Grand energy aims require direction

Speaking at the Vietnam Circular Economy Forum 2022 last week in Hanoi, Caitlin Wiesen, resident representative of the United Nations Development Programme (UNDP) in Vietnam, suggested that the country needs to further promote renewable energy production.

“We know that the cost of renewable energy has dropped dramatically, by 89 per cent over the past 10 years, and solar is currently the cheapest source of electricity,” she explained.

In just five years, Vietnam has scaled up its solar capacity from virtually zero to over 16,000MW by 2022, far exceeding national targets, Wiesen added. “Vietnam also has rich wind power potential, especially offshore wind, with more than 3,200km of coastline,” she said.

Meanwhile, over the past decades, the energy sector has been a fundamental enabler of inclusive economic development in Vietnam. The sector is well-positioned to lead the green growth ambitions of the country, Wiesen said, and can catalyse new investments, create new jobs, and improve the competitiveness of the economy.

She added that circular economy and climate policies will have implications for the future of work and the gender work balance. A recent UNDP study in Indonesia found that 75 per cent of the 4.4 million jobs created by adopting circular opportunities in four sectors will go to women.

“Sectors that traditionally employ more men – like mining and construction industries – will be displaced. This means we need to invest significantly in education for the next generation of female engineers, architects, scientists, and urban planners,” Wiesen said.

Several big foreign groups continue to seek information on branching out into Vietnamese offshore wind, Photo: Le Toan

Offshore takes centre stage

Offshore wind power is also likely to play a significant role in the country’s energy transformation, and Vietnam’s net emissions reduction depends on its rapid expansion. There are, however, still problems with policy frameworks and grid capacity.

Stuart Livesey, senior director and head of Copenhagen Offshore Partners (COP) in Vietnam, told VIR that the Power Development Plan VIII (PDP8), which is being crafted to take measures to combat climate change and commit to net zero in the coming decades, is showing a commitment from the government to a clean and sustainable energy transition by contemplating reducing coal consumption and making more place for wind energy.

“In order to fully utilise Vietnam’s enormous offshore wind potential, we hope to see more offshore wind projects added to the country’s energy mix as well as strategies to create a robust grid system that could support more renewables in the coming decades,” Livesey said. “To enable the implementation and integration of offshore wind technology into the nation’s energy mix, we also need a specific regulatory framework for offshore wind projects in Vietnam.”

There have been lengthy delays regarding the PDP8. It was originally submitted to the prime minister by the Ministry of Industry and Trade in March 2021, after which it was found that a number of issues still need to be corrected.

Areas of concern involve the scale of power source development, the structure of power sources, and unreasonable regional balance, leading to the requirement for investment in the transmission grid.

The prime minister and other authorities have doubled down on directing the completion of the PDP8, not only to overcome the remaining shortcomings but to take into account Vietnam’s climate commitments being spelt out in more detail at COP26 last November.

This master plan has since been approved by the Appraisal Council and submitted again to the prime minister for consideration. It was hoped that the PDP8 would be approved last month, but delays remain. In the current draft, the capacity of offshore wind projects is expected to reach 7,000MW by 2030.

Streamlined mechanisms

Effective renewable energy generation, especially in regions that have been largely underutilised up until now, like offshore wind, would be a key focus area to diversify the reliance on fossil-based forms of energy generation after the commitment to reduce carbon emissions.

But many of the projects vying to be included in the PDP8 are onshore initiatives that still suffer from some limitations when compared to offshore wind. These, in turn, are unable to provide the advantages that offshore wind would in terms of energy generation capacity and decreased conflict zones because of shared land difficulties among other factors, according to Livesey of COP.

Meanwhile, according to the Global Wind Energy Council, a streamlined transition mechanism can be built within the coming year, and local governments can then finish the selection process for around 4GW of projects by the end of 2023.

This allows projects to be created in smaller chunks rather than all at once, which would take much longer and would result in delays in the grid infrastructure, port construction, and supply chain. By the end of 2026, an auction system that covers the final 2-3GW of volume envisioned by the draft PDP8 could be created and implemented concurrently.

Grete Lochen, Norwegian Ambassador to Vietnam, said, “Norway has a willingness and determination to contribute to the development of Vietnam’s offshore wind industry and to be part of its green transition process and implementation of the country’s commitments. The recent official opening of a representative office in Hanoi by Equinor – the largest Norwegian energy company – reaffirms this.”

Lochen noted last month that methods to create and utilise energy must change if Vietnam is to meet its climate goals. “Worldwide agreements exist on the green energy transition’s goals, despite the fact that our starting places and the energy mix, potentials, talents, and resources significantly differ. But I have no doubt that we will improve our collaborations in order to advance the sustainable development goal, and not just for environmental reasons.”

In Vietnam, although offshore wind is still in its infancy, a list of foreign and local investors continue to show interest in funding offshore wind projects in Vietnam, such as T&T, Enterprize Energy, and Orsted.