Difficulties in securing capital, competence of investors and operating conditions in the competitive power market pose bigger challenges to small hydropower projects, investors said at a meeting in Hanoi on Thursday.

Nguyen Duc Dat of the Vietnam Energy Association said there are now over 200 medium and small hydropower projects and 30 large projects nationwide with a total capacity of nearly 10,000 MW. Around 40-50% of these projects have started generation.

Small and medium hydropower plants last year generated more than 7.8 billion kWh, accounting for one-fifth of the total hydropower output, or 7% of the entire system’s output.

However, given the massive development of small hydropower projects, the Government and the Ministry of Industry and Trade have adopted multiple policies and measures to supervise rampant hydropower investment and licensing. As a result, several provinces like Quang Nam and Cao Bang have seen dozens of projects licensed by the provincial governments excluded from the country’s master plan.

As for the operational projects, investors bemoan they are facing numerous difficulties.

Le Truong Thuy, chairman and director of the Hoa Binh-based Mai Chau Hydropower Co., said the greatest difficulty of small plants now is the competition to sell power. Small hydropower plants seem to be underdogs with the new regulations of the trade ministry, said Thuy at a forum on small hydropower development co-held by the Vietnam Chamber of Commerce and Industry (VCCI) and Dien Dan Doanh Nghiep newspaper in Hanoi on Thursday.

He analyzed when the competitive power market officially started operation on July 1, the Electricity Regulatory Authority of Vietnam issued the list comprising 29 power plants allowed to directly join the market, 26 plants to indirectly join it, 18 plants to have provisional indirect joining, together with dozens of others on the waiting list.

However, all plants must have a 30 MW capacity, meaning there is no room for smaller hydropower plants.

As for the unfinished power plants, besides troubles with outputs, investors are struggling with surging input costs and tougher borrowing conditions.

Dat said the investment efficiency of small and medium hydropower projects is not as high as that of bigger ones.

Statistics of 25 large hydropower plants show that they invest some VND20-25 billion in one megawatt of electricity, while small plants spend more, at VND25-30 billion or above.

Vietnam Electricity Group (EVN) is buying power from small hydropower plants at low prices, from VND700 to VND900 per kWh. Moreover, small plants are mired in financial distress.

Ha Sy Dinh, deputy general director of Son Vu Energy Development JSC, owner of the 32MW Muong Hum hydropower project, said a project below 30MW costs some VND1 trillion and the investor must have 30% of the reciprocal capital and collateral to take out bank loans. “This is a tough requirement for small and medium enterprises given the current tough times,” said Dinh.