(PetroTimes) – “We need to understand the criteria that Vietnam selects for offshore wind power (OWP) project investors. These criteria include technical capabilities, financial strength, experience, etc. In addition, we hope to have opportunities to share experiences between international and domestic investors to develop the supply chain as well as the OWP industry in Vietnam.” This is one of the proposals from foreign investors looking to enter the OWP sector in Vietnam.

Opportunities and Challenges for Foreign Investors

According to the World Bank, the total technical potential of offshore wind power (OWP) in our country reaches 600 GW. With this attractive potential and the specific objectives outlined in the Power Development Plan VIII, foreign investors have expressed their desire to participate in the initiation and development of the OWP sector in Vietnam.

Foreign investors assess that Vietnam has excellent offshore wind power potential, especially in the southern region. They also recognize favorable conditions for developing offshore wind power based on existing services and supply chains. The recently approved Power Development Plan VIII has set specific targets for offshore wind power, aiming to achieve a capacity of 6 GW by 2030, accounting for 4% of the total electricity structure. By 2050, the capacity could reach 70 – 91.5 GW, making up 14.3 – 16% of the total electricity structure. Additionally, Vietnam aims to develop offshore wind power in conjunction with other renewable energy sources to produce new forms of energy such as hydro and green ammonia, as well as to export offshore wind power to other countries. These opportunities are opening up for international investors to participate in this sector.

To achieve the 6 GW offshore wind power target by 2030, foreign investors believe that Vietnam needs mechanisms to accelerate offshore wind power development, and these mechanisms should be specific and transparent. Since it takes 7 – 10 years to implement an offshore wind power project, there is significant pressure on Power Development Plan VIII. However, issues related to mechanisms and policies in this field are still under consideration. For example, the investor selection process for offshore wind power projects has not been standardized, approval authorities for investment decisions are not clearly defined, and there is no electricity purchase price mechanism for offshore wind power projects.

There needs to be a mechanism for pioneering projects. 

Mr. Stuart Livesey, General Director of COP Vietnam & La Gan Wind Power Project, shared his perspective: “For an international developer in implementing offshore wind power projects, we need to see a clear roadmap to access the market. This roadmap includes legal mechanisms, commercial mechanisms, as well as mechanisms to ensure that projects are implemented on schedule. Similar to other renewable energy projects, the development of offshore wind power requires a power purchase agreement with a clear and transparent roadmap, along with grid development to ensure that electricity production is absorbed. When looking at the Vietnam market and other markets worldwide, we consider the cost equation, along with risks. To minimize costs and risks, foreign investors need the support of the government through mechanisms for implementation.”

Mr. Stuart Livesey also added that international investors need to know the criteria that Vietnam selects for investors in offshore wind power projects. In this regard, Vietnam needs to establish clear criteria for screening investors to ensure that projects are implemented on time, with the right technology, and at competitive costs. These criteria may include project implementation plans, technical capabilities, development conditions, expert teams, financial capabilities, experience, and may require evidence of these capabilities as well as implementation plans.

Mr. Jacques – Etienne MICHEL: Vietnam has a well-developed oil and gas supply chain, and this can be leveraged for the development of offshore wind power. Like many other companies and major oil and gas conglomerates worldwide, Equinox has transitioned from oil and gas to renewable energy, particularly offshore wind power. It can utilize its experience and existing resources for this purpose.

Mr. Jacques – Etienne MICHEL, the Country Representative Director of Equinor in Vietnam, shared, “When we invest in a country, we look at the long-term prospects. First and foremost, we consider the legal framework and policies, and we need strong political support. In addition, the project scale must be substantial enough to warrant investment, and there must be a supply chain and suppliers to ensure project progress. Good coordination with local authorities is essential, and there needs to be a sizable market demand ready for investment.”

Equinor, like other foreign investors, is ready to share its experience in offshore investments, supply chain development, and recognized offshore wind technologies. They are also willing to collaborate with other global companies to develop the offshore wind industry in Vietnam.

