Scotland Eager to Support Offshore Wind Power Projects in Vietnam

Viet · Jan 30, 2022

A wind farm developed by Vietnam's Trungnam Group in Ninh Thuan. Photo: Trung Nam Group

Scotland has shown eagerness to support Vietnam’s offshore wind power development during a meeting between its first minister Nicola Sturgeon and Vietnamese prime minister Pham Minh Chinh on the sidelines of the 2021 Climate Change Conference (COP26) in Glasgow.

The country needs US$150 billion in new capital investments for electricity generation and grid upgrades to meet increasing electricity demands by 2030, increasing Vietnam’s energy capacity to 138GW. Between 2021 and 2025, the country’s power demand is forecast to rise 8.6 percent per year and 7.2 percent per year between 2026 and 2030.

The government issued a new Resolution 21 in January 2020 which sets out a plan for power generation in the country. Under the resolution, wind power has been given priority over other energy sources. Among wind projects, priority is further given based on location.

Wind power opportunities in Vietnam

Vietnam’s climate and topography naturally lend themselves to wind power, with average annual wind speeds reaching as high as 10m/s in southeast provinces and a coastline stretching more than 3,000km.

As such, offshore wind power has significant room for growth as a scalable alternative to coal imports. The country also relies on hydroelectric power and is home to several large rivers including the Mekong. Hydroelectric power formed 26 percent of the total electricity generation in 2020, but this is set to reduce from 2030 onwards as hydro’s reliability is impacted by periods of drought and water shortages.

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For offshore wind power, however, the World Bank forecasts that Vietnam’s potential could reach 500GW by 2030, and consultancy firm Wood Mackenzie predicts Vietnam to account for 66 percent of total new wind capacity to be added to Southeast Asia by the same year. In comparison, Germany only has 8GW of offshore wind capacity and a countrywide total of 62GW installed.

There are several challenges in expanding this sector, namely related to high costs. Wind projects have a higher financial barrier to entry, with the average total installed costs for offshore wind power coming to US$3,200 per kilowatt, compared with US$900 for solar panels. Further, wind projects can have a two-year construction period and few original equipment manufacturers (OEMs) produce the technology. PV-cell manufacturers, however, are widespread in Vietnam and so their construction costs are much lower.

Government incentives

The government is actively encouraging foreign investors to develop offshore wind projects in Vietnam.

Around 36GW is registered for development, situated in Bac Lieu, Ninh Thuan, Binh Thuan, Phu Yen, Khanh Hoa, Ben Tre, Ba Ria–Vung Tau, and Binh Dinh provinces.