World Bank Group has launched an Offshore Wind Roadmap for Vietnam that provides analysis of the offshore wind development potential in the country
Prepared under contract to the World Bank by BVG Associates in association with Atkins, Frontier Economics, Sterling Technical Services (Vietnam) and Du Van Toan, the report suggests offshore wind could play a significant role in meeting Vietnam’s rapidly growing electricity demand and has the potential to supply 12% its electricity by 2035.
The roadmap suggests a target of 10 GW by 2030 and 25 GW by 2035 could accomplish this objective.
Vietnam has an abundant offshore wind resource that is located close to demand centres and in relatively shallow water – although the roadmap focuses on areas further offshore which have higher wind speeds and energy yields.
By replacing coal-fired generation and meeting the 12% goal, offshore wind could help to avoid over 200 tonnes of CO2 emissions and add at least US$50Bn to Vietnam’s economy, stimulating the growth of a strong, local supply chain, creating thousands of skilled jobs, and exporting to other offshore wind markets globally.
BVG Associates director Neil Douglas said, “Vietnam’s economy and carbon emissions will benefit significantly from the development of an offshore wind sector.
“Our experience in developed offshore wind markets is that ambitious, long-term targets serve as cornerstones for cost reduction and industry development.”
The roadmap analyses two possible growth scenarios for Vietnam’s offshore wind industry. The ‘low-growth’ scenario with moderate expansion of offshore wind, resulting in offshore wind supplying 5% of Vietnam’s electricity needs by 2035.
The ‘high-growth’ scenario has significant expansion of offshore wind, resulting in offshore wind supplying 12% of its needs by 2035.
Both scenarios require similar enabling actions but, under a high-growth scenario, a more ambitious vision is established with a requirement for earlier action. Both growth scenarios could deliver substantial benefits to Vietnam, however the results indicate the high-growth scenario could deliver much larger economic benefits for a lower overall cost.
In comparison to a low-growth scenario, high growth would result in faster cost reductions – 20% lower levelised cost of energy by 2035; almost four times more local jobs and value added to the economy; less than half the net cost to the consumer.
A larger Vietnamese offshore wind market, under the high-growth scenario, would enable more local supply chain investment and optimisation, leading to exports to the regional and global market. A larger, more capable, Vietnamese supply chain increases the local content in projects, thereby reducing imports, and boosts economic development. A larger local supply chain could also increase competition and lower the cost of energy.
Under a high-growth scenario, offshore wind generation costs could reach parity with fossil fuel generation costs sooner, have a 60% lower cumulative net cost to consumers up to 2035, and provide a net benefit to consumers from 2036 – three years earlier than would be achieved under the low-growth scenario.
At the same time, a consequence of higher growth is a higher risk of adverse environmental and social impacts. This places even greater importance on the need to develop a marine spatial plan and a framework for environmental legislation to be put in place before development leases are issued.
The roadmap suggests that regulations, legislation, processes and infrastructure need to be developed to deliver the vision that is eventually set by the Government of Vietnam. It provides a series of recommendations to help create the conditions to establish and grow an industry.
The recommendations include publication of a vision for offshore wind to 2050; the setting of annual offshore wind installation targets to 2030; establishing development zones through marine spatial planning, taking into account environmental and social constraints; creating leasing and permitting authorities, a transparent permitting process, and clear environmental and social impact assessment procedures to international standards; determining a preferred approach to seabed leasing and power purchasing and the transition to a competitive system for offshore wind leases and power purchase agreements by 2026.
Other recommendations include a timetable for leasing competitions, revising the terms and conditions of the existing feed-in tariff, including the incorporation of environmental and social requirements, making it bankable for offshore wind and encouraging financial mechanisms to reduce cost of capital.
The authors of the report also recommend ‘substantial transmission reinforcements,’ taking offshore wind into the country’s port masterplan and investing in port facilities, preparation of a supply chain plan and local content guidance, and addressing issues relating to standards and regulation.
The report was formally launched at a webinar aimed at key Vietnamese stakeholders on 9 June and is intended to support collaboration between the Government of Vietnam and the wind industry.
Riviera Maritime Media’s Offshore Energy Webinar Week is being held 14 June 2021 – use this link for more details and to register