Years of painstaking relationship-building at the highest level of government will soon see one of the world’s largest offshore wind farms enshrined in the national energy policy of Vietnam, the founder of the company leading the project hopes.
Ian Hatton, chairman of Enterprize Energy, said the 3.4GW, $12bn plan to develop the Thang Long Wind project off the south of the country, has applied for acceptance in Vietnam’s National Power Development Plan VII (NPDP 7).
“To be included is effectively to be part of [Vietnam’s] national strategy. A 3.4GW project is going to be a major national power generation asset,” Hatton told Recharge. “It is the authority by which projects move forward to construction.”
Acceptance in NPDP 7 would be the most significant breakthrough yet for Enterprize and its partners in a Vietnamese offshore wind “alliance” first unveiled in early 2018, and which hopes to have its first 600MW phase up and running in 2023. Other alliance members are turbine-maker MHI Vestas, Vietsovpetro, Petro-Vietnam Construction, and Offshore Design Engineering (ODE). Societe Generale has been mandated to lead the project financing segment and state consultancy EVN PECC3 prepared the NPDP 7 submission.
Along the way Hatton has met Vietnam’s Deputy Prime Minister and addressed the central economic committee of the Vietnamese Communist Party – the first non-Vietnamese to do so.
He said the message from the Deputy Prime Minister was clear: “The focus is providing substantial energy at a price Vietnam can afford. Pay attention to what we’re telling you, meet these objectives and things will go well.”
Hatton reckons the high-level relationship-building has allowed his group to focus on delivering what the Vietnamese government wants, rather than what the offshore wind sector sees as an ideal landscape – a trap he believes some others in the sector have fallen into.
“Some developers were hanging on expecting there to be some sort of Western-type regulatory framework. I think that’s a fundamental misunderstanding of how countries like Vietnam work,” Hatton said.
Companies come here expecting to operate as if they’re in Western Europe.
“I’ve seen some companies come into a new markets where there’s a feed-in tariff, and the first thing they argue for is an increase [to the FIT]. That will not go down well.
“Unfortunately, it’s a trait we’ve seen a lot here in Asia, that companies and organisations come here expecting to operate in the same way as if they’re in Western Europe.
“Vietnam is a country which will be very courteous, but they are very capable of making their mind up over how to progress this.”
Vietnam in fact has an offshore feed-in tariff worth the equivalent of $0.098/kWh, but that expires in late 2021 and “even when they issued it, it was pretty well known that no one was going to make it”, said Hatton.
Instead of obsessing with the FIT, the team behind Thang Long has focused on preparing a comprehensive proposition to the government as part of its submission for NPDP 7, which if accepted will underpin the project’s relationship with the Vietnamese government and state power group EVN.
“We are to an extent embracing the risk of what a commercial deal is going to be with the government. Part of the acceptance into NPDP 7 will be the commercial terms.”
Hatton says this chimes with the “radically different approach to the way we approach contracting and financing” that will allow the project to move forward rapidly once given official blessing, including early engagement with suppliers.
Crucially, said Hatton, Vietnam has many of the elements already in place to deliver an heavily-localised offshore wind supply chain, meaning local content should be far less of a tricky issue than in other markets.
Hatton – a Briton with a long background in offshore energy who developed Ormonde, one of the UK’s first offshore wind farms, and before that was a senior geologist and director of exploration in the oil industry – added that Vietnam has also indicated it is very open to being part of a regional supply chain in Asia with markets such as Taiwan, where Enterprize is also involved.
