Wind power in Vietnam holds significant potential for growth as a scalable alternative to thermal power, considering the country’s favourable natural conditions. With a coastline spanning 3,000 kilometres and consistently high mean wind speeds, Vietnam has many opportunities to expand its installed wind capacity. Given the suitable water depth, distance to the shore, and good offshore wind resources, large areas of Vietnam’s territorial waters are suitable for offshore wind developments.
Developing offshore wind projects requires a complex and coordinated supply chain that involves various stakeholders, activities, and resources. The supply chain covers the entire lifecycle of offshore wind projects, from planning and design to construction and installation, operation and maintenance, decommissioning and recycling. The supply chain faces many challenges and risks, such as technical, financial, regulatory, and logistical issues. Vietnam boasts a pre-existing supply chain in parallel industries with synergies to offshore wind, including oil and gas and onshore wind. This suggests the country’s potential to leverage its existing experience in parallel industries to supply and facilitate the development of offshore wind projects. Considering its advantageous location in the APAC region, marine traffic, and port infrastructure, Vietnam also has the potential to become a supply chain hub for offshore wind components, particularly in the following areas:
• Fabrication of jacket foundations;
• Tower manufacturing;
• Nacelle assembly
1. Vietnam Overview
For the purpose of this guide, Vietnam can be divided into two primary regions: the northern and southern areas.
Northern Region:
In the years 2018-2021, renewable energy in Vietnam experienced significant growth, with most projects concentrated in the Central Highlands, Central South, and South regions. Meanwhile, the Northern region mainly developed hydroelectric and thermal power projects, many of which faced delays compared to the planned schedule. This has led to difficulties and challenges in the operation of the national power system. To mitigate the risk of power shortages, especially during hot periods in the Northern region, there is a need to accelerate the development of renewable energy sources in this area. Additionally, with the Northern economic focal area (Ha Noi, Hai Phong, QuangNinh, Hai Duong, etc.) being a power consumption centre, leveraging the offshore wind potential and aiming for a balanced development of source-load relationships, minimizing long-distance transmission is necessary. PDP 8 encourages further development of renewable energy sources in the Northern region up to the year 2030. Seaports in Hai Phong and Quang Ninh currently specialize in shipbuilding. This location is well-suited for researching and receiving technology transfers, domesticating mechanical engineering products, and supplying equipment for renewable energy power plants, particularly offshore wind power.
Southern Region:
Southern / Southern Central regions possess high potential of renewable energy especially in Ninh Thuan, Binh Thuan areas. Aside from high wind speed and ideal seabed condition for offshore wind foundation installation, Ninh Thuan also has potential to develop international ports to serve the offshore wind industry. Additionally, Ninh Thuan and Binh Thuan areas are situated in proximity to the Southern economic focal area (Ho Chi Minh City, Binh Phuoc, Tay Ninh, Ba Ria – Vung Tau and Binh Duong) which is a power consumption centre. Utilizing the existing potential of renewable sources in the Southern / Central Southern regions, avoiding long-distance transmission was therefore key in the most recent renewable energy developments. Though seaports in the Southern Central region are mainly under development with an international orientation. Ho Chi Minh and Ba Ria – Vung Tau ports have long been specialized in shipbuilding and fabricating large scale maritime and oil & gas equipment and vessels. Their recent contracts in manufacturing offshore wind components (including jacket foundations and OSS) are proof of the existing capabilities and beginning of an offshore wind supply chain. The southern area, thanks to its existing oil and gas manufacturing infrastructure, lends itself to a faster development timeline.
2. Installed Capacity
The installed capacity for wind power projects in Vietnam has seen a significant increase in recent years, reaching 4.8 GW at the end of 2023, with 3.9 GW of onshore wind projects and 874 MW of nearshore projects.
These projects are primarily situated in the central coastal provinces of Quang Binh and Quang Tri, as well as the southern coastal provinces of Ninh Thuan and Binh Thuan. Additionally, numerous wind power plants are located in the highland provinces of Gia Lai, Kon Tum, and a significant number are spread across the Mekong Delta. A large proportion in the Mekong Delta area are installed in nearshore conditions.
