Scotland Eager to Support Offshore Wind Power Projects in Vietnam

Scotland has proven eagerness to assist Vietnam’s offshore wind energy improvement throughout a gathering between its First Minister Nicola Sturgeon and Vietnamese Prime Minister Pham Minh Chinh on the sidelines of the 2021 Local weather Change Convention (COP26) in Glasgow.

Vietnam has proposed collaboration within the type of overseas funding, expertise switch, and human useful resource coaching because the nation goals to extend wind energy capability to 18 GW from its present 0.6 GW contribution by 2030.

That is additionally a part of the federal government’s draft energy improvement plan eight (PDP 8) for 2021-2030 with a imaginative and prescient to 2045. PDP 8 seems to be to solidify Vietnam’s dedication to renewables extra broadly, particularly in increasing photo voltaic and wind energy within the nation’s electrical energy era combine.

Scotland, in the meantime, has quickly transitioned away from fossil gas energy. In 2020, the nation noticed the equal of 97.4 p.c of gross electrical energy consumption was generated from renewable sources. The nation goals to generate half of its whole power consumption from renewable assets by 2030 and attain its net-zero emissions goal by 2045.

Vietnam’s burgeoning electrical energy wants

Vietnam has catapulted from one of many world’s poorest international locations right into a lower-middle-income nation in a single era and with it, demand for electrical energy has elevated at a median of 10 p.c per 12 months during the last 5 years. This demand was catered by way of the imports of coal for coal-fired energy crops; greater than half of the nation’s electrical energy era got here from coal in 2020.

The nation wants US$150 billion in new capital investments for electrical energy era and grid upgrades to satisfy rising electrical energy calls for by 2030, rising Vietnam’s power capability to 138GW. Between 2021 and 2025, the nation’s energy demand is forecast to rise 8.6 p.c per 12 months and seven.2 p.c per 12 months between 2026 and 2030.

The federal government issued a brand new Decision 21 in January 2020 which units out a plan for energy era within the nation. Below the decision, wind energy has been given precedence over different power sources. Amongst wind initiatives, precedence is additional given based mostly on location.

Wind energy alternatives in Vietnam

Vietnam’s local weather and topography naturally lend themselves to wind energy, with common annual wind speeds reaching as excessive as 10m/s in southeast provinces and a shoreline stretching greater than 3,000km.

As such, offshore wind energy has vital room for development as a scalable different to coal imports. The nation additionally depends on hydroelectric energy and is house to a number of giant rivers together with the Mekong. Hydroelectric energy fashioned 26 p.c of the overall electrical energy era in 2020, however that is set to scale back from 2030 onwards as hydro’s reliability is impacted by durations of drought and water shortages.

For offshore wind energy, nonetheless, the World Financial institution forecasts that Vietnam’s potential may attain 500GW by 2030, and consultancy agency Wooden Mackenzie predicts Vietnam to account for 66 p.c of whole new wind capability to be added to Southeast Asia by the identical 12 months. As compared, Germany solely has 8GW of offshore wind capability and a national whole of 62GW put in.

There are a number of challenges in increasing this sector, specifically associated to excessive prices. Wind initiatives have a better monetary barrier to entry, with the typical whole put in prices for offshore wind energy coming to US$3,200 per kilowatt, in contrast with US$900 for photo voltaic panels.

Additional, wind initiatives can have a two-year building interval and few unique tools producers (OEMs) produce the expertise. PV-cell producers, nonetheless, are widespread in Vietnam and so their building prices are a lot decrease.

Authorities incentives

The federal government is actively encouraging overseas buyers to develop offshore wind initiatives in Vietnam.

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

They’re additionally entitled to state loans and tax and non-tax incentives which embody:

• A ten p.c relevant company revenue tax (CIT) charge for 15 years, which will be prolonged to 30 years in particular circumstances;
• A CIT exemption interval of as much as 4 years;
  • Items imported as supplies, uncooked supplies, and semi-finished merchandise which Vietnam is unable to supply and used for the wind mission are tax-free; and
• A CIT discount of fifty p.c for as much as 9 years.

Additional, the federal government is debating on whether or not to increase the present feed-in tariff (FIT) for onshore wind initiatives of US$0.85 per kWh and US$0.98 per kWh for offshore initiatives till March 31, 2022.