With its significant potential for offshore wind development, the country faces regulatory and technical challenges that must be addressed to harness this resource effectively.

At a recent meeting, the Ministry of Industry and Trade (MOIT) reported several key obstacles to developing offshore wind energy (OSWE) in Vietnam. These include issues related to planning, investment policy, investor selection, market access conditions for foreign investors, public-private partnership (PPP) investment, construction permitting, maritime law, and defining wind resources as public assets.

Concluding the meeting, Deputy Prime Minister Tran Hong Ha emphasized that a pilot OSWE development plan has been a long-standing priority for the government. The plan must select specific projects, identify legal, research, policy, investment, financial, and technological transfer challenges, and propose solutions to address legal or policy barriers.

Stuart Livesey, with over 20 years of experience in developing and managing OSWE projects in Europe and the Asia-Pacific, suggests: "Each market has its approach to starting an OSWE industry. However, successful countries share commonalities: implementing pilot projects combined with Feed-in Tariff (FiT) mechanisms in the initial stages."

In 1991, Denmark became the first country to install offshore wind turbines with 11 turbines at Vindeby. The initial market was supported by FiT mechanisms with two successful pilot projects, later transitioning to competitive bidding after 1993. As the market and technology developed, costs per kWh significantly decreased, with Denmark's total OSWE capacity reaching 2.7 GW by 2024 and targeting 12.9 GW by 2030.

The UK followed a similar path. Initially developing 3.2 GW of OSWE under the FiT mechanism, it transitioned to competitive bidding with Contracts for Difference (CfD) in 2015, reducing bid prices by 65% between 2015 and 2019. The UK now has 14.7 GW of operating OSWE, making it the cheapest energy source in the country.

Germany also adopted a Pilot-FiT-Tender model. Initially supporting OSWE with a 15 cent/kWh FiT in 2009, Germany expanded its OSWE capacity to 8.9 GW by 2024, with the latest tender prices dropping to 0 USD/kWh, meaning selling at market prices without FiT support.

According to Stuart Livesey, Vietnam can learn two key lessons from these countries:

First, establishing appropriate, breakthrough policies from the government will provide a solid foundation and build investor confidence in a new industry with no precedent in the country, especially OSWE with its complex technology and multi-billion-dollar investments.

Second, Vietnam should aim for a flexible legal framework that adapts to the practicalities of each stage. This means regulations don't need to be perfect from the start, similar to the early oil and gas industry. Technology is ever-evolving, and energy consumption and market needs change. Legal regulations should adapt to these changes while assuring investors a certain degree of certainty in the industry's development path.

Additionally, Taiwan's (China) three-phase approach allows for feasibility testing and gradual scaling. Phases 1 and 2 include pilot projects with a FiT mechanism of 20 cents/kWh to attract foreign developers and kickstart the industry. In contrast, Phase 3 involves larger-scale projects with competitive bidding and Direct Power Purchase Agreements (DPPA). Taiwan currently has 2.2 GW of operational OSWE, with another 1 GW under construction.

Collaborating with experienced partners

The MOIT is currently tasked with thoroughly reviewing investor selection, electricity export, foreign investor participation, and other issues within the government's and Prime Minister's authority to propose solutions.

The MOIT's leadership states that the ministry is working with Vietnam Electricity (EVN) and Vietnam Oil and Gas Group (PVN) to advance preparations for two pilot projects.

Stuart Livesey shares, "I believe that partnerships between state-owned corporations (such as PVN and EVN) and experienced international project developers are the fastest and easiest way for Vietnam to access advanced technologies, construction methods, and real-world operations, significantly reducing risks and costs. This collaboration ensures projects are delivered on time and within budget. Partnering with reputable international partners also facilitates access to international supply chains and funding, which are crucial for large-scale renewable energy projects. This collaboration also promotes knowledge transfer and enhances the skills of the domestic workforce."

For instance, CIP (Denmark) has successfully partnered with CSC, a state-owned enterprise in Taiwan (China), to implement the 300 MW Zhong Neng OSWE project.

"I believe that to successfully deploy the first OSWE projects in Vietnam, cooperation with experienced international investors with long-term vision and commitment to Vietnam, coupled with supportive pricing policies and coordinated processes among relevant agencies, will be essential. The market also anticipates the completion of the Electricity Law and the pilot mechanism expected to be issued by the end of 2024, allowing state-owned corporations to collaborate with foreign enterprises to develop the first OSWE projects to quickly establish Vietnam's OSWE market," he says.

Hanh Nguyen