Whilst there is a current base of onshore and nearshore wind projects, no offshore projects have been constructed to date.
3. OFW projects with a survey license
Only three OFW projects have been granted survey licenses to date, including:
a) Thang Long OFW Power Project in Binh Thuan province, developed by Enterprise Energy Group, with a capacity of 3,400 MW.
b) The OFW project of Vietnam Oil and Gas Technical Services Corporation (PTSC) and Sembcorp in Ba-Ria Vung Tau province with the purpose of exporting 1.2 GW to Singapore pursuant to Singapore Energy Market Authority tender.
c) Ben Tre Wind Farm, co-developed by Mainstream and Advanced Information Technologies Corporation (AIT), with a capacity of 500 MW.
4. Grid planning
The power grid in Vietnam relies on a 500 kV transmission line stretching from the South to the North and is currently operation on two circuits. This backbone is supported by 220 kV and 110 kV HVAC infrastructure.
However, Vietnam´s transmission infrastructure is struggling to keep up with the growing demand for electricity across regions, leading to shortages and load shedding. To address this issue, plans are underway to upgrade the power infrastructure at all voltage levels. This includes constructing dedicated substations for connecting OFW power at 500 kV and 220 kV, as well as installing a third circuit for the 500 kV backbone.
Private sector investment into Vietnam´s grid has been encouraged since 2004 but has been limited due to constraints under the legal framework. Following Law 03/2022/QH15, private investors are permitted to develop and operate grid assets, however, the implementing investment framework requires clarification.
5. National marine spatial planning (NMSP)
The NSMP was approved on 28 June 2024 under Resolution 139/2024/QH15 by the National Assembly. OFW development is to be encouraged in 28 areas in the South Western sea region, In addition to other potential sea areas in other regions. Investigation, assessment, effective and sustainable exploitation of marine renewable energy sources is identified as a nationally important project and will be implemented throughout the entire planning period from 2021 to 2050.
A plan for implementation for of the NMSP and issuance of relevant support materials (e.g. data, maps, diagrams) will be completed in parallel (NMSP Implementation Plan).
6. Port Infrastructure
The ports of Vietnam have been assessed to determine their capability to support the logistics and operations of offshore wind projects. Suitable ports were identified for the assembly, staging, and transportation of foundations and wind turbine components. The analysis was based on various factors such as the port’s available space, water depth, berthing capacity, lifting equipment, accessibility, and the infrastructure’s overall readiness to handle components such as nacelles, blades, towers, and foundations. Consequently, ports with potential to support offshore wind developments have been identified.
Ports in the northern regions, including those in the Hai Phong cluster, currently demonstrate low capabilities in supporting the offshore wind industry, requiring higher investments and longer development timelines. It was found that height constraints of numerous prominent Northern shipyards would significantly limit the transportation of foundations. This limitation combined with geographical proximity to electrical components and cabling manufacturing (LS Vina Cables & System JSC, GE Vietnam Limited and ABB Automation and Electrification Vietnam Company Limited) make them ideal for future development of smaller complex components such as WTGs assembly lines or OSS components. Finally, these ports can also leverage their strong shipbuilding experience to build offshore wind dedicated vessels.
Ports in the southern regions present favourable conditions for the construction of larger components, likely influenced by the established presence of the oil and gas sector. A notable location would be the Vung Tau Port cluster, where PTSC is pioneering in the offshore wind industry. Congested quayside and yard area due to oil & gas operations in Vung Tau might obstruct the marshalling activities for future developments. The Thi Vai port cluster could also act as a staging and manufacturing hub, thanks to the presence of major manufacturing facilities for wind towers and steel foundations (CS Wind and SREC). This cluster also presents the potential for future development for manufacturing of monopole foundations.
