OWA Industry Watch | facing an ebb? Equinor has also withdrawn from Vietnam's offshore wind market
Following the withdrawal of Danish renewable energy giant Orsted from the Vietnamese market, Norwegian energy giant Equinor also announced its withdrawal from Vietnam and the closure of its offshore wind development office in Hanoi. Earlier, the Vietnamese government showed a strong willingness to develop offshore wind power, and in May last year officially approved the eighth Power Development Plan (PDP8), the World Bank also said that by 2035, Vietnam offshore wind power has 11GW of installed potential. But the exodus of energy giants means that offshore wind development in the country is far from easy, and for now, regulatory challenges and political instability may be the main factors holding it back.
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Energy giants withdraw from Vietnam market
Norway's Equinor recently announced that due to the ongoing political volatility and uncertain market path in Southeast Asia, the company has decided to terminate its offshore wind investment plans in Vietnam and close its offshore wind development office in Hanoi. The decision marks a full retreat from Equinor's operations in Vietnam, which spokesman Magnus Frantzen Eidsvold confirmed to Reuters.
Last year, the World Bank named Vietnam as one of the emerging offshore wind markets, with its 2021 roadmap showing the country on track to reach nearly 25 GW of offshore wind capacity by 2035 and setting a target of 6 GW by 2030.
The reality, however, is more complicated. Last year, Equinor signed a memorandum of understanding (MOU) with PetroVietnam to deepen renewable energy cooperation, but ultimately failed to resist industry resistance and the pressure of its own strategy. Equinor spokesman Eidsvold said in a statement to Recharge Media that the offshore wind industry was facing significant headwinds and Equinor had to prioritize to ensure it remained competitive during the industry downturn.
Equinor's withdrawal is not an isolated case: Danish renewable energy giant Orsted pulled out of the Vietnamese market last year, after it had planned to develop "several gigawatts" of offshore wind projects in Vietnam, but eventually opted out of the Vietnamese market due to waning market attractiveness.
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Vietnam's wind power market is in trouble
Vietnam's offshore wind industry is currently facing multiple challenges, especially the vagueness of the policy framework and the uncertainty of the market path, which constitute major obstacles to its development. The government has reportedly been pushing state-owned enterprises to pilot offshore wind projects, but there are concerns that the inexperience of state-owned enterprises may lead to slow progress in offshore wind.
In addition, the Vietnamese government is conducting a broad "melting pot" anti-corruption campaign, which has resulted in the arrest and resignation of several senior government ministers.
Vietnam's nascent renewable energy sector is not immune. In January, Vietnam's former deputy trade minister Hoang Quoc Vuong, who was in charge of regulatory work in areas such as electricity and renewable energy between 2015 and 2020, was arrested for project licensing and certification violations.
Vietnam's President, To Lam, was elected in May and has continued a broad anti-corruption campaign launched by his predecessor
According to local media reports, the Vietnamese government recently launched investigations into 22 wind power projects and 10 solar power projects, alleging abuses of power.
In addition, the State Power Company of Vietnam (EVN), as the monopoly of the national grid system, has been asked to provide documents and information to assist in the investigation concerning the signing of power purchase agreements and inspection records of wind and solar projects. Four wind power projects, Hung Hai, Ia Bang 1, Cuu An and Ia Le 1, were also named in the investigation, the first two of which used Siemens Gamesa and Vestas turbines respectively.
Despite this, Vietnam maintains a leading position in the renewable energy sector, with nearly half of its electricity supply coming from renewable sources, especially hydropower. However, due to the large excess of wind and solar installed capacity, as well as the financial pressure on EVN and the state caused by the previous "generous" feed-in tariff policy, the ability of Vietnam's grid to handle such a large scale of variable power generation remains a concern.
According to local media reports, the Vietnamese government recently launched investigations into 22 wind power projects and 10 solar power projects, alleging abuses of power.
