Offshore wind power in Vietnam at a crossroads

Wind energy – Vietnam

A new report released today by the Global Wind Energy Council, in cooperation with The Renewables Consulting Group, finds that Vietnam is facing a crucial crossroads and has the opportunity to act now to accelerate deployment of offshore wind in this decade.

The report, “Vietnam’s Future Transition to Offshore Wind Auctions – International Best Practices and Lessons Learned,” draws from global case studies and makes concrete recommendations to enhance the long-term growth and sustainability of offshore wind in Vietnam.

With world-class resource potential and rapidly growing power demand, Vietnam is poised to be South East Asia’s offshore wind leader over the next decade. But true large-scale offshore wind projects are not due to be connected until 2026 at least, and a number of policy and regulatory challenges need to be addressed to safeguard the pipeline of investment and project development.

Among these are the expiration of the current intertidal Feed-in Tariff by November 2021, and the current 2 GW by 2030 offshore wind target in the draft Power Development Plan 8 master energy strategy – which, the report finds, could be raised to 10 GW by 2030 to maximise social, economic and environmental gains from offshore wind. The PDP8 is due to be approved and finalised later this year.

“GWEC is calling on the Vietnamese government to urgently adopt a transition stage for offshore wind, and incorporate a systematic and open consultation process on future procurement and auction design,” said Liming Qiao, GWEC Head of Asia. “With less than 10 years to meet PDP8 targets for 2030, the time is now to begin wider consultation and consider raising ambitions to 10 GW by 2030. We hope this report will support Vietnam in this vital period of making offshore wind a pillar of the future energy mix.”

“The policy solution for Vietnam to accelerate offshore wind growth and maximise its benefits will require more than auctions on their own – but they could be a piece of the puzzle,” said Michael Stephenson, Associate Director at The Renewables Consulting Group. “We have seen countries learn how to integrate auctions into offshore wind policy in different ways and the key conclusions and case studies from our analysis are presented in this report. Overall, a more coordinated approach is critical, considering the interaction of auction policy with other factors such as investor confidence and supply chain maturity, as well as ensuring a suitable transition period is put in place to move to a new mechanism.”

The report draws on the experience of six geographies in transitioning from offshore wind support schemes to competitive mechanisms, including: Denmark, Germany, the UK, the Netherlands, France and Taiwan. Each case study outlines the policy frameworks in place to guide the transition, the timing of different procurement schemes and the effect on installed capacity in the offshore wind market.

“Global experience yields valuable recommendations for Vietnam’s nascent offshore wind sector, especially at this crossroads where the country’s energy system decisions will make the difference between a clean energy future and locking in carbon-intensive generation,” said Joyce Lee, GWEC Head of Policy and Projects. “The new report puts forth several concrete recommendations around the timing and transition from an offshore wind Feed-in Tariff, planning frameworks, auction design and more. Proactive efforts and cooperation in each area could support a larger and more sustainable pipeline of projects to 2030.”

The report recommends a transition period over the next few years, wherein an offshore wind Feed-in Tariff is established to apply to the first 4-5 GW of projects in Vietnam, concurrent to the government undertaking technical studies on auction design. Auctions could be introduced as soon as 2024 under this transition model.

The full report “Vietnam’s Future Transition to Offshore Wind Auctions – International Best Practices and Lessons Learned,” and Appendix can be downloaded here.

Original Source: https://ocean-energyresources.com/2021/07/23/offshore-wind-power-in-vietnam-at-a-crossroads/