To progress the development of the domestic supply chain capabilities, the southern ports should continue fostering their foundations and towers manufacturing capabilities. Ports in Vung Tau should reach a consensus allowing for a coordinated approach, increasing the facilities’ capabilities and usage efficiency. The coordination of the various activities among ports is essential and allows for the optimisation of logistical operations ensuring the projects’ seamless execution.
7. Local Suppliers
Domestic suppliers have been identified that have already supported offshore wind projects or have announced plans to enter the offshore wind supply chain. The available information focused on supplier’s track record, manufacturing capabilities, quality standards, and future expansion plans.
The suppliers’ assessment indicated that Vietnam’s existing capacity to manufacture foundations and towers could meet specific offshore wind requirements. However, as the domestic, and consequently regional, demand is anticipated to increase, the existing infrastructure will not be able to support the delivery of key components such as WTG blades and nacelles. This is mainly linked to the current inactivity of WTG OEMs who have yet to confirm plans to establish such manufacturing facilities in Vietnam.
The suppliers acknowledged that their investment decisions are highly linked to the development of Vietnam’s offshore wind market which should be backed-up by a consistent project pipeline. Having a consistent project pipeline is fundamental to the development of the domestic offshore wind supply chain and infrastructure.
Another key factor which can contribute to the development of a domestic supply chain is the finalisation of an offshore wind specific regulatory framework. Vietnam, as of the time of writing of this report, has yet to establish such a regulatory framework, resulting in the developers’ unwillingness to engage with the domestic suppliers and commit investment in the local infrastructure. The suppliers are now making preliminary steps to kick-start the development of a domestic supply chain conducting market studies, establishing connections with other local suppliers, fostering relations and partnerships, as well as promoting their offshore wind capabilities through marketing initiatives and the establishment of representative sales offices.
8. Job creation
Offshore wind projects provide job opportunities across the project’s entire lifecycle, spanning from the development, construction, and operation phases. The available information indicated a promising potential to generate numerous high-quality jobs, offering opportunities for technology transfer and knowledge exchange/sharing. The domestic personnel could potentially be mobilised to various positions in the offshore wind industry, such as mechanical engineering, electrical engineering, environmental expertise, and project management. As the offshore wind sector continues to expand, the potential for direct, indirect and induced jobs will increase.
Offshore Wind Supply Chain for Fast-Track Scenario in Vietnam Page 14 It is estimated that about 55,000 jobs including direct, indirect and induced jobs, could be generated throughout the development of 6 GW offshore wind capacity as presented under the PDP 8. Such development could create two inter-regions renewable energy industries, northern and southern, with associated service centres. A specific emphasis would be on manufacturing, servicing, research and training, and operation & maintenance activities. Key provinces that could be benefited by the development of offshore wind project would be Quang Ninh, Hai Phong for the North, and Ho Chi Minh, Vung Tau, Binh Thuan and Ninh Thuan for the South.
9. PTSC
PTSC, a member of Vietnam Oil & Gas Group (PetroVietnam- PVN), traces its origins back to Geophysical Group 36F, established in 1966. Over 47 years of development, PTSC has achieved significant milestones, propelling itself to the forefront as a premier contractor in delivering technical services to the oil & gas (O&G) industry and various other sectors within Vietnam and the broader region.
Today, PTSC stands as the leading local EPC/EPCI Technical Services Provider with a proven track record of over 100 O&G projects in Vietnam and internationally. This wealth of experience underscores their capability to navigate and excel in complex energy projects. Leveraging its extensive offshore engineering expertise, PTSC strategically entered the offshore wind sector at the close of 2021 with dual pivotal roles as a Technical Services Provider (Manufacturing Contractor) and Investor & Developer.
