Burdens still to be tackled to ensure efficient DPPA pilot

For Vietnam to fully harness the potential that offshore wind (OSW) has to offer, it is imperative that a complete regulatory framework is set in place. This begins with the Power Development Plan VIII (PDP8). We hope that the government will soon approve the plan, which will serve as the overarching policy guidance that drives Vietnam’s development of renewables, OSW, and the energy sector.

Given OSW’s vast potential to help the country deliver its commitment to net-zero by 2050, we would like to emphasise the urgency to immediately develop it in Vietnam.

With the current draft PDP8 setting an ambitious target of constructing 7GW of OSW by 2030, there are only seven years left for Vietnam to deliver its first GWs of OSW. Therefore, related projects must undertake their consenting, development, and construction immediately if Vietnam is to have any chance of meeting these ambitious targets.

As with any other emerging industries, Vietnam’s OSW industry must overcome significant technical, operational, and regulatory challenges. As such, it is imperative that a transparent, consistent, and accommodating regulatory framework be established. This may include but is not limited to marine spatial planning, a clear and consistent consenting and licensing route for projects, transparent investor selection mechanism, functional power purchase agreements, and incentives.

As the Vietnamese government develops and fine-tunes the regulatory framework for OSW, it is critical that policies and mechanisms for offshore surveys consenting are prioritised and survey activities will then receive approvals and be allowed to commence this year to deliver 7GW of OSW by 2030. This is because offshore surveys typically take 2-4 years within OSW projects’ 6-8 years development timeline.

Surveys provide indispensable prerequisite information and data for developers to plan future development steps and adapt to the constraints and necessary design parameters of a site.

There is a need to comply with International Finance Corporation standards and environmental, social, and governance (ESG) commitments in developing regulations for renewables, especially new regulations for OSW. For large international developers, ESG is increasingly key as part of their working policy, as these companies need to meet global standards to satisfy lenders and international organisations.

A transparent approach and reasonable pricing to entice investors are two of the most crucial factors. Power transmission must be the main priority of Vietnam’s energy development programme, and grid investment time is extended. The country can reach its goals if the government is enthusiastic about the energy transition and firmly committed to achieving net-zero carbon emissions.

With the astonishing and quick development of wind and solar energy in Vietnam, it is important to stimulate investment by all power consumers in energy-efficient measures to achieve the nation’s related strategic goals. For this reason, the contribution of solar, biomass, hydropower, wind, and offshore wind power within the energy system should be maximised.

Related to the DPPA mechanism which has been studied by the Ministry of Industry and Trade since 2018 – and as an important mechanism when moving to the retail electricity market, especially for renewable energy projects and large power customers – it is unlikely to be a feasible short-term application. This is because there are still not enough legal instruments for all participants to get involved and partly because of the lack of transparent information currently available in the domestic power market.