Vietnam’s renewable energy landscape is undergoing a transformative shift, with offshore wind power emerging as a key player in the country’s ambitious plans to achieve net-zero emissions by 2050. As a net coal importer, Vietnam currently relies heavily on fossil fuels for electricity generation, but the recently approved Power Development Plan 8 (PDP8) aims to significantly increase the share of renewables, including wind and solar, to 46.5% by 2030.
Offshore Wind Market in Vietnam
The PDP8 sets a comparatively modest target of 6 GW of offshore wind capacity by 2030, accounting for 4% of the energy mix. However, this is expected to increase to 16% by 2050, highlighting the growing importance of offshore wind in Vietnam’s long-term energy strategy. Currently, in-development offshore wind projects account for 43.4% of all new power projects in the country, second only to gas-fired capacity at 42.5%.
Vietnam’s offshore wind potential is substantial, with estimates suggesting the country could reach up to 311 GW of wind capacity. The technical potential is primarily concentrated on the southwest coast in the South China Sea, making it a prime location for future development. Despite this vast potential, the lack of a robust regulatory and legal framework appears to be delaying the progress of offshore wind projects in the country.
Regulatory Framework and Policies
The PDP8 outlines plans to amend the current Law on Electricity and introduce a separate law for renewable energy, with the Ministry of Industry and Trade as the main authority overseeing the sector. The plan also includes a significant goal of a complete coal phase-out by 2050, underscoring Vietnam’s commitment to transitioning away from fossil fuels.
In 2023, Vietnam released its Resource Mobilisation Plan (RMP), which outlines strategies for spending funding allocated through Just Energy Transition Partnerships. The RMP highlights several policy actions that would support offshore wind development, including streamlining the permitting process, providing financial incentives, and facilitating access to grid infrastructure.
Challenges and Opportunities
One of the key challenges facing Vietnam’s offshore wind sector is the social impact on fishing communities. Nearshore wind projects, which are less expensive but have more prominent environmental effects, are expected to have a more direct impact on these communities. As of January 2023, approximately 81% of the planned wind farms in the south were nearshore.
Despite these challenges, offshore wind development in Vietnam presents significant opportunities for the country. Estimates suggest that offshore wind could reduce CO2 emissions by 9.96 million tonnes in 2030, though an additional $3.8 billion in financing would be required to achieve this goal.
Offshore Wind Project Development
Site Selection and Assessment
The technical offshore wind potential in Vietnam is primarily concentrated on the southwest coast in the South China Sea, which offers favorable wind conditions. However, the legal framework remains incomplete, including the process for granting site survey licenses and selecting investors.
Technological Considerations
Compared to other renewable energy sources, offshore wind is likely to create fewer jobs in Vietnam based on the PDP8 targets. Estimates suggest the offshore wind industry could create around 700,000 full-time equivalent (FTE) employment years by 2035, with 40% of these jobs potentially coming from exports of components.
Environmental and Social Impact
The environmental and social impacts of offshore wind development vary depending on the project location and installation type. Nearshore projects tend to have more prominent effects on the local ecosystem and fishing communities. The government has stated that a large-scale coal phase-out is not feasible, and older coal plants may begin to co-fire with biomass and ammonia.
Grid Integration and Transmission
Grid Infrastructure Upgrades
The PDP8 includes plans to build reliable 500 kV and 220 kV transmission grids and accelerate the development of a smart grid. However, the government does not plan to develop major inter-regional transmission lines connecting central southern provinces (where offshore wind projects are being proposed) to the northern region (where electricity demand is highest) before 2030.
Interconnection Challenges
The current PPA structures require offshore wind developers to finance the transmission costs needed to connect to the national grid. Amendments to the Electricity Law indicate that developers might be able to fund, build, and operate their own transmission lines, which could accelerate grid upgrades, though uncertainty remains.
Economic Viability
Cost Considerations
Offshore wind development in Vietnam faces challenges related to the lack of experience in research, development, investment, construction, and operation of these projects. This presents opportunities for localization of the supply chain, which could help reduce costs and increase the economic viability of offshore wind.
Financing and Incentives
Vietnam and the International Partners Group (IPG), consisting of several countries and multilateral institutions, announced a Just Energy Transition Partnership (JETP) in 2022. This partnership has pledged a total of $15 billion to support the country’s energy transition, with offshore wind development identified as one of the key priorities for investment.
Environmental Sustainability
Marine Ecosystem Protection
The environmental impacts of offshore wind development, such as noise pollution and seabed damage, can be mitigated through careful planning and monitoring. The government has stated that a large-scale coal phase-out is not feasible, and older coal plants may begin to co-fire with biomass and ammonia to reduce emissions.
Emissions Reduction Targets
Vietnam’s commitment to achieve net-zero emissions by 2050, as well as the PDP8’s goal of a complete coal phase-out by the same year, underscores the country’s ambition to transition towards a sustainable energy future. Offshore wind development will play a crucial role in this transformation.
Stakeholder Collaboration
Government Involvement
The Vietnamese government has taken a proactive approach to supporting the offshore wind industry, with the PDP8 and the Resource Mobilisation Plan outlining various policy actions and financial incentives. However, the lack of a clear regulatory framework and permitting process remains a key challenge.
Engagement with Local Communities
The social impact on fishing communities is a significant concern for offshore wind development in Vietnam. Engaging with these stakeholders and addressing their concerns will be essential to ensure the successful and sustainable deployment of offshore wind projects.
Global Partnerships and Knowledge Sharing
International Cooperation
Vietnam has existing partnerships with countries like Australia to foster renewable energy development, particularly in the areas of critical minerals and energy transition. The country is also a signatory to the Global Coal to Clean Power Transition Statement, underscoring its commitment to accelerating the shift away from unabated coal.
Technology Transfer and Innovation
As a relatively new player in the offshore wind sector, Vietnam can benefit from knowledge-sharing and technology transfer from more experienced markets, such as Europe. Collaboration with international partners can help the country develop its domestic capabilities and address supply chain gaps.
The journey towards a sustainable energy future in Vietnam is gaining momentum, with offshore wind power emerging as a crucial component of the country’s renewable energy strategy. By addressing regulatory and infrastructure challenges, fostering stakeholder collaboration, and leveraging global partnerships, Vietnam is well-positioned to unlock the vast potential of its offshore wind resources and contribute to a cleaner, more resilient energy landscape in Southeast Asia.