As a technical services provider, PTSC commenced its first milestone in this sector by winning the manufacturing contract for 02 units of Offshore Substations (OSS) in 2022 for The Hai Long 2 and Hai Long 3 Offshore Wind Farms in Taiwan. In consortium with Semco Maritime, PTSC has cumulatively secured the manufacturing contracts for 9 OSS units, serving leading offshore wind developers in Taiwan & Europe markets by the end of 2023. Another significant achievement for PTSC was securing the Procurement and Construction contract (EPC) in May 2023 for 33 Suction Bucket Jacket (SBJ) foundations – the first to be manufactured in Asia – for the Greater Changhua Offshore Wind Farms in Taiwan. By December 2023, PTSC recorded a substantial total backlog for contract value in the offshore wind sector, exceeding 1.2 billion USD. PTSC is poised to participate in numerous projects involving the fabrication of components (open to various types) for offshore wind power in the near future. PTSC plays a crucial role as a linchpin in the supply chain for offshore renewable energy in Vietnam.
In its role as an investor and a developer, PTSC is distinguished as one of the foremost local investors and developers for offshore wind farm projects in Vietnam. Presently, in collaboration with Sembcorp Utilities Ltd Pte (SCU, Singapore), PTSC is actively engaged in the joint development of the 2.3 GW Offshore Wind Farms Project off the south coast of Vietnam. This project is part of the Government-to-Government cooperation, with the aim of exporting green electricity to Singapore. Notably, PTSC stands as the first and only domestic investor in Vietnam to have been granted the extensive marine survey license for an offshore wind project by MONRE.
PTSC claims to be capable of supporting the following key supply chain work packages. However, it is noticed that to some extent despite their O&G detailed design experience, PTSC currently might lack OWF detailed design capabilities. This deficiency is particularly evident in their lack of involvement in Integrated Load Assessment or experience in managing large capacity electrical cables. However, PTSC’s strategic partnerships with leading international well-established offshore wind investors/developers and technical services providers, such as Furgo and Semco Maritime would help augment PTSC’s proficiency in those fields.
10. Challenges
• No supply chain specific incentives are in place so far, which creates hurdle to the development of a domestic offshore wind supply chain. The government is advised to take actions, starting with the allocation of investments to improve the domestic port infrastructure, which could act as marshalling or staging port for projects not only in Vietnam but also to other countries in the vicinity.
• Vietnam’s current supply chain strengths lay within the manufacturing of fixed-bottom offshore wind foundations. A few identified suppliers have already been awarded contracts to supply such structures to other regional markets.
• Vietnamese suppliers have established relationships with other international players aiming to exchange experience and knowledge, which will facilitate the development of the domestic supply chain. Semco Maritime and PTSC have forged such a partnership for the delivery of two offshore substations for the Hai Long project in Taiwan.
• Vietnam’s capabilities to provide wind turbine units (nacelle and blade) are limited as there is no manufacturing facility present in the market. A significant investment will be required to establish such facilities, which could require up to 3 years to be fully operational.
• Vietnam’s port infrastructure is suitable and capable of supporting the nearshore projects. However, the infrastructure will require investments to upgrade the port’s facilities. Targeted investment is advised, allowing for the creation of two clusters, one in the North and one other in the South
Legal and regulatory frameworks for OFW project development in Vietnam
OFW is at a nascent stage in Vietnam and there is not currently a national government strategy or plan for the sector. OFW sites have not yet been identified or zoned by the government within the context of a national plan.
Development is regulated and governed by the legal and regulatory framework that applies to both onshore and OFW. However, OFW projects have been delayed by issues impacting the application and interpretation of this framework.
A definition of an OFW projects is currently provided under Article 2.7 of Circular 19/2023/TT-BCT (Circular 19). Under Circular 19 an OFW project is defined as a grid-connected wind power plant with wind power turbines built in sea area beyond 6 nautical miles (nm) from the mainland. However, Circular 19 is a ministerial-level document and it is only applicable in a limited context (i.e. for the generation of solar and wind power tariffs) and not the OFW sector as a whole.