Regarding the supply chain, Mr. Jacques – Etienne MICHEL believes that Vietnam’s well-developed oil and gas supply chain can be utilized for the development of offshore wind power. Like many other major oil and gas companies worldwide, Equinor has transitioned from the oil and gas sector to renewable energy, particularly offshore wind power, and can leverage its experience and existing resources.

The mechanism for pilot projects is also a topic that many foreign investors have proposed, with the requirement to have a process for the first projects to be implemented quickly. In this regard, foreign investors hope to have a pricing mechanism for the initial projects because revenue is a crucial condition. Access to international capital with low-interest rates requires having a power purchase agreement (PPA) in place. In this context, a special pricing mechanism could be considered for the short term, alongside the development of a pricing mechanism for the future, such as moving towards direct power purchase agreements.

Regarding the implementation of pilot projects, Mr. Stuart Livesey, General Director of COP Vietnam & La Gan Wind Power, believes that state-owned enterprises with experience and capacity in the renewable energy sector and the electricity sector, such as PetroVietnam and EVN, should participate in this process to learn and lead the industry. Additionally, it is essential to encourage experienced private investors and project developers to participate in providing knowledge and capital for the implementation process.

Based on their global experience, foreign investors have provided four key recommendations: Licensing offshore surveys and providing guidance for offshore surveying for project developers. Considering a pilot offshore wind power mechanism. Establishing clear criteria for selecting investors. Ensuring the availability of a power purchase agreement that can mobilize international capital and guarantee each project’s viability. These efforts would provide investors with confidence to invest billions of dollars in surveying and project development.

Based on their global experience, international investors have provided four key recommendations for participating in the offshore wind power sector:

Assigning project development survey areas: The ongoing marine spatial planning will serve as the basis for selecting project areas. The first projects should be urgently assigned survey areas through a specific mechanism. Updating regulations and granting survey licenses (Decree 11).

Implementing a pilot mechanism: Combining state-owned enterprises and private project developers; the proposed goal is to pilot 3 GW (combining projects of 500 MW and 1 GW), while the remaining 3 GW will be deployed through competitive bidding.

Clear investor selection process: Establish a more robust, transparent process to remove barriers for investors, upgrade port infrastructure, and understand the jurisdiction of relevant ministries. A stable support mechanism will encourage steady development.

Power purchase agreements (PPAs) capable of mobilizing international capital with assurance of project connection capacity: The objective is to ensure that projects can attract capital and guarantee significant investments (2-3 billion USD for a 500 MW project).

Dr. Hoàng Xuân Quốc, Director of Energy at VinaCapital Group and Independent Member of the Board of Directors at PetroVietnam Technical Services Corporation (PTSC), emphasizes the unique nature of offshore wind power projects. They require large investments to be effective, typically ranging from 1 GW and above. Therefore, the role of foreign investors in this field is crucial. Given the substantial capital required for offshore wind power investments, often in the billions of USD, arranging significant funding, especially foreign capital with reasonable financing costs, is essential.

Additionally, foreign investors bring expertise in operating, maintaining, repairing wind power clusters, selecting the most suitable technologies, and managing risks during project implementation. Therefore, Dr. Hoàng Xuân Quốc believes that Vietnam needs appropriate policies to strongly attract foreign investments in offshore wind power. Many large companies and investment funds are currently highly interested in renewable energy development in general and offshore wind power in Vietnam in particular. 

Final thoughts

There is no doubt that Vietnam is at the best stage for investors to to develop Offshore Wind Power projects. Thus, it is an ideal time for every investor to look into and seize the opportunities! Reach out to us if you are also eager about such a field and in need of support with setting up a company in Vietnam. With our specialized knowledge and experience in Vietnam and global markets, as well as legal procedures across diverse majors and sectors, we will walk you through the challenges. Don’t miss your chance to be part of this transformative journey. Take action now and explore the possibilities of doing business and investing in Vietnam.