Illustrative image.

According to the draft National Power Development Plan for the 2021-2030 period, with a vision to 2045 (Power Development Plan VIII), as submitted to the Government by the Ministry of Industry and Trade, Vietnam has set the target of having about 7GW of offshore wind power by 2030.

As Vietnam has great potential for offshore wind power development, this goal is not too difficult to reach. The main challenge is the lack of breakthrough solutions.

In the context of increasingly exhausted fossil fuel sources and escalating power prices, sustainable energy development is a top concern of countries around the world, including Vietnam.

According to a report by the International Renewable Energy Agency (IRENA), the total installed offshore wind capacity in the world reached 55.7GW in 2021.

Offshore wind power technology has made significant strides, with efficiency increasing rapidly, while the average production cost of offshore wind power has decreased by about 60% in the 2010-2021 period.

Given its favourable geographical position and climatic conditions, Vietnam is considered a country with great potential for offshore wind power development.

According to the World Bank (WB) and the Danish Energy Agency, with a long coastline and abundant wind potential, Vietnam's wind power has an estimated potential of about 475GW, including about 160GW of technical potential.

The report on the potential of offshore wind and wave energy in Vietnam's seas by the General Department of Meteorology and Hydrology (Ministry of Natural Resources and Environment) said that the sea areas with the best potential for wind energy are from Binh Dinh to Ninh Thuan and from Binh Thuan to Ca Mau, in addition to part of the central waters of the Gulf of Tonkin.

Specifically, the wind potential is said to be good to very good in the coastal areas from Ninh Thuan to Ba Ria-Vung Tau, with average wind speeds of 8m-10m/s and an annual average energy density of 600W to over 700W/m2.

The draft Power Development Plan VIII, submitted by the Ministry of Industry and Trade to the Government for consideration and approval, sets the target to develop about 16,121MW of onshore and nearshore wind power and about 7,000MW of offshore wind power by 2030. Wind power accounts for about 15.8% of the total system capacity, of which offshore wind power is 4.8%.

Offshore wind energy is a renewable energy source with great development prospects, which can install offshore wind farms on large seas.

Wind speeds over the ocean are generally more stable and stronger than on land, so the main advantage of offshore wind is its higher ability to generate electricity than onshore wind.

Another advantage is that offshore locations for wind farm deployment are not limited, and there is little or no conflict with the resident community (which is a difficulty for onshore wind power development). 

With investment in the transmission system, as well as smart regulation, wind power can solely become the main source of Vietnam's energy system in the future, thereby reducing dependence on imported fossil fuels.

According to a report published in June 2021 by the Global Wind Energy Council (GWEC), the world will see the largest number of wind turbines ever installed offshore, with 21.1GW of capacity newly added to the grid.

The orientation of offshore wind power development is identified by the Party as an important driving force in the Strategy for the sustainable development of Vietnam's marine economy to 2030, with a vision to 2045, adopted by the Party Central Committee at Resolution No.36-NQ/TW dated October 22, 2018; Resolution No. 55/NQ-TW dated February 11, 2020, of the Politburo on orientations of Vietnam's national energy development strategy to 2030, with a vision to 2045.

In addition to ensuring energy security and sustainable development, offshore wind power development also contributes to creating thousands of jobs and gradually forms supporting industries, to support wind power development in Vietnam.

Despite great opportunities, the development of offshore wind power in Vietnam is facing big problems, such as the difficulty in mobilising large capital and the technical and technological complexity leading to many investment processes and procedures for the projects.

This is also the reason why dozens of the wind power projects that have been built and put into operation in recent years are onshore or nearshore.

Regarding planning, the draft National Power Development Plan VIII only allocates offshore wind power capacity according to region, not locality. After the plan is approved, the Ministry of Industry and Trade is expected to plot out the approach to carry out the plan, which will serve as a basis for determining the scale and capacity of projects by each locality. The ministry will then select investors. 

The development of offshore wind power must be associated with the national marine spatial plan to identify potential areas for wind power development while ensuring the utilisation of good energy sources, reducing impacts on marine ecosystems and avoiding conflicts of its benefits with other economic sectors such as marine transport, oil and gas exploration, fishing, aquaculture, national security and defence. However, the national marine spatial plan is still under research and development.

Regarding the policy framework, the roadmap for formulating and promulgating a pricing mechanism for offshore wind power projects has so far not been prepared.

There is a lack of specific and clear instructions, especially regulations on how to be called an offshore wind power project.

Specifically, the Prime Minister's Decision No. 39/2018/QD-TTg, dated September 10, 2018, only regulates onshore and offshore wind power while the draft National Power Development Plan VIII mentions onshore, nearshore and offshore wind power.