The current Draft Law on Electricity proposes a new definition for OFW projects under Article 24.5:
“A marine wind power plant” is a wind power plant with all wind turbines built and operated in the territorial sea of Vietnam and located outside the average [lowest] tide level line over many years towards the sea. An offshore wind power plant includes:
(a) a nearshore wind power plant being a marine wind power plant with all turbines built within 6 nautical miles from the average lowest tide level line for many years towards the sea, and
(b) an offshore wind power plant being a marine wind power plant, with all wind turbines built beyond 6 nautical miles offshore from the average tide level line for many years.”
PDP8
Given that energy transition is one of Vietnam´s strategic priorities, Vietnam´s PDP9 places a focus on clean energy development. PDP8 aims to achieve 31 to 39 percent of renewable energy generation capacity by 2030 and 68 to 72 percent by 2050. OFW is planned to reach approximately 6 GW by 2030 and between 70 to 91.5 GW, with the potential for further growth in case of technological development, competitive costs, and swift transmission build out.
PDP8 Implementation Plan
The Implementation Plan for PDP8 was approved under Decision 262/QD-TTg of the Prime Minister dated 1 April 2024 (Decision 262). Key contents of the PDP8 Implementation Plan include:
Approval and details of:
– Priority power source and grid projects, including regional interconnected grid projects.
– Renewable energy projects for development to 2025 (small-scale hydropower, onshore wind power projects, biomass, waste-to-energy, etc.)
– Prioritised schemes and projects on policy and technology capacity enhancement with respect to the power sector.
Policy and planning to:
– Allocate resources and capital in power sector investment.
– Facilitate the energy transition to clean and renewable energy sources.
– Coordinate state agencies in the implementation of PDP8.
– Assign tasks and responsibilities for implementation of PDP8 under Decision 500/QD-TTg.
Key power projects
Priority power projects for development in the period to 2030 are detailed under PDP8, and in the PDP8 Implementation Plan. OFW projects are not included in the priority project list under PDP8 or the PDP8 Implementation Plan.
A list of key energy projects and programmes have also been identified under Decision 270/QD-TTg of the Prime Minister dated 2 April 2024 (Decision 270). Within the power sector, Decision 270 identifies key power source (thermal, hydro, pumped storage hydro) and grid projects.
Development and implementation of an OFW pilot programme (OFW Pilot Scheme) is a key project under Section 7, Appendix, Decision 270. Projects under Decision 270 will be overseen by the State Steering Committee for key energy projects established under Decision 1447/QD-TTg dated 22 November 2023 of the Prime Minister.
The MOIT plans to submit the OFW Pilot Scheme in November 2024.
Pilot OFW Projects
The MOIT has been assigned responsibility for the development of the OFW Pilot Scheme. This includes an assessment of obstacles under the current legal framework and an identification of regulatory reform required.
The MOIT has provided an assessment of OFW potential and legal and regulatory reform required. Following receipt of recommendations from the MOIT, instructions with respect to OFW Pilot Scheme have been issued under Notice 356/TB-VPCP dated 30 July 2024. Pursuant to this Notice the MOIT, in conjunction with EVN and PVN, are required to devise the OFW Pilot Scheme.
On 1 October 2024 the Government assigned the MOIT to report on the necessary procedures to assign PVN responsibility to conduct a survey and pilot scheme for the implementation of OFW.
OFW Power Pricing
Rules for determining renewable energy power project price ranges have been adopted under Circular 19/2023/TT-BCT dated 1 November 2023, effective from 19 December 2023 (Circular 19). Following this Circular, EVN will manage the development of annual renewable energy power price ranges, which are subject to Electricity Regulatory Authority of Vietnam (ERAV)´s appraisal and the MOIT´s approval. The price calculation will be based on data from a standard OFW plant.
It is expected that the MOIT will issue a supplementary Decision which provides solar and wind tariff ranges, including OFW. However, pending this Decision, OFW tariffs are not currently available.
Electricity wholesale market (VWEM) operation rules
On 12 March 2024, the MOIT published a Draft Circular on the operation rules for VWEM for public consultation. Under this Draft, grid-connected power plants with an installed capacity of over 30 MW are required to directly participate in the VWEM, except certain special power plants and renewable energy power plants.
