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Nov 09, 2023 / 08:52

Vietnam’s ambitious offshore wind targets magnetic to foreign investors

An ambitious target with support from the government would help channel foreign investment, including investors with experience and technologies in renewables like world-class energy developer Equinor.

Vietnam’s Power Development Plan VIII (PDP8) provides ambitious targets set for offshore wind, which is one of the first things that foreign investors look for in a market, 

Jacques-Etienne Michel, Country Manager for Vietnam at Norwegian state-owned multinational energy company Equinor, has told The Hanoi Times

  Equinor Senior Vice President for Renewables Asia-Pacific in Equinor Ingunn Svegården and PetroVietnam Vice President Phan Tu Giang sign an MoU on renewable energy in the attendance of PVN President and CEO Le Manh Hung (3rd from left), Norwegian Ambassador to Vietnam Hilde Solbakken (4th), and Country Manager Equinor Vietnam Jacques-Etienne Michel (5th). Photo: PetroVietnam

Offshore wind projects typically take 7-10 years to develop though, so to follow up on the target, it is urgent to clarify the implementation plan for PDP8, Michel said, adding that for Equinor, it will be significant to support the Vietnamese government in establishing a sustainable regulatory framework fit for Vietnam.

“Many countries are competing for renewables investments now. We see Vietnam as an interesting country for us, but competition is fierce, and it is important that Vietnam remains competitive,” Michel stressed.

Following the good news of PDP 8 approval, it is necessary to start the implantation phase quickly. As in most countries, it is important that the process is handled by central authorities. To reach the 2030 Target (6 GW+), Equinor, based on their experience from other countries, believes that policy and ambition are the big factors in addition to area award/ development, power grid and connection, price mechanism, and supply chain industry.

Specifically, the ongoing work to develop marine spatial planning will guide area selection. It is urgent to award the first projects through a fast-track mechanism for Vietnam to remain attractive to international investors that can support state-owned enterprises (SOEs) to develop projects. This includes updating regulations and awarding survey license rights to local SOEs (Decree 11).

Regarding the power grid and connection, Michel recommended that developers be responsible for the offshore grid, while the Vietnamese state handles the onshore grid. Strengthening of the grid is a precondition for offshore wind at scale.

To ensure projects are economically sustainable, a revenue support mechanism must be developed for first projects and future auctions, so that developers see a sustainable business case in the projects. This includes ensuring that the power purchasing agreements are bankable – a standard for financing projects through bank loans.

“We also think direct PPA’s (DPPA) will be an important tool in Vietnam – this is when large users of power such as industrial plants, buy power directly from renewable projects,” Michel stated.

Meanwhile, Vietnam has a robust oil and gas supply chain that can be used to deliver offshore wind. “We need to stimulate voluntary collaboration and support promoting local suppliers,” he noted.

The renewables industry is an inherently local business. Equinor has developed a supply chain report together with the Norwegian Embassy and Innovation Norway, and currently, another follow-up study on supply chain management capabilities in Vietnam is being developed.

  A wind farm in the Mekong Delta, Vietnam. Photo: VNA

Joint efforts

Equinor and PetroVietnam (PVN) have signed a Memorandum of Understanding (MoU) to promote cooperation in renewables and low-carbon solutions to concretize Vietnam and Norway's collaboration in energy transition.

The MoU was signed at PVN’s headquarters in Hanoi early this month, in the presence of Norwegian Ambassador to Vietnam Hilde Solbakken, PVN President and CEO Le Manh Hung, Country Manager Equinor Vietnam Jacques-Etienne Michel, among other executives of both sides.

The MoU follows the one signed between the parties in 2021, reconfirming PVN and Equinor’s collaboration within offshore wind, and expanding the scope of cooperation to include low-carbon solutions like hydrogen and ammonia.

Ingunn Svegården, Senior Vice President for Renewables Asia-Pacific in Equinor, called the move a new milestone in their cooperation with PVN and another step forward for emerging business in Vietnam. “Through our partnership with PVN, we hope to bring our experience and expertise from international projects to Vietnam, opening up a new supply of domestic energy production in the country and contributing to Vietnam’s energy transition,” she said.

PVN President and CEO Le Manh Hung said the partnership will bring new achievements in PetroVietnam’s transition journey. With the first MoU, they have studied and assessed potential areas for offshore wind development together. The latest move will enable them to strengthen their collaboration within offshore wind and expand it into low-carbon solutions.

PetroVietnam and Equinor have a long-lasting relationship, starting with collaboration on the gas fields Lan Tay and Lan Do in Vietnam in the 1990s. Vietnam is among Equinor’s prioritized markets for renewables in Asia, and the company established a new office in Hanoi earlier this year to further mature potential projects in the country.

“I would like to congratulate PetroVietnam and Equinor on their renewed and strengthened collaboration. Norway and Vietnam have ambitious targets to switch to renewable energy, and I believe that this collaboration will also strengthen cooperation between Norway and Vietnam towards our common goal of achieving net-zero emissions”, said Hilde Solbakken, Norwegian Ambassador to Vietnam.

Jacques-Etienne Michel, Country Manager for Equinor in Vietnam, believed this MoU lays the ground for further cooperation as they continue to work together to establish a plan for specific projects in Vietnam, built on a good and trusted relationship.

According to Michel, there are exciting opportunities in Vietnam ahead and the partnership will help the companies solve challenges together. PetroVietnam and their daughter company PTSC will also bring experience in the local supply chain into the collaboration, which will be an important part of their future success.

“These activities will be aligned with the implementation of the PDP8 as approved by the Vietnamese authorities. PetroVietnam and Equinor will work together to succeed in developing renewables in Vietnam and contribute to a just energy transition,” Michel emphasized.