzlon Group 5.8%

United Power 5.1%

Gamesa 4.7%

Mingyang 4.4%

Envision 3.8%

Others 28.2%


Installed power capacity over time

Over 22,220 ENERCON turbines produce more than 33,200 MW worldwide (as of December 2013).

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Installed power (Export)

Installed power (Germany)

Cumulative power


Global activities of ENERCON

ENERCON is active in an increasing number of emerging markets.


Agenda

1 ENRCON GmbH

2 New Markets and South-East Asia experiences



Enercon New Markets – Costa Rica and Uruguay

COSTA RICA

Enercon in Costa Rica since 2008, installed

72 turbines with 64.8 MW capacity.

URUGUAY

Enercon this year installing first 24 turbines

with 55.2 MW capacity this year.

Lessons learnt

• Important to have local teams to support the process and

make sure required scope is met. This will also alleviate

issues due to time and culture differences

• Larger wind farm layouts pays-off because of high crane

costs, - compared to single turbine installations

• Cost savings by using local workforce for road

construction, cabling, and foundation construction

• Service more expensive due to obstacles in custom

clearance and transportation time/costs of spare parts.

• Employee retention for service workers difficult due to

high level of training make them valuable on market

Permissions difficult to get, which have limited the number of new wind farms


Enercon Asia – Japan and Taiwan

JAPAN

• Conditions Good wind, 7-8 m/s,

• Potential capacity > 5,000 MW

• Feed-in-tariff Yes

Enercon in Japan since 1998, installed 250

turbines with 396,65 MW capacity. TAIWAN

• Conditions Strong wind (8-9 m/s)

• Potential capacity Around 1,600 MW

• Feed-in-tariff Yes

Enercon in Taiwan since 2001, installed

200 turbines with 416.5 MW capacity.

Japan and Taiwan had success with feed-in-tariff as investment tool – and have more than 6 GW installed


Agenda

1 ENERCON GmbH

2 New Markets and South-East Asia experiences



Vietnam - Situation

Wind maps and yield estimates show that Vietnam is one of the most interesting

countries in regard to wind in the region. Places for wind farms are mapped out,

and a pipeline of possible projects are ready – and have been so for quite a while.

More capacity is needed. Estimates for a tripling of the energy need within the

next 20 years makes energy generation a key issue in keeping the development

ongoing.

A political framework is being created, for example wind is included in the

Vietnamese governments Master Plan (PDP) and several incentives are available

for renewable energy generation.

The grid code is currently under development to accomodate a higher mix of

energy sources. This is important to ensure that the energy sources helps maintain

a stable power supply.


Vietnam - Challenges

Financing is not readily available for wind projects. There is still a lack of

investors that have been convinced on the profitability of wind in Vietnam. Two

main factors:

• Feed-in Tariff is currently too low when we compare with other countries

where Enercon is present, a higher FIT would make the wind power

development in Vietnam flourish.

There is a need for a higher FiT or a similar tariff system with long-term

plans, that can support the renewable energy generation.

• The business environment is still immature. Despite the step into WTO

and increasingly business focused legislation, it is still difficult to avoid

corruption which creates unecessary risks when conducting business.

A more detailed framework for wind / renewable energy projects

including clear legislation and transparent responsibilities could mitigate

this.


Vietnam – Prospects

• Urgent need for energy. Vietnam’s energy need is growing faster

than new capacity is created. Compared to conventional power

sources, wind parks are one of the fastest ways to add extra

power to a grid.

• Salary level is lower than our other Asian markets and there is an

available work force. This makes it financially interesting to let as

much as possible be locally done. It will create jobs in transport,

installation, and also for the service and maintenance.

• We can use locally produced towers which will keep down the

CapEx costs.

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Construction time in years


Vietnam – Why a Feed-in Tariff (FIT)

• Feed-In Tariff is more efficient. It costs less compared to

quota systems, but increases the installed capacity faster.

• Politics can control the promotion of the development by

rising or reducing the tariffs for each technology.

• FIT with long lifetime will give investments lower interest

rates, because of the guaranteed income of the operator.

• Even during the economic crisis, the German renewable

industry sector grew and so did the installed capacity.

Job creation Germany in renewable energy


New representative office:

• Close to site and clients in same timezone

• Easier to follow inside knowledge on law changes

• Access to companies for logistics and engineering companies

• Int’l team with experience in Wind and Vietnamese market

Vietnam – Enercon presense in Vietnam

Representative office

Centec Tower

4/F., 72 -74 Nguyen Thi Minh

Khai St.,Dist 3, HCMC 1 • Representative office in HCMC opened this May

2 • Project team will join with first project

3 • Service offices will be established when wind farm opens


ENERCON has over 5,500 service employees worldwide

• Service structure overview:

Germany Europe World

13 companies 26 companies 9 companies

131 service stations 170 service stations 25 service stations

Thank you for the attention!

ENERCON GmbH | Dreekamp 5 | D-26605 Aurich

Telefon: +49 4941 927-0 | Fax: +49 4941 927-109

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