Non-hydro renewable energy power plants will participate indirectly or directly in the VWEM and on a voluntary basis, subject to having an installed capacity larger than 10 MW and required infrastructure.
Direct power purchase agreements (DPPA) mechanism
On 3 July 2024, the Government issued Decree 80/2024/ND-CP approving the introduction of a DPPA mechanism in Vietnam.
Investment Frameworks
Two investment frameworks are available for OFW development in Vietnam. Projects can be developed as an Independent Power Producer (IPP) project, under the Law on Investment and related regulation, or as a Public Private Partnership (PPP) project under the Law on Public Private Partnership. There are significant parallels between the two licensing and permitting processes, however, there are also key differences. To date, planned IPP projects remain at an early stage of development and no OFW projects in Vietnam have been developed as a PPP project.
Investor Selection
Currently, the Draft Law on Electricity includes a provision on investor selection under Article 33.3:
From time to time, depending on socio-economic development conditions, the Government shall provide specific regulations on:
a) Conditions for investors to participate in bidding;
b) Selection of investors for implementation of offshore wind power projects other than as stipulated in sub-clause 1 of this Article to achieve the targets for development pursuant to the master planning and demand for attraction of investors in this sector;
c) Selection of investors for development of offshore wind power projects for which survey has been approved pursuant to Clause 31.3(c)
(…)
Site Planning
OFW sites have not yet been identified or zoned by the Government within the context of a national plan and the country currently adopts an open-door approach to site selection. Planning is currently on the basis of national and regional capacity only. In addition to general plans such as the National Master Plan under Resolution 81/2023/QH15, OFW projects are governed by specialised plans, such as:
– National Energy Master Plan (Decision 893/QD-TTg)
– National Energy Master Plan Implementation Plan (Decision 338/QD-TTg)
– PDP8 (Decision 500/QD-TTg)
– PDP8 Implementation Plan (Decision 262/QD-TTg)
– National Energy Development Plan (Decision 215/QD-TTg)
– National Marine Spatial Plan (Resolution 139/2024/QH15)
The basis for inclusion of wind power project in the National Power Development Plan (NPDP) is prescribed under Circular 02/2019/TT-BCT (Circular 02) and the Law on Planning. The investor submits their pre-Feasibility Study documents to the MOIT through the Provincial People´s Committee (PPC)/Provincial Department of Planning and Investment (DPI) and engages with the MOIT and relevant agencies to progress the application. The PPC proposes supplementing the project into the NPDP (on an independent basis or in conjunction with other projects). The MOIT gathers the related agencies´ opinions and submits these to the Prime Minister for consideration and a final decision.
Site Survey Permit
The OFW site survey process in Vietnam is currently regulated by Decree 11/2021/ND-CP which regulates activities including the measurement, observation, investigation, survey and assessment of marine resources under Article 9.4. Under the current process an investor submits a survey application to the Ministry of Natural Resources and Environment (MONRE).
The Prime Minister has authority over projects where the investment policy is approved by the National Assembly or the Government. With the exception of projects under the authority of the Prime Minister, the MONRE is the competent authority for, among others, (i) inter-regional sea areas, sea areas beyond 6 nm from the lowest sea level edge of the mainland and islands (sea level measured as an average over many years); and (ii) sea areas related to foreign investors or foreign-invested economic organizations. With the exception of projects under the authority of the Prime Minister and the MONRE, the relevant PPC can make decisions on sea areas within 6 nm from the lowest sea area level edge of the mainland and islands (sea level measured as an average over many years).
Due to ambiguity with respect to the rights of foreign-based investors to conduct site surveys at sea, engagement with local firm with respect to survey activity has been an option selected by some foreign developers.
It is possible that government coordinated bidding will be introduced with respect to project sites going forward, however, the basis and structure of such a mechanism has not yet been determined.
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Please do not hesitate to contact Dr. Oliver Massmann at omassmann@duanemorris.com if you have any questions. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.