Equinor Halts Offshore Wind Plans in Vietnam: A Setback for Renewable Energy Ambitions
As Equinor's exit highlights the precarious state of Vietnam's offshore wind ambitions, the future of the sector remains uncertain. The government must address the existing regulatory gaps
In a significant development for Vietnam's renewable energy landscape, Equinor, the Norwegian energy giant, has announced the cancellation of its offshore wind energy projects in the country. This decision marks a notable retreat from a market that has been touted for its potential, given Vietnam's favorable wind resources. The announcement comes on the heels of similar actions by other major players in the industry, including Danish firm Orsted, which had previously paused its market development activities in Vietnam.
Equinor's spokesperson, Magnus Frantzen Eidsvold, confirmed that the company will close its Hanoi office, a move that underscores the challenges facing the offshore wind sector in Vietnam. "We have decided to discontinue our business development in Vietnam and to close our office in Hanoi," Eidsvold stated. This closure is particularly significant as it is the first time Equinor has shut down an international office focused on offshore wind development, reflecting a broader trend of caution among renewable energy investors in the region.
Vietnam has long been recognised for its robust wind resources, especially in shallow coastal waters, making it an attractive destination for offshore wind projects. However, the country has struggled to establish a comprehensive legal and regulatory framework that would facilitate the development of such projects. Delays in implementing necessary reforms have led to uncertainty, prompting major investors like Equinor and Orsted to reconsider their commitments.
Equinor - The Challenges
The challenges facing offshore wind development in Vietnam are multifaceted. At a recent meeting, Deputy Minister of Industry and Trade Nguyen Hoang Long identified key obstacles, including issues related to planning, investment policy, and investor selection. Additionally, the conditions for market access for foreign investors and the complexities surrounding public-private partnerships (PPP) have further complicated the landscape. The lack of clear construction permits and regulatory standards, as well as concerns regarding national security and electricity pricing, have also contributed to the hesitation among potential investors.
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Johan Chairil
Despite these setbacks, there are still signs of interest in Vietnam's renewable energy sector. The Ministry of Industry and Trade has expressed support for a $4.6 billion offshore wind project proposed by Germany-based developer PNE AG in Binh Dinh province. Moreover, Japanese conglomerate Marubeni has indicated plans to increase its investments in Vietnam's energy sector, including offshore wind and solar energy projects.
The Global Wind Energy Council (GWEC) has noted that Vietnam has yet to initiate any true offshore wind projects, with only intertidal wind developments currently in operation. The ambitious target of installing 6 GW of offshore wind capacity by 2030, as outlined in the country's latest power development plan (PDP VIII), is now viewed as increasingly challenging. The GWEC's Market Intelligence report suggests that without significant regulatory improvements and a clear route-to-market policy, Vietnam is unlikely to meet its offshore wind targets.
Vietnam's offshore wind ambitions
As Equinor's exit highlights the precarious state of Vietnam's offshore wind ambitions, the future of the sector remains uncertain. The government must address the existing regulatory gaps and create a more conducive environment for foreign investment to revitalise interest in renewable energy projects. With global energy markets evolving and a pressing need for sustainable energy sources, Vietnam's ability to adapt and overcome these challenges will be crucial in determining its position in the renewable energy landscape.
Equinor's withdrawal from Vietnam's offshore wind sector serves as a cautionary tale about the importance of regulatory clarity and investor confidence in developing renewable energy projects. As the country seeks to harness its vast wind resources, it must navigate these challenges to realise its green energy ambitions and attract the necessary investment to build a sustainable energy future.