Special policy mechanisms are needed so that offshore wind and gas power do not "miss planning appointments".

According to the Power Plan VIII from now until 2030, gas-fired power and offshore wind power account for about 50% of the total power capacity that needs to be added. Meanwhile, each gas-fired power and offshore wind power project needs at least 7-8 years to be completed and put into operation, so there needs to be a separate policy mechanism to ensure that these projects are implemented on schedule, not "missing" the goals set by the Plan. The challenge is not small. According to the Power Plan VIII for the period 2021 - 2030, with a vision to 2050 approved by the Prime Minister in Decision No. 500/QD-TTg dated May 15, 2023, the total installed capacity of power sources by 2030 is 150.489 GW (nearly double the current total installed capacity, about 80 GW). Of which, the total capacity of gas-fired power sources that need to be newly invested in is 30,424 MW. The total capacity of offshore wind power sources is about 6,000 MW and can be increased in case of rapid technology development, reasonable electricity prices and transmission costs). These two sources account for about 50% of the total additional power capacity. At the same time, the development of gas power and offshore wind power will help Vietnam fulfill its commitment to carbon neutrality by 2050. Gas power projects are flexible, stable baseload power sources that will support wind and solar power projects to ensure security of power supply. At a recent meeting chaired by Minister of Industry and Trade Nguyen Hong Dien to find solutions to remove difficulties and obstacles in the implementation of offshore gas and wind power projects according to the Power Plan VIII, experts said that ensuring electricity supply and national energy security by 2030 is a huge challenge, because it must both increase very quickly in scale and strongly transform the structure to approach the goal of carbon neutrality and balanced development of regions, and balance between source and transmission. In particular, the development of our country's base power sources in the coming time is forecasted to face many difficulties and challenges, especially in the context of hydropower basically running out of room for development; coal-fired thermal power cannot be developed further after 2030 according to international commitments.

Minister Nguyen Hong Dien chaired a meeting to review difficulties and obstacles in the implementation of offshore gas and wind power projects under the Power Plan VIII and find solutions to remove them.

Experience in implementing LNG power projects shows that the preparation for investment, construction and operation of these power plants is quite long. In fact, to implement a power project from the time the project is approved for planning to when it is put into operation requires about 7-8 years. Of which, the time for selecting investors is 1-2 years; completing the Feasibility Study Report and necessary legal documents for the project is about 1-2 years; negotiating the PPA Contract, arranging loans is about 2-3 years, the time of this stage is difficult to determine and has a large fluctuation, because it depends on the experience and financial capacity of the Investor and the specific requirements in the PPA Contract; and the construction time is about 3.5 years. For offshore wind power projects, the implementation time is about 6-8 years from the time of survey. Therefore, the implementation of offshore gas and wind power projects to meet the schedule of putting them into operation before 2030 is a huge challenge. A mechanism is needed to ensure investors in the long term. According to the Power Plan VIII, the total capacity of gas power plant projects invested in and put into operation before 2030 is 30,424 MW, including 10 projects using domestically exploited gas with a total capacity of 7,900 MW and 13 projects using LNG with a total capacity of 22,824 MW. For LNG power projects, there are 3 remaining problems that need to be resolved that are not clearly regulated by current laws, including: Minimum gas output guarantee; Mechanism for transferring gas prices to electricity prices; Gas purchasing mechanism in line with the general trend of the world. Mr. Nguyen Duy Giang - Deputy General Director of PetroVietnam Power Corporation - JSC (PV Power) said that recently, the Government and ministries, especially the Ministry of Industry and Trade, have paid attention to directing and supporting the removal of obstacles so that LNG power projects can be completed on schedule. However, the actual implementation process still has problems. "The biggest requirement of lenders and sponsors is to have a long-term Qc (contracted electricity output) for the project. That is the most important thing to ensure cash flow to repay debt" , Mr. Nguyen Duy Giang shared.

Experts point out 3 obstacles in implementing LNG power projects according to Power Plan VIII

