Vietnam must give offshore wind developers clarity on policy and procurement mechanisms ahead of the impending phase-out of feed-in tariffs for the country’s intertidal projects, analysts have warned.
The Global Wind Energy Council (GWEC) called for Vietnam to implement a “transition phase” in which the first large-scale projects would receive a guaranteed tariff, while later ones would compete at auction.
In a report co-authored with the Renewables Consulting Group (RCG), GWEC also called for Vietnam to consider raising its ambitions on offshore wind and aim for 10GW by 2030, rather than the current 2GW target, as there is plenty of industry and investor interest. The country also needs to meet rapidly growing power sector demand and increase energy security, GWEC added.
“The policy solution for Vietnam to accelerate offshore wind growth and maximise its benefits will require more than auctions on their own — but they could be a piece of the puzzle,” said Michael Stephenson, associate director at the RCG.
“We have seen countries learn how to integrate auctions into offshore wind policy in different ways, and the key conclusions and case studies from our analysis are presented in this report.
“Overall, a more coordinated approach is critical, considering the interaction of auction policy with other factors, such as investor confidence and supply chain maturity, as well as ensuring a suitable transition period is put in place to move to a new mechanism.”
Vietnam’s first large-scale offshore wind farms are not likely to be connected to the grid until 2026 or later.
However, the country’s current feed-in tariff mechanism for intertidal offshore wind farms is due to expire in November 2021. The uncertainty about what will take its place jeopardises its pipeline of investment and project development, GWEC warned.
The industry body called for Vietnam to establish an offshore wind feed-in tariff to apply to the first 4-5GW of large-scale projects. Meanwhile, the government could simultaneously carry out technical studies on auction design, and then award subsequent projects at tender from around 2024.
Vietnam currently targets 2GW of offshore wind by 2030 in the latest draft of its power development plan (PDP8), due to be approved and finalised later this year.
Vietnam is poised to be south-east Asia’s offshore wind leader over the next decade, according to GWEC and RCG.
Liming Qiao, GWEC’s head of Asia, said: “With less than ten years to meet PDP8 targets for 2030, the time is now to begin wider consultation and consider raising ambitions to 10GW by 2030."