Vietnam Offshore Wind Power – Potential of novel energy sources and concerns

In the effort to combat climate change globally, to comply with the requirement of carbon neutrality, energy transition is a play a crucial role. Considering current international happenings, with the commitment of the Vietnamese Government at COP26, the process of replacing fossil fuels for energy production with more renewable and emission-restricted sources has made initial progress in Vietnam.

Potential for Offshore Wind Power (OWP) development  in Vietnam

Possess geographical advantages of having a coastline of more than 3400 kilometers, two large archipelagos of Hoang Sa and Truong Sa, as well as numerous islands and islets lies within the Exclusive Economic Zone, which form a good foundation for the exploitation and use of marine wind energy – especially in the generation of energy. According to the World Bank, the potential capacity of offshore wind power (OWP) in Vietnam is about 475 GW, with some research by other institutions, this number can reach above 900 GW, with particularly strong winds in the Central regions, South Central and a part of the North Coast.

With the above mentioned factors, with the purpsose to show the determination of Vietnamese Govermnment in energy transition, moving towards carbon neutrality by 2050, stated in the Draft National Power Development Plan for the period of 2021 – 2030 with a vision to 2050 (NPDP VIII), which is being reviewed and completed by the Ministry of Industry and Trade long with competent authorities for submission to the Government, the NPDP VIII has indicate the expectation to mobilize OWP capacity under the high-load operation plan from 2030 to 2050 and the national electricity demand as follows:

Current legal framework for OWP projects development:

Despite having a long coastline as an advantage, with good quality and steady wind,  the lack of experience as well as the complex nature of this project type in affected numerous aspects economically and social  , the feasibility of these projects has not yet been fully determined.

In recent times, the lack of a comprehensive legal framework and  existence of unclear points in the regulations for the approval of offshore surveying for project investment, have not only partly resulted in a lack of data to determine whether projects are feasible but also made it challenging for stakeholders to obtain licenses and selecton of investor. Presently, ministries are still quite cautious when it comes to legal corridors and mechanisms for OWP projects in Vietnam.

However, with the expectation of the draft  of December 2022 Decree amending a number of articles of Decree 11/2021/ND-CP (on assignment of certain sea areas to organizations and individuals for exploitation and use marine resources) and Decree 40/2016/ND-CP (detailing the implementation of certain articles of the law on resources and environment of the sea and islands), it is expected to be issued soon in 2023. This is considered an important milestone in the process of resolving difficulties during the project development – survey phases.

Initiating an OWP project:

In the current condition,  in addition to the immediate challenges, investors should concentrate on creating a roadmap for themselves to demonstrate their financial capability (guaranteed by financial institutions), technical capability, experience and reputation in both domestic and foreign markets. Furthermore, in demonstrates the commitment to carrying out the project by committing to the localization rate of the supply chain during the project’s implementation.

In addition to a strong and relevant portfolio, investors should also take note of the general procedures for beginning an OWP project:

• Preliminary assessment of the project area through national and other institutional Reference information from the National Electricity Development Plan, the Marine Spatial Plan and relevant specialized plans, along with recommendations of localities with potential for OWP;
• Apply for a survey permit, collect data, make an investment proposal (or a pre-feasibility study report), apply for the approval of investment guidelines, and obtain an investment certificate for project implementation.

Concerns in the development of OWP projects in Vietnam:

Referring to the advantages and disadvantages of the current situation, the concerns of parties in offshore wind power development includes but not limit to listed following:

* Regarding the Government:

• Necessary for establishing a framework for the growth of OWP. Moreover, the National Power Development Plan and the Maritime Spatial Planning are being finalized;
• Necessary to provide technical guidelines, processes and mechanisms to facilitate the execution of offshore wind power projects.

* Regarding Energy Sector Regulatory Authorities and associated corporations:

• It is essential to maintain the incentive mechanism and proper electricity purchase price from the Government for new energy projects in general and OWP in particular;
• Sustainable socio-economic development, the electricity selling price correlates with the rate of economic growth, as well as meeting the demand for electricity, energy security must be maintained;
• The load center is mainly located in the Northern and Southern Deltas, while the offshore wind power potential area is mostly located in the South-Central Sea region, where the wind blows strongest. Thus, it is important to create a synchronous transmission grid to obtain future renewable energy centers’ capabilities.

* Regarding investors:

• Investors should create a roadmap for themselves to demonstrate their capability and standing in both domestic and foreign markets, as well as clearly show their commitment to carrying out the project through commitments and start exploring the potential localization rate of the supply chain from this moment;
• Prepare the competitive bidding documents and ensure the project’s viability when the legal and policy framework is ready.

Based on the information and experience given during organised conferences, it is vital to acknowledge that even in industrialized countries, the energy transition and initiation phase of OWP projects development take time and require efficient coordination between relevant authorities and investors. Particularly in the beginning stages of development, the Government and state management agencies play an important role in making decisions regarding the nation’s overall socioeconomic development as well as focusing on long-term national energy security and guaranteeing the congruence of interests for all parties.

Given the aforementioned benefits and challenges, all parties must be patient at this time and do a good job of preparing for following phases.

With smore than 40 years of expertise and a dedicated team, The Power Engineering Consulting Joint Stock Company 3 (EVNPECC3) takes great pride in being the nation’s leading consulting firm in research and development, offering advisory services, and assisting investors in OWP project development.

Author: Nguyen Tuong Tuan – Master of Electrical Network and System

Editor: Le Minh Thuy – Bachelor of Environmentand Media Studies