“Seeking a Partner for an Offshore Wind Project”

A recent World Bank study reveals that Vietnam possesses the greatest wind power potential among four countries in the region (Cambodia, Laos, Thailand, and Vietnam). The study estimates that over 39% of Vietnam’s total area experiences average annual wind speeds greater than 6 m/s at a height of 65 m, equivalent to a capacity of 512 GW.

Numerous Obstacles

As the global energy transition is an inevitable trend, Vietnam has committed to achieving net-zero emissions by 2050. With large-scale domestic hydropower sources already exploited, there is a need to promote the development of renewable energy in Vietnam, including offshore wind power, in line with the growing global trend.

According to the Power Development Plan VIII approved by the Prime Minister, the capacity of offshore wind power to meet domestic electricity demand is expected to reach 6,000 MW by 2030 (accounting for approximately 4% of the country’s installed capacity). The orientation for 2050 aims for a capacity between 70,000 MW and 91,500 MW (accounting for 14.3% – 16%). Electricity production from offshore wind sources is estimated to reach 21 billion kWh by 2030 (4% of the country’s total electricity production) and about 258 – 343 billion kWh by 2050 (21% – 25%).

The plan is to vigorously develop offshore wind power in combination with other forms of renewable energy (solar power, onshore wind power, etc.) to produce new energy sources (green hydrogen, green ammonia, etc.) for domestic needs and export, ensuring national defense, energy security, and high economic efficiency.

However, according to the Ministry of Industry and Trade, there is currently no offshore wind power project that has been granted investment approval or assigned to an investor for implementation. Additionally, the implementation plan approved in Decision No. 262 dated April 1, 2024, determines that by 2030, the capacity of offshore wind power in the North will be 2,500 MW, 500 MW in the Central region, 2,000 MW in the South-Central region, and 1,000 MW in the South. The Power Development Plan VIII does not specify the number, capacity, and location of offshore wind power projects or the connection plan for this energy source.

Generally, offshore wind power is a new field for Vietnam, and there are challenges in implementing legal provisions for this type of energy, ranging from sea area allocation to potential research, planning, investor selection, and investment and construction.

Many experts believe that the investment rate for offshore wind power is substantial, approximately $2.5 – 3 billion/1,000 MW, and it takes 6-8 years from the start of the survey.

Given these challenges, Equinor, Norway’s largest state-owned energy group, confirmed at the end of August that it had canceled its plans to invest in Vietnam’s offshore wind power by closing its office in Hanoi. Previously, in 2023, Ørsted (Denmark) also announced the suspension of its plans to invest in Vietnam’s offshore wind power.

According to Dr. Nguyen Quoc Thap, Chairman of the Vietnam Oil and Gas Association, there are many obstacles and inconsistencies in the approval of investment policies and the selection of investors in the field of offshore wind power under the current legal management documents. The Bidding Law, Investment Law, and Land Law do not clearly and specifically define the competence of the levels of authority in approving investment policies for offshore wind power projects. There are no specific guidelines in legal documents regarding the procedures and processes for sea surveys, exploration, measurement, and allocation of sea areas for offshore wind power projects. There is also a lack of a price framework and mechanism for offshore wind power…

Need for Consensus

Therefore, the Ministry of Industry and Trade believes that the construction and issuance of a National Assembly resolution on piloting the development of offshore wind power could serve a dual purpose. Firstly, it would provide a basis for completing the legal provisions in this field, and secondly, it would create a premise for the development of offshore wind power, contributing to the goals set in the Power Development Plan VIII and the net-zero emission target.

“However, the issuance of the National Assembly resolution has not received the consensus of all ministries and agencies. As this is a significant issue, it is necessary to consider and report to the competent authority of the Party before the Government decides to construct and submit the resolution on piloting the development of offshore wind power to the National Assembly” – stated the Ministry of Industry and Trade.

When issuing the National Assembly resolution to allow the piloting of offshore wind power development, it is necessary to simultaneously summarize the relevant legal documents for amendment and supplementation. Regarding investor selection upon the issuance of the resolution, the Ministry of Industry and Trade leans towards the opinion of assigning state-owned economic groups to invest in the pilot project, with three options: PVN (PetroVietnam), EVN (Vietnam Electricity), and the Ministry of National Defense. However, all three options have their drawbacks, so the Ministry has not finalized its decision.

According to the Ministry of Industry and Trade, assigning PVN to invest in offshore wind power needs to be assessed for alignment with the Party’s orientation on the industry, business, and investment fields of PVN. Currently, the Party’s resolution does not permit PVN to invest outside its industry or in offshore wind power.

Regarding the option of EVN, this is a new field with different requirements compared to traditional power projects. Meanwhile, the Ministry of National Defense has “declined” to invest, citing conditions related to capacity and experience.

The target capacity of 6,000 MW of offshore wind power by 2030 will be challenging to achieve without an early “breakthrough” in the mechanism and a finalized decision on the investor selection.

Pilot Project Recommendation

Dr. Ngo Duc Lam, former Vice Director of the Energy Institute (Ministry of Industry and Trade), suggested that offshore wind power projects should be assigned to state-owned economic groups such as EVN and PVN as pilot projects, creating a premise for the completion of legal provisions. However, it is essential for the Government to establish stable mechanisms and policies to build trust with investors.

According to Mr. Le Manh Hung, Chairman of the PVN Board of Members, PVN’s units such as Vietsovpetro and PTSC have signed memorandums of understanding, confidentiality agreements, bilateral cooperation agreements, and survey/service provision contracts with foreign investors in offshore wind power. PVN has received numerous proposals from major global corporations such as Equinor, Ørsted, CIP, and Macquarie to develop offshore wind power projects in Vietnam.

“PVN is striving to leverage all available advantages to participate in the supply chain and develop offshore wind power projects in Vietnam, increase the localization rate of equipment, and reduce electricity production costs to pave the way for the future development of hydrogen energy,” said Mr. Hung about their readiness.

To achieve this, Dr. Nguyen Quoc Thap mentioned the need to amend the charter of organization and operation and the financial regime of state-owned economic groups in the energy sector, such as PVN, EVN, and TKV (Vietnam National Coal, Mineral Industries Holding Corporation Limited). The Vietnam Oil and Gas Association proposes upgrading the decree on the charter of organization and operation and the financial regime of these groups to a law issued by the National Assembly to ensure a sufficient legal corridor.

Along with this, the Vietnam Oil and Gas Association recommends the need to amend and supplement synchronously four laws, including the Law on Electricity, the Law on Environmental Protection, the Law on Marine and Island Natural Resources and Environment, the Law on Investment, the Law on Bidding, the Law on Construction, etc., along with diversifying investment in transmission infrastructure.