Challenges and Solutions for The pilot project mechanism aims to develop policies for offshore wind power in Vietnam

The Ministry of Industry and Trade (MOIT) recently announced that the pilot project mechanism for developing offshore wind power policies, which would have a capacity of 300-500MW, may not be presented to the National Assembly in May 2024.

Recent studies by the World Bank have revealed a staggering fact: Vietnam boasts the highest wind energy potential among its regional peers. With over 39% of its total area experiencing an average annual wind speed greater than six m/s at a height of 65m, equivalent to a capacity of 512 GW, Vietnam's wind energy potential is nothing short of remarkable.

With its ambitious goal of achieving net-zero carbon emissions by 2050, Vietnam is poised for a significant shift towards renewable energy. As the country's substantial hydropower resources have been extensively tapped, the focus is now on developing renewable energy sources such as offshore wind power. This aligns with the global trend of increasing interest in offshore wind development, offering a promising future for Vietnam and instilling confidence in its energy transition.

In the power sector, the PDP8, approved by the Prime Minister in Decision No. 500/Q?-TTg dated May 15, 2023, sets a target for offshore wind power capacity to reach 6,000 MW by 2030, with a vision to achieve between 70,000 MW and 91,500 MW by 2050.

Vietnam must still approve investments or designate investors for offshore wind power projects. Furthermore, the plan approved in Decision No. 262/Q?-TTg on April 1, 2024, only specifies offshore wind power capacities for various regions. By 2030, the Northern region is approved for 2,500 MW, the North Central region for 500 MW, the South-Central region for 2,000 MW, and the Southern region for 1,000 MW.

Challenges

While Vietnam's potential for offshore wind power is immense, the path to its development has challenges. This new and complex field lacks investment experience and is intricately tied to national security and sovereignty over seas and islands. The lack of synchronized mechanisms, policies, and legal regulations further complicates matters, posing significant hurdles in achieving the goals set out in the PDP8.

Furthermore, Vietnam needs a comprehensive and accurate database of wind speed surveys and wind potential for each region, locality, and country. More information on the current terrain and seabed depth must also be provided.

The National Marine Spatial Planning has yet to be approved, and there is no national offshore wind power development plan (as per the Planning Law). Therefore, implementation may lead to conflicts between sectors and fields, complicating the deployment of wind power projects. Additionally, as offshore wind power is a new field in Vietnam, developed after establishing international maritime transport routes and shipping lanes, its development may be affected.

Many experts have analyzed offshore wind power's high investment costs, ranging from approximately 2.5-3 billion USD per 1,000 MW. The implementation time from the start of the survey is around 6-8 years. Therefore, reaching the offshore wind power capacity target of 6,000 MW by 2030 is challenging, as outlined in the PDP8.

The Ministry of Industry and Trade emphasizes the importance of conducting thorough and careful scientific research. This requires significant investment in terms of time and quality, especially when it comes to collaborating on research projects. Consulting units that possess the necessary expertise are typically responsible for carrying out the construction of such projects. This was evident in the PDP8.

Regarding the National Assembly’s resolution enactment

The Ministry of Industry and Trade has proposed that the National Assembly approve a resolution allowing for the pilot development of offshore wind power in 2024. The pilot project could be operational by 2030 if the resolution is enacted. However, experts estimate that offshore wind power projects usually require 6 to 8 years from the start of the survey. Achieving the target of 6,000 MW of offshore wind power by 2030 is challenging. Therefore, the objectives of enacting the National Assembly's resolution must be clarified.

The Ministry of Industry and Trade has pointed out that implementing the National Assembly's resolution must follow legal procedures. This involves collecting opinions from various ministries and sectors, summarizing the information, and getting it appraised before submitting it to the Government for comments. Therefore, presenting it to the National Assembly in the May 2024 session is unrealistic and would not comply with legal regulations.

Regarding the establishment of an inter-ministerial working group

The Ministry of Industry and Trade has suggested that the Prime Minister should not refrain from forming an inter-ministerial working group on offshore wind power. Instead, this responsibility should be given to the National Energy Steering Committee. If any additional functions, tasks, or members are required, Decision No. 1447/Q?-TTg will be reviewed for amendment.

Solutions to address difficulties and obstacles

Legally: One of 3 options to be offered:

• Enact a law to amend relevant current legal documents.
• Review and evaluate offshore wind power issues to incorporate necessary amendments into the Electricity Law (revised) and related laws.
• The National Assembly enacts a pilot resolution on offshore wind power development.

In terms of planning and potential assessment:

• The National Assembly should promptly enact the National Marine Spatial Planning.
• The National Assembly should consider and enact a resolution allowing energy development, including offshore wind power, in suitable locations (to align with National Assembly Resolution No. 81/2023/QH15 on the National Master Planning for 2021-2030, with a vision to 2050).
• The National Assembly should consider and decide on the Marine Economic Development Planning stipulated in Article 44 of the Vietnam Maritime Law.
• The Ministry of Natural Resources and Environment should research and assess the national wind energy potential, including specific marine regions, to serve as a basis for marine spatial planning and offshore wind power development.

Essential contents proposed in the pilot project mechanism

Offshore wind power projects are located at least six nautical miles from the shore and have a seabed depth of over 10 meters. These projects include power plants, electrical grid infrastructure, and auxiliary facilities. The scale of the pilot project ranges from 300 to 500MW.

The government aims to promote the production capacity and development of the domestic industry, with a localization rate of over 70% and total equipment import costs less than 30% of the total estimated construction cost.

The Ministry of Industry and Trade has proposed developing the electricity purchase mechanism for the offshore wind power pilot project and submitting it to the Prime Minister for a decision.

Initially, the pilot project will be implemented by either EVN, PVN, or the Ministry of Defense, and private entities will not be involved. The assignment of foreign and private investors will be considered only after a comprehensive evaluation and completion of the pilot project and the legal document system.

The government aims to complete the investment for one pilot project by 2032 and the legal regulations related to offshore wind power development, such as laws on electricity, investment, construction, seas and islands, fire prevention and fighting, etc., by 2030.

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