Vietnam has been assessed to have many advantages in developing the supply chain for offshore wind power development due to its long history in the oil and gas industry, marine transport, seaports and mechanical equipment manufacturing.

Therefore, in the process of energy transition, the requirement is to take advantage of the available resources and strengths in the country through solutions related to integrating the planning of energy port development.

It is also crucial to launch policies to encourage and promote the capacity of domestic mechanical equipment installation and production while planning and training hi-tech human resources.

It is should be noted that the Ministry of Natural Resources and Environment has not introduced any specific regulations on the dossiers, documents, procedures and time for approving the activities of measuring, observing, investigating, surveying and assessing marine resources; nor regulations on the marine area per one megawatt of expected capacity to be approved for wind measurement, geological surveying, and environmental impact assessment for each specific marine region.

Regulations on the maximum capacity for a project to ensure that it is attractive to investors and does not overload the transmission system are also absent.

In the face of the above issues, the Ministry of Natural Resources and Environment has proposed that the Government should halt the appraisal and approval of locations, boundaries, areas, coordinates, depths and durations of use of marine regions until the Government issues a resolution on wind measurement, observation, investigation, ecological surveying, and marine environmental impact assessment.

According to Executive Director of the Vietnam Initiative for Energy Transition (VIETSE) Ngo Thi To Nhien, in order to promote the development of offshore wind power, it is necessary to establish specific targets through national plans such as the national marine space plan, the master plan on the sustainable exploitation and use of coastal resources, the energy plan, and the power development plan as the basis for implementing offshore wind projects.
 In implementing planning objectives, it is necessary to introduce specific policies and mechanisms on the management roles at all levels, the sea leasing method aligned with the installed capacity density to maximise the use of marine resources for offshore wind power development.

In addition, it is necessary to complete the fundamental regulations of technical standards and environmental impact assessment. 

According to experts, the timeframe for developing an offshore wind farm can range from 5-11 years, including survey, licensing, project development, construction preparation, construction, and test-runs.

Therefore, in order to achieve the goal of offshore wind power development, there are many things that must be implemented from now on.

To promote the early formation of the offshore wind power industry, the State's breakthrough solutions are extremely important.

Talking about capital mobilisation, Trung Nam Group Deputy CEO Le Nhu Phuoc An shared: In order for foreign investors to "pour" their capital, the market must be attractive enough, low-risk, and highly profitable.

The problem that is causing many investors to consider is the determination of criteria and mechanisms to develop offshore wind power.

In order to manage investment flows, foreign investors expect clear and predictable policies. Therefore, we must remove bottlenecks, especially those related to price mechanism and policy.

Similarly, Mark Hutchinson, a representative of the Global Wind Power Association (GWEC), also said that the development of technology has reduced the cost of implementing offshore wind power projects, creating a very important impetus for the rapid and widespread development of this type of technology.

However, businesses still need to invest billions of dollars for a project, even the smallest ones. In the context of domestic banks limiting loans, foreign investment units are necessary.

A prerequisite for foreign banks is the need to calculate risks and financial estimates through the price mechanism and the terms in the power purchase agreement represent the terms of capacity reduction in the power purchase agreement. Therefore, both investors and banks need clarity and stability in policies.

Deputy General Director of T&T Group Nguyen Thi Thanh Binh suggested that, in the start-up phase, shaping the development of a new and modern industry, the Government may consider starting with a mechanism to select investors on the basis that they must meet the set criteria in terms of capacity, experience, finance, development of domestic supporting industries (not through bidding).

This proposal aims to shorten the selection period, thus helping projects to be deployed and put into operation before 2030.

Several countries such as the Republic of Korea and Japan have also applied the Feed-in Tariff (FIT) pricing mechanism to promote offshore wind power development in the early stages.

According to the Ministry of Industry and Trade, as of the end of 2021, the total installed capacity of renewable energy sources was estimated at around 20.7GW (including 4GW from wind power), accounting for 27 per cent of the total installed capacity of the power system.

The electricity output from renewable energy sources contributes to ensuring sufficient electricity supply for the 2021-2025 period, especially in May and June of 2021 and 2022 which saw increased power demand in the northern region.

As of August 31, 2022, the Ministry of Natural Resources and Environment received 55 proposals. One of the approved proposals was a wind measurement proposal by a domestic investor to install an offshore wind Lindar station as a preparation for the feasibility report of Ben Tre offshore wind power plant.

In addition, according to statistics, there were about 40 surveying proposals with a distance from six nautical miles submitted to authorities of coastal localities, all of which were under the appraisal of the provincial People’s Committees.  

Source: Nhan Dan