Insights from the Discussion on Amendments to the Electricity Law

Nguyen Tuan, who leads the Commerce Department at PetroVietnam Technical Services Corporation (PTSC), shared his insights during a discussion on the Electricity Law amendments on October 16.

The current draft of the law consists of 130 provisions, yet only 9 are dedicated to offshore wind power, which lack specific guidance and detail.

PetroVietnam and PTSC have put forward 17 proposals aimed at defining clearer policies and development strategies. Regrettably, just 4 of these have been addressed. Key unresolved topics include: establishing direction and models for development at various phases; clarifying PetroVietnam’s role per Conclusion 76-KL/TW; ensuring cohesive government oversight; aligning land and sea area allocations; and formulating solid mechanisms for overseas wind power sales.

The ambiguity in procedures surrounding offshore wind power, along with a missing developmental framework, has left significant legal gaps in terms of exports. This uncertainty also hampers the ability to attract investments necessary for a robust offshore wind supply chain in Vietnam.

Tuan emphasized that as offshore wind power is a new endeavor in Vietnam, a pilot mechanism is critically needed. He recommended empowering the government and the Prime Minister via the draft law to delineate a strategic development plan for this sector, set investor selection criteria, and clarify the investment policy approval process. Additionally, he suggested initiating pilot projects for offshore wind that cater to both domestic needs and exports.

Concerns have been raised by PTSC representatives regarding the auctioning of offshore wind power projects, particularly given the nascent market. They advocate for a phased development approach with tailored policies for each stage.

Given the high costs associated with offshore wind investments, Tuan urged for substantial incentives for investors, asserting that without such support, the market may stall, risking investor retreat. He proposed that the government consider exemptions or reductions in seabed usage fees, which pose a significant burden due to the large areas needed for wind farms. Furthermore, he called for a review of corporate income taxes over the project’s lifecycle, similar to incentives provided to foreign investors.

Dr. Du Van Toan from the Institute of Marine and Island Environment pointed out significant potential for offshore wind energy in Vietnam’s South-Central region. However, he noted growing challenges in securing areas for necessary surveys and investments.

Dr. Toan highlighted four critical challenges identified by the Ministry of Industry and Trade: ambiguity concerning authority over sea area allocations, approval processes for project-related activities in these areas, the absence of national marine spatial planning impacting Power Plan VIII, and unclear pathways for foreign market entry in offshore wind. He stressed the importance of enhancing the legal framework to tackle licensing and measurement standards.

To overcome these obstacles, Dr. Toan advocated for establishing a pilot mechanism for offshore wind projects. He proposed that the National Assembly pass a resolution prioritizing a pilot-scale development of 1,000 MW to 2,000 MW, complete with defined timelines and pricing structures.

Regarding strategic survey locations, Dr. Toan recommended exploring pilot projects in regions like Quang Ninh or Binh Thuan, which offer favorable wind conditions and logistical advantages. He also emphasized the necessity for pilot mechanisms that address preliminary survey processes, timelines, land use concerns, funding, and the management and evaluation processes involved.