Contributing to Vietnam’s green energy shift

While relatively smaller onshore renewable energy projects are moving ahead, there remain a number of key hurdles for the development of large-scale offshore wind in Vietnam. What are the benefits of the growing offshore wind industry for Vietnam?

Stuart Livesey, senior director and head of Copenhagen Offshore Partners in Vietnam

Currently, Vietnam has built a small number of onshore and nearshore wind farms, but no true large-scale commercial offshore wind farms. This is typical trend for a new market that is in the early stages of adopting renewable wind energy as a power source, as previous onshore and nearshore wind farms are on a small scale, are easier to finance, and have shorter development periods. Offshore wind is the next step and will allow wind farms to happen on a multi-GW scale.

Vietnam’s onshore and nearshore wind power potential is estimated at about 200GW, while total offshore wind power potential is said to be 450GW, which could power about 900 million households per year. In the long term, offshore wind will provide the most viable long-term large-scale alternative to fossil fuels.

When comparing nearshore and onshore wind to offshore wind, one of the most noticeable benefits is associated with scale. The greater the scale of the wind farm, typically generation of 1GW or more, the greater the benefit to a province and country. Greater scale can increase efficiencies and start to push down costs by supporting further supply chain development in-country.

The offshore wind industry has a sophisticated supply chain, and for Vietnam can utilise a lot of the existing supply chain generated through existing transmission, construction and fabrication industries, many other suppliers can be adapted from existing capabilities and attract in new investment. Hand-in-hand with the supply chain boost, the actual workforce needed to plan, build, and operate an offshore wind farm can be extremely large and diverse over multiple sectors, both utilising existing skill sets and training locally to create many high-skill jobs – a huge bonus of this industry is that it creates added employment.

What are you looking for in the upcoming national power strategy in order to unlock Vietnam’s great potential?

We see a determination from the Vietnamese government in a clean and sustainable energy transition when considering reducing coal use and creating more room for wind energy in the Power Development Planning VIII (PDP8), taking the action to fight climate change and commit to net zero in the following decades.

The clear commitment from Prime Minister Phạm Minh Chinh at COP26 is very reassuring to both the offshore wind industry and the health of the planet. However, to build on this and deliver these ambitious targets, the government can set a clear and achievable target for offshore wind farms. Therefore, the market and the industry can grow from a solid and secure pipeline by creating a strong platform from well-planned and executed projects that can materialise to help deliver on these commitments.

We hope to see more offshore wind projects joining the energy mix in Vietnam and a plan to build a resilient grid system that could sustain more renewable energies in the coming decades, maximising the huge offshore wind potential Vietnam has. We also seek a dedicated regulatory framework for offshore wind projects in Vietnam, to ensure that offshore wind technology can be implemented and integrated into the country’s energy mix.

Many provinces and cities in Vietnam are asking for various projects to be added to PDP8. What do you think about this trend and what are the strengths of the La Gan project in particular?

Following the commitment to reduce carbon emissions, it is understandable that effective renewable energy generation, particularly in areas that have been relatively unused to date (such as offshore wind), would be a key focus area to diversify the reliance on fossil-fuel based forms of energy generation.

However, many of the projects being targeted to be added to the PDP8 are onshore projects that still have some disadvantages compared to offshore wind. In turn, these cannot offer the benefits that offshore wind would have in relation to energy generation capacity and reduced areas of conflict due to shared land issues, amongst other things.

On top of obvious benefits in electricity production, offshore wind development normally drives the market to integrate the latest technologies of grid systems and creates a lot of economic opportunities locally because of its long service life and complexity in supply chain requirements, which can have secondary benefits to the transmission system as a whole.

If you consider the 3.5GW La Gan offshore wind project, which is led by Copenhagen Infrastructure Partners (CIP) and jointly developed by local partners in the south-central province of Binh Thuan, a report conducted by BVG Associates estimated that the project is projected to contribute approximately $4.4 billion and 45,880 full-time equivalent jobs to the Vietnamese economy. It is also expected to generate 250TWh and help the nation reduce 130 million tonnes of CO2 emissions over the project’s lifetime. This level of energy generation could provide enough power to meet the electrical demand for over 7 million Vietnamese homes.

CIP is a major pioneer in global renewable energy, and a leading wind energy investor. CIP, together with project managerment group Copenhagen Offshore Partners – which has world-class experience in global offshore wind project development spanning 20 years across the globe – is continuing to share international experience in designing regulations, industry mobilisations, and technology transfer to the Vietnamese market.

With that experience from other markets, what lessons can you share with Vietnam in transitioning towards a greener path?

The transition towards the green path in Vietnam is on a journey that many countries have started, but others have yet to focus on. Vietnam has a wealth of natural resources to undertake this; however, it is lacking experienced human resources. Companies and organisations in a new industry such as offshore wind must be able to ensure ventures can be delivered on time, within budget, and of good quality to set a strong foundation for the growth of this industry.

With this in mind, we would recommend the government to set a more welcoming investment environment and legal framework that selects and encourages experienced international developers to invest and shape the market. Once clear timelines and regulations are in place, it is possible for developers to make solid commitments and invest knowing that the supporting framework allows the delivery of initial projects. This will, in turn, act as a catalyst for more offshore wind development in the most considered and experienced manner.

A clear route to market is required to deliver projects on a timeline with supporting regulatory framework, and streamline the process by aligning and coordinating key governmental and regulatory bodies. Clear feed-in tariffs must also be utilised for developers to achieve success from the start, creating a solid and well-structured basis for the industry.

In the years to follow, it will be obvious that this solid base then allows for greater focus on the other aspects, which will allow the offshore industry to become even more competitive and work within an auction-based system within a few years.

What are you most excited about for your company this year, and what new frontiers will you tackle?

This year, we are looking forward to PDP8 being finalised and a specific framework for offshore wind projects could be regulated. We look forward to continuing to support the government and localities by providing input and sharing information about offshore wind generation as a whole, and sharing experiences and lessons learnt from the industry so that Vietnam can become one of the global leaders that it has the potential to deliver.

We also hope that we can achieve our survey license this year to complete the necessary surveys and continue to develop the La Gan project in line with the ambitious plans established at COP26 to diversify the energy mix for Vietnam and provide less reliance on fossil fuels.

The La Gan project is committed to developing Vietnam’s offshore wind supply chain and facilitating knowledge transfer. We very much hope that the this project will be part of pioneering the offshore wind industry in Vietnam.