Slow policy issuance may make offshore wind power investors leave Vietnam: global wind energy council
Vietnam is in a position to attract offshore wind power investments, but failures to timely provide supporting policy can turn investors and suppliers away, the Global Wind Energy Council (GWEC) said.
In its newly-released “Global Offshore Wind Report 2023,” the GWEC clarified no “real” offshore wind project has been built in Vietnam as all projects are nearshore (intertidal) ones. “Real” offshore wind projects are expected to be built from 2028, the council added.
The GWEC reviewed that Vietnam had a successful year for the wind industry in 2021, with nearly 4 GW of projects receiving their commercial operations date (COD) licenses. But then 2022 recorded no projects connected to the grid because the government did not release any follow-up policy for the industry. As a result, many projects, which have already finished installation, missed the feed-in-tariff (FiT) deadlines, and not connected to the grid, are categorized as “transitional projects.”
In January, the Ministry of Industry and Trade issued the purchase price frame for such "transitional projects."
The government approved the latest national power development plan VIII (PDP VIII) in May, featuring 21.8 GW of onshore wind power. This ambitious plan is achievable, the GWEC affirmed, thanks to 4 GW of already-built projects and 4 GW of “transitional” projects in the process of power purchase agreements (PPA) negotiation with state utility Vietnam Electricity (EVN).
The country will need to issue a new regulatory framework to attract developers for the remaining 13.8 GW, also part of the country’s commitment to meet net-zero emission target 2050, it noted.
The GWEC pointed out challenges for project development. Developing the legal framework will take at least two-three years, while a project will require six-eight years for full development from gaining permits to construction. This could result in Vietnam missing its 2030 target of 6 GW of offshore wind power. The GWEC suggested Vietnam apply some forms of fast-track mechanisms for first projects to kickstart the sector, as the government has already signaled its intention to launch pilot scheme to start projects.
Another challenge is the global offshore wind supply chain is constrained by increasing demand and high prices for key components. However, an advantage of Vietnam is that the oil-gas industry can quickly transition to offshore wind, giving Vietnam first-mover advantages, the council noted.
The GWEC emphasized major wind energy developers have been facing profitability crunch in recent years, causing them to retrench and withdraw from smaller or slower-moving markets. An example is Denmark’s Orsted withdrawing from Vietnam, Vattenfall Boreas projects in the UK, and the U.S. Avangrid development.
Previewing the Asia-Pacific region, the GWEC highlighted the region’s offshore wind power can add a capacity of 186 GW between 2023 and 2032, of which Vietnam accounts for 4%.
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