Determining the list of renewable energy projects is currently very confusing, passive, and the scientific basis is not solid. Photo: Duc Thanh

Two policy options for offshore wind power

According to the draft revised Electricity Law submitted by the Ministry of Industry and Trade to the Government, to ensure the orientation of the shift from policies to encourage and support the development of renewable energy sources to competition policies, it is necessary to complete the policy framework to specifically regulate the development of renewable energy and new energy.

The Ministry of Industry and Trade believes that continuing to maintain the support electricity price policy (FIT price) is no longer appropriate. Encouraging renewable energy sources should be implemented through a flexible electricity price framework to suit the development orientation in each period.

Regarding offshore wind power development - a new field for Vietnam, the agency in charge of drafting the law emphasized that the investment rate is very large, about 2 - 3 billion USD/GW and the implementation time is from 6-8 years from the beginning of the survey and depending on the capacity scale and project implementation area. Offshore wind power projects play an important role in supplying electricity to the national power system, while contributing to helping Vietnam fulfill its commitment to carbon neutrality by 2050.

However, in addition to ensuring energy security, offshore wind power development must be associated with protecting airspace, sea areas and ensuring national security. It has not yet been determined whether the exploitation of natural resources for offshore wind power projects falls within the scope of the Law on Marine and Island Environment and Resources.

On the other hand, current laws have not specifically defined the authority to approve investment policies for offshore wind power. Therefore, institutionalizing Resolution No. 55-NQ/TW of the Politburo on breakthrough mechanisms for offshore wind power development associated with the implementation of Vietnam's Marine Strategy is facing many difficulties.

In addition, the reality of recent times shows that solar and wind power technology has developed rapidly and technological equipment has a lifespan of a certain period of time, while land and natural resources are limited and need to be used effectively. However, current laws do not stipulate the responsibility of investors to dismantle the construction when the operating period or the term of use expires as prescribed above.

“Therefore, the Electricity Law needs to be amended and supplemented with policies on renewable energy development to institutionalize the Party's guidelines and policies,” the drafting agency affirmed.

In the Draft Law Proposal, the Ministry of Industry and Trade separated 4 issues for comments, including policies for offshore wind power. Accordingly, to build a mechanism for offshore wind power, in addition to the electricity generation price framework and incentives, support for investment and taxes according to regulations, there are 2 policy options to be considered.

Option 1 is to have a policy of commitment to the minimum amount of electricity mobilized and the implementation period with the advantage of institutionalizing Resolution 55-NQ/TW, being a breakthrough, creating conditions to strongly promote investment in offshore wind power. The electricity buyer (Vietnam Electricity Group - EVN) has a basis for mobilization, not under pressure from business losses, when the cost of offshore wind power production is higher than the average price of the system. However, the disadvantage is that, during the incentive period, this policy does not ensure the marketability of offshore wind power like other types.

Option 2 is to follow other types of power sources, which has the advantage of ensuring comprehensive market access for all types of renewable energy, but it is difficult to attract investment in offshore wind power, due to the large investment scale and high electricity prices, EVN has the right to refuse to buy.

The Ministry of Industry and Trade proposed option 1 in the Draft.

Concerns about self-produced and self-consumed electricity

The latest draft (Draft 5) has devoted Chapter IIII to regulate the development of renewable energy and new energy. This chapter has legalized the concept of offshore wind power, stipulating that an offshore wind power plant is a wind power plant at sea, with all wind turbines built more than 6 nautical miles from the mainland from the average low water line of many years.

Chapter III also regulates the development of offshore wind power and support policies for this type (to be regulated by the Government) to institutionalize Resolution No. 55-NQ/TW. In addition, there are a number of other regulations such as the development of self-produced and self-consumed electricity sources for purposes (living, administrative and career, production and business) and a number of support policies of the State (Provincial People's Committee) for households.

Another new content is the regulation on the development of electricity from new energy based on the requirements of ensuring energy security and conditions for scientific and technical progress, human resources, and financial capacity of the economy, and additional regulations on the implementation of repair, renovation, and replacement of equipment of renewable energy and new energy electricity.

According to Mr. Nguyen Quyet Chien, General Secretary of the Vietnam Union of Science and Technology Associations, in addition to renewable energy and new energy, electricity storage technology also needs appropriate encouragement and support policies from the State. From there, there is a basis for building specific policies to promote the development of this technology to help exploit renewable energy sources more effectively, contributing to reducing the pressure on operating and regulating the power system.

Article 34 of the Draft stipulates that the State encourages organizations and individuals to develop self-produced and self-consumed electricity from renewable energy sources and new energy sources to supply the load demand of those organizations and individuals. Including regulations on self-produced and self-consumed electricity in the Draft may make renewable energy investors understand that other types of renewable energy besides self-produced and self-consumed renewable energy will be limited and difficult to invest and develop. "This is not consistent with Vietnam's policy and goal of sustainable energy transition," Mr. Chien commented.

Commenting on the incoherent regulations on self-produced and self-consumed electricity, even some of which are unreasonable (such as not being allowed to sell self-produced and self-consumed electricity to other households), Dr. Le Hai Hung (Hanoi University of Science and Technology) said that the issue of self-produced and self-consumed electricity should not be included in the Draft.

According to Mr. Nguyen Duc Hanh, Deputy Director of the Institute of Energy (Ministry of Industry and Trade), with the ultimate goal of ensuring energy security in the new situation, the amendment of the law needs to take into account a number of new factors. Accordingly, small-scale, distributed sources, mainly renewable energy, are developing very strongly and gradually taking on a leading role in electricity supply. "This type of source has the characteristics of small scale, distributed (except for offshore wind power) and each project has its own characteristics in terms of land use planning, infrastructure, connection, primary energy potential, and environment," Mr. Hanh noted.

Mr. Hanh commented that the development of renewable energy is facing problems, as before, in order to determine the list of renewable energy projects, it is necessary to establish a national renewable energy plan, renewable energy plan and power development plan of provinces and cities. After the Law on Planning was applied, the above types of plans have not been established. Therefore, in the plan to implement the National Power Plan, the determination of the list of renewable energy projects is very confusing, passive, and the scientific basis is not solid.

Mr. Nguyen Duc Hanh acknowledged that these sources are mostly implemented by private investors, so it is difficult to control progress and quality. Current investment laws only consider the selection of an investor or a contractor for a specific project, not considering competitive bidding for the development of renewable energy projects (the characteristics of renewable energy projects are often linked to the land of a specific investor and the initial investments that the investor has made, so it is difficult to bid or select another investor for that location).

“Without adjustments to laws and mechanisms, it will be very difficult to ensure electricity supply,” Mr. Hanh emphasized.

Before being submitted to the National Assembly at the 8th Session later this year, the Draft will be commented on by the National Assembly Standing Committee at the August 2024 meeting.