New offshore wind power investment inflows into Vietnam

Vietnam is likely to become one of the world's five offshore wind power hubs along with Northern Europe, America, East Asia and South America.

In the draft Power Plan VIII, offshore wind power capacity only hits 2-3 GW by 2030, accounting for 1.45- 2% of the total power capacity by 2030. However, Ms. Liming Qiao, Asia Director of the Global Wind Energy Council (GWEC) considers this capacity to be too low.

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“Given the potential of this energy source of Vietnam, as WB previously outlined the roadmap, 10 GW capacity by 2030 is reachable. Besides, an ambitious target will also help convince investors to pour capital into more projects," GWEC Asia Director emphasized.

Ms. Liming Qiao explained, although the efficiency of offshore wind power is high, with the projects implemented 5 to 10 years ago, we could only install old technologies, 2-3 MW turbines. Therefore, the proportion of wind energy was often low in planned projects.

However, most of the turbines in use have an average capacity of 4-5 MW. This technology is still relatively new for wind power operators, especially Vietnam hasn’t any offshore wind power project put into operation.

Like the investment inflow into solar power last year, in 2021 investors will eye offshore wind power in Vietnam, when the wind power FIT at 9.8 cents/kWh (equivalent to 2,223 VND) will expire on November 1, 2021.

The said reality will cause the Vietnam power system to face two major challenges. First of all, the construction of power lines might not keep pace with the development of both solar and onshore wind power projects.

The remaining challenge is how to ensure stable operation of the power system, avoiding waste due to weather-dependent renewable energy. For example, there will neither be solar power at night nor wind power in an area where there is no wind.

Previously, GWEC assessed that, in 2020, the offshore wind power industry will continue its rapid growth with new projects with a total capacity of more than 6 GW, despite the Covid-19 pandemic negatively has affected the energy industries.

One of five offshore wind power centers to appear

The global offshore wind power capacity has now reached over 35 GW, up 106% over the past 5 years. With 3 GW of new capacity, China has now surpassed Germany in cumulative installations to become the second-largest offshore wind power producer globally, while the UK remains in the lead.

WB estimates that Vietnam's technical offshore wind power potential is about 475 GW in water zones 200 km  the coastline. 

Steady growth in Europe accounted for the majority of remaining new capacity, led by the Netherlands which installed nearly 1.5 GW of new offshore wind in 2020. Besides China and European countries, the two countries that record new wind power capacity in 2020 are South Korea (60 MW) and the US (12 MW).

The steady and continued growth of the global offshore wind industry during the COVID-19 pandemic proved a boom in this energy sector.

China's record power growth expected to continue in 2021, is driven by a rush to offshore wind in line with China's electricity price regulation that will go into effect later this year.

While Europe remains the world's largest wind power market, the Asia Pacific region will play an important role in driving the growth of this sector. Major economies such as Japan and South Korea have recently set ambitious targets for offshore wind power.

The US will also expand the offshore wind market, as the Biden administration has made clear its determination to accelerate the growth of this vital industry.

With a long coastline, the World Bank (WB) estimates that Vietnam's technical offshore wind power potential is about 475 GW in water zones 200 km  the coastline. 

Experts said that Vietnam should soon have a long-term strategy for offshore wind power, which is planned to integrate with other marine economic sectors. This allows anticipating the potential trend of this energy industry in the future.

As of September 2020, Vietnam will have 14 offshore wind power projects with a total capacity of nearly 30 GW. It means that the total capacity of upcoming projects is 40 GW. With favorable natural conditions, accomodating many foreign investors in both nearshore and offshore wind power projects, the World Energy Organization (IEA) forecasts that Vietnam will likely become one of the five wind power hubs of the world along with Northern Europe, America, East Asia, South America.

At the present, the Thang Long project off the coast of Binh Thuan with a capacity of 3.4 GW has completed the first phase of wind measurement (2019 - 2020) to enter the 2nd phase (2021 - 2025) and integrated wind power into national grids.

The 3.5 GW La Gan offshore wind power project (Binh Thuan) is in the process of a feasibility study 2020 and can be completed before 2030. Recently, the developer of La Gan offshore wind project who comes Denmark signed 4 memorandums on cooperation in providing pile foundations and logistics port with Vietnamese contractors.

However, we have only exploited a tiny fraction of the enormous potential of offshore wind. The World Bank Group reports that there is over 71,000 GW of offshore wind potential globally with current technology, and tapping into this resource will be key to keep global warming below 1.5°C pre-industrial levels while generating significant economic benefits. Vietnam cannot stay out of this trend.

“The partnership between the wind power industry and the government will be key to realizing this potential, along with stable policies to create a long-term development opportunity for the industry. Accelerating the commercialization of offshore wind power within this decade will help open new doors for the sector and maximize the exploitation of wind resources,” said Alastair Dutton, Chairman of the Global Offshore Wind Power Group at GWEC.