- Green Growth
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|Liming Qiao, head of the Global Wind Energy Council (GWEC) Asia|
Offshore wind has massive potential in Vietnam, with the World Bank Group estimating nearly 600GW of technical fixed-bottom and floating offshore wind resource potential. Vietnam currently does not have any true offshore wind projects, as the installed capacity currently is only nearshore and intertidal, and so the 530MW figure would still account for nearshore and intertidal projects and not true offshore wind capacity.
Thus, there is an urgent need to differentiate intertidal projects from true offshore, as the two technologies are very different from each other, from the turbines deployed and foundation design, to the scale of the electricity output, cost profile, and risks involved in the development of projects.
Overall, the GWEC expects there to be over 5GW of offshore wind capacity installed in Vietnam over the next decade. Scaling-up this clean energy capacity will be critical for Vietnam, as the country’s energy demand is soaring and there is a looming challenge of increased power shortages over the next few years. The country therefore needs to urgently harness its incredible offshore wind resource to meet this growing energy demand, and provide greater energy security for the country through large volumes of renewable, indigenous energy.
Due to the sheer size and scale of true offshore wind projects, they have longer timelines for planning, development, and construction compared to an onshore wind project. This means that it is necessary for policymakers to act now to pave the way for scaling-up offshore wind in Vietnam. A proactive plan for offshore wind will also give Vietnam a competitive edge in the region, as the country will be recognised as a pioneer for this clean energy technology in Southeast Asia.
Offshore wind is now one of the most cost-competitive power sources in many European markets. However, the rapid cost reduction we saw for offshore wind in Europe didn’t happen by accident, and was a result of government support and collaboration with the industry to create the market environment needed for offshore wind to succeed.
While we won’t see the same competitive costs for offshore wind in Vietnam right away, these costs can be achieved with the right policy framework. This framework should include an ambitious offshore wind target, clear and stable support mechanism, streamlined permitting processes, and a roadmap for developing the necessary infrastructure to support offshore wind growth such as grids and ports.
Currently, Vietnam’s offshore wind target is a mere 3GW by 2030, which does not reflect the true offshore wind potential in the country and should be much more ambitious. There is also currently a lack of clarity on how offshore wind capacity will be allocated, and uncertainty on what the next phase of support mechanism for offshore wind in Vietnam when the current feed-in tariff will come to an end in November this year.
In order to scale-up Vietnam’s offshore wind sector, strong policy signals providing a long-term vision for the industry is absolutely crucial. Volume and stability are key to attracting the international offshore wind industry to invest in projects, manufacturing, and supply chain development. Not only will this reduce costs for offshore wind in Vietnam, but it will position the country as a key offshore wind hub in Southeast Asia.
To establish investor confidence, a sufficiently ambitious and forward-looking offshore wind target is essential for Vietnam. The GWEC recommends a continuous 10GW build-out by 2030, 25GW by 2035, and 40GW by 2040, at which point offshore wind could supply around 17 per cent of Vietnam’s electricity. This long-term vision coupled with a strong regulatory framework that provides a clear process for consenting, site development, and leasing will be essential to effectively scale-up offshore wind in Vietnam.
Offshore wind brings massive socioeconomic benefits, with one 500MW offshore wind project creating directly 2.1 million personnel days of work, or about 10,000 personnel years over its life.
Looking to other emerging offshore wind markets in the region that have put in place the right regulatory frameworks and support system, it is clear that the economic benefits of offshore wind are huge. For example in Taiwan, the government’s offshore wind target of 5.5GW by 2025 will generate around 20,000 local jobs and nearly $30 billion in inward investment.
Vietnam now has an incredible opportunity with its national power plan to put in place the policies needed to realise its formidable offshore wind potential, and drive a green economic recovery from COVID-19.
Ultimately, the Texas power outages were as widespread and damaging as they were due to a lack of planning. Ensuring that a country’s energy assets and infrastructure are sufficiently modernised, especially as extreme weather events due to climate change become increasingly more frequent, is crucial.
While wind and solar were the first to blame for the power outages, there were many other factors related to the wider energy system that ultimately caused the blackout, and in fact, wind and solar were the first energy assets able to bounce back and begin operation after the freeze.
A key lesson here is proactive and forward-looking planning for energy systems. While we don’t expect there to be -30 degree weather in Vietnam any time soon, there could be other disruptions such as typhoons, trade disputes, volatility in the LNG market, and many other environmental, economic, and political factors that could impact the region’s energy markets.
The global gas market has been facing oversupply, led by an influx of cheap shale gas from the United States and lower electricity demand during the pandemic. However, the oversupply is only temporary and the global gas sector will face a market shortage after 2032, at which point the price for gas is expected to rise significantly.
As the offshore wind sector scales-up in Vietnam over the next decade, costs will reduce and the levelised cost of electricity gap between offshore wind and LNG will only widen further.
In order to build greater energy security and independence in the region, provide price stability, and facilitate forward-looking planning, it is clear that locally-produced energy sources like offshore wind offers far more benefits than an expensive, volatile, and polluting energy source like LNG.