Ørsted Partners Up to Compete in Vietnam's New Offshore Wind Sector
Leading offshore wind farm developer Ørsted has signed an agreement with Vietnamese conglomerate T&T Group to cooperate on the development of large-scale offshore wind farms off Vietnam's southeastern coast.
The memorandum of understanding between Ørsted and T&T creates a unified pipeline of a multi-gigawatt pipeline of wind projects located off the coasts of Binh Thuan and Ninh Thuan provinces, believed to be Vietnam's best areas for offshore wind development. They will team up to advance the pipeline and support the creation of a working regulatory framework for Vietnamese offshore wind.
Ørsted sees Vietnam as a high-potential growth market. The nation's EEZ has high offshore wind speeds, some of the best in Asia, and the World Bank believes that Vietnam's total resource potential is in the range of 500 GW - more than five times the entire world's installed offshore wind base today.
In addition to this world-class potential, Vietnam has a rapidly growing demand for electricity and a coal-dependent grid. It also has the capability to support offshore wind's supply chain needs domestically. Taken together, these factors support Ørsted's decision to partner up and enter the market.
The Vietnamese government hopes to encourage development of 6-15 gigawatts of offshore wind by 2030. Uncertainty over the future of its subsidy system has recently been reduced. Its guaranteed feed-in tariff of $0.098 per kilowatt-hour for offshore wind was set to expire in November 2021, but in June 2020 its government agreed to extend the deadline until the end of 2023, according to global tax law firm CMS. After 2023, it will likely switch to an auction system, in line with current global trends.
Ørsted has a long history in the sector: its predecessor firm built the world's first commercial offshore wind farm off Denmark in 1991, and the company now has a market-leading global presence. In East Asia, the firm also has interest in the budding Japanese market, where it has partnered with the Japan Wind Development Company and Eurus Energy to compete for lease areas off Akita Prefecture. The auction winner will build and operate the first Japanese fixed-bottom wind farm in the Sea of Japan.