In addition, Mr. Giang also said that the input gas price for projects is currently anchored to world prices, so there needs to be a mechanism for transferring gas prices into electricity prices. "If the problems are not resolved completely, if there are no mechanisms for long-term processes and gas transfer, it is clear that the project can be rejected by lenders at any time, causing losses not only to the investor but also to the national power system and possibly affecting the implementation of the VIII Power Plan" , said the leader of PV Power. Along with the development of gas power plant projects, in the coming time, Vietnam Gas Corporation - Joint Stock Company (PV GAS) will focus on investing in the construction of port warehouses to prepare infrastructure in line with the development orientation of the VIII Power Plan. Mr. Pham Van Phong - General Director of PV GAS informed that in the near future, PV GAS will complete the increase of the capacity of the Thi Vai LNG warehouse from 1 million tons to 3 million tons to ensure the ability to supply gas to the entire Southeast region. The second project that PV GAS is preparing procedures to implement investment is the Son My LNG port warehouse project. The third project that PV GAS is looking forward to implementing and is in the process of working with investors and localities is the concentrated port warehouse project in the Central region. The fourth project is the concentrated port warehouse project in the Northern region. The total investment for these 4 projects is estimated at about 4 billion USD, the capital recovery period is up to about 20 years. Therefore, it is necessary to have a mechanism for buying and selling LNG for power plants, legalizing the determination of costs for storing, distributing and transporting gas to consumption places and committing to a minimum gas consumption volume to ensure capital recovery for investors. Assoc.Prof.Dr. Bui Xuan Hoi - Principal of the Northern College of Electricity also said that gas-fired power projects have many differences compared to other power sources, especially in terms of cost and input. Therefore, within the legal framework of the current electricity market, it is very difficult for gas-fired power to participate "fairly". "I think that there needs to be a special mechanism for these power sources. This requires the Government's determination to build specific mechanisms for specific power sources to be able to participate in the grid and generate electricity" , Mr. Hoi analyzed, saying that at the same time, there must be a mechanism to adjust retail electricity prices flexibly, in accordance with market signals to ensure the sustainable development of power sources.

Assoc.Prof.Dr. Bui Xuan Hoi - Principal of Northern Electricity College

Proposing the National Assembly to issue a separate Resolution for gas-fired power and offshore wind power Meanwhile, offshore wind is considered the only renewable energy source capable of running baseload for the system. Vietnam is located in the tropical monsoon climate zone, with a coastline of 3,260 km with 28 coastal provinces and cities, so the potential for wind energy development in Vietnam is extremely large. According to the World Bank, Vietnam is the country with the largest wind energy potential among the four countries in the region: Cambodia, Laos, Thailand and Vietnam, with more than 39% of Vietnam's total area estimated to have an average annual wind speed of more than 6m/s at a height of 65m, equivalent to a capacity of about 512 GW. The Offshore Wind Roadmap for Vietnam published by the World Bank in 2021 presents a high scenario of 70 GW by 2050, with a vision of a successful country in the offshore wind industry and believes that Vietnam could rank 3rd in Asia (after China and Japan). The investment rate for 1 MW of offshore wind power has decreased sharply since 2012 with 255 USD/MWh to about 80 USD/MWh now and after 2030 will be about 58 USD/MWh. The World Energy Organization once stated that Vietnam will be one of the 5 offshore wind power centers in Southeast Asia in the world along with Northern Europe, America, East Asia, and South America. According to the Power Plan VIII, the offshore wind power capacity by 2030 will reach 6,000 MW, with a target of 70,000 MW to 91,000 MW by 2050. Offshore wind power is planned to be developed on a large scale due to its relatively good technical potential across the country's territorial waters, and superior technical characteristics compared to onshore solar and wind power sources. However, this type of power source has no development experience in Vietnam.

Realizing the goals set out in Power Plan VIII for offshore wind power is also a huge challenge.

In particular, offshore wind power has a very large investment rate, about 2 - 3 million USD/1 MW and the implementation time is about 6 - 8 years from the beginning of the survey. Due to the specific nature of technology and engineering, large investment scale, complex investment processes and procedures, realizing the goals set out in the Power Plan VIII for offshore wind power is also a huge challenge. For offshore wind power projects, experts pointed out 4 remaining problems related to: The competent authority assigns sea areas, allows or approves organizations to use sea areas to carry out measurement, monitoring, investigation, exploration, and survey activities to serve the establishment of offshore wind power projects; Up to now, the National Marine Spatial Planning has not been approved, so there is no basis for implementing the Power Plan; Authority to approve investment policies; Market access conditions for foreign investors in the offshore wind power sector. To solve these problems, it is necessary to promptly report to the Government to propose to the National Assembly to issue a Resolution on specific mechanisms and policies for the implementation of offshore gas and wind power projects, meeting the progress according to the 8th Electricity Plan. In particular, the offshore wind power project needs to be included in the list of important national projects that need to apply special mechanisms and policies. At a recent meeting, Minister of Industry and Trade Nguyen Hong Dien requested EVN, PVN, PV GAS, and PV Power to urgently review legal regulations and base on the actual implementation situation, difficulties and obstacles of the projects, as well as refer to the experience of countries with strengths in developing offshore gas and wind power to have specific proposals and reports to the Prime Minister and the Ministry of Industry and Trade, before December 20, 2023. The Minister also assigned the Electricity and Renewable Energy Department to preside over and coordinate with units (Electricity Regulatory Authority, Department of Oil, Gas and Coal, Department of Legal Affairs), based on reports from units, to synthesize reports to the Government to propose the National Assembly to issue a Resolution to remove obstacles to current legal regulations in the implementation of offshore gas and wind power projects according to Power Plan VIII before December 30, 2023.

TCCT