MoIT has proposed 2 state-owned corporations or military-run units to develop offshore wind power projects. (Photo: iStock)
The Vietnamese government is attempting to overcome the stagnation in offshore wind power development. The Ministry of Industry and Trade (MOIT) has recently released a pilot development report, recommending that state-owned enterprises take the lead.
The report highlights the advantages of the Vietnam Electricity Group (EVN) and the Vietnam Oil and Gas Group (PetroVietnam) for the pilot projects or suggests involving the Ministry of Defense. Following an evaluation and regulatory adjustments, foreign investment may be considered.
Vietnam’s unclear policies and cautious attitude slow the development
Vietnam’s excellent geographical and climatic conditions provide a solid foundation for wind power development. The most recent version of the National Power Development Plan (PDP8), approved last year, sets a target for offshore wind power to reach 6 GW by 2030. However, no concrete projects have been implemented so far.
According to official statistics, in 2022 alone, 36 domestic companies applied for surveys to assess the potential of offshore wind power. However, the Ministry of Natural Resources and Environment (MoNRE) advised postponement due to regulatory restrictions. Similarly, foreign investments such as the development project by Denmark’s Copenhagen Infrastructure Partners (CIP) in Binh Thuan Province and Germany’s PNE Group’s $4.6 billion investment in Binh Dinh Province have made little progress.
The MOIT points out that offshore wind power development involves multiple regulatory bodies that currently lack experience and capability. Coupled with issues related to national security and electricity prices, this has led to a cautious approach, with international investors not yet invited to participate in the pilot.
Challenges for the offshore wind pilot projects
The report lists three potential pilot executing entities. Option one is the Vietnam Oil and Gas Group. The MOIT believes that offshore wind power development is like offshore oil extraction and recommends PetroVietnam to take the lead. The International Energy Agency (IEA) reports that 40% to 45% of the overall cost of offshore wind power comes from expertise in the oil and gas industry.
For example, companies like Equinor, Repsol, Total, BP, Chevron, and Shell have ventured into offshore wind power. Additionally, Malaysia’s Petronas subsidiary Gentari holds a 29.4% stake in Taiwan’s Hai Long project.
Option two is the Vietnam Electricity Group. The MOIT believes that EVN, with its operational advantage in power plants and control over the national electricity market, could streamline the pricing negotiation process and is suitable to be a pioneer. Option three involves directly assigning a unit under the Ministry of Defense to lead the development, which could shorten coordination time among various entities.
However, each option faces challenges. PetroVietnam is currently restricted from investing in core business areas outside its primary sector, raising questions about its ability to meet renewable energy needs. EVN lacks experience in renewable energy development and will require assistance from other government departments. Military units need to discuss with the Ministry of Defense whether their involvement aligns with future development directions.
The MOIT’s pilot plan must still be approved by the Vietnamese National Assembly. Given the typical timeline for offshore wind power development, which can take 6 to 8 years from preliminary surveys to the completion of the power plant, the Ministry recommends that government leaders discuss the plan to expedite the approval process.
Source: Vietnam Plus, Vietnam Investment Review
