LNG, offshore wind energy projects may miss 2030 deadline: official

By Phuong Dung   December 26, 2023 | 02:11 am PT
LNG-to-power projects typically take 7-8 years to complete while offshore wind energy projects could take 6-8 years, meaning they might not be operational by 2030 as planned.

The statement was made by Hoang Tien Dung, director general of the Electricity and Renewable Energy Authority under the Ministry of Industry and Trade, during a meeting about the development of LNG and offshore wind energy projects on Dec. 25.

According to the National Power Development Plan VIII, which guides the development of power plants and the national grid, Vietnam’s energy production will nearly double and surpass 150,000 MW by 2030.

The master plan also sets ambitious goals for Vietnam's renewable energy sector.

By 2030, energy production from natural gases should reach 30,420 MW, with 75% from LNG, while offshore wind energy is expected to achieve a capacity of 6,000 MW.

In the same timeframe, 13 LNG projects are expected to be developed. However, only one project has progressed so far: the Nhon Trach 3&4, which is under construction and expected to start operating in mid-2025 with a capacity of 1,500 MW.

"It is no small challenge to put LNG and wind energy projects into operation by 2030," Dung said.

For offshore wind energy, only a few projects have progressed to the site survey stage. Experts at the meeting believed the biggest hurdle for these projects was the lack of legal framework and infrastructure.

Pham Van Phong, CEO of natural gas firm PV Gas, mentioned the difficulty in determining an LNG project’s profitability, required capital and volume of gases to be imported due to the lack of financial policies, offtake agreements and guidelines on determining energy prices.

Le Manh Hung, CEO of state energy firm Petrovietnam, noted that since LNG and offshore wind energy projects shared some common stages, like seabed surveys, these activities could be simultaneously conducted for both projects.

He said this was a highly productive strategy that could not be done due to a lack of regulations. "No regulator was specifically responsible for issuing policies and planning site surveys for offshore wind energy projects."

Additionally, the infrastructure for importing LNG is currently inadequate and not connected to power plants, which is suboptimal and ineffective, said Phong.

"The port with LNG storage zone in Thi Vai, Ba Ria-Vung Tau, is the only one in operation. Other ports encountered many obstacles," he added.

Another issue brought up at the meeting was the pricing method.

Dinh Trong Thinh, an economist, suggested having clearer regulations on trading electricity from these projects. "The government has already regulated electricity prices so there should be mechanisms to ensure electricity trading follows the rules of market economy. Only then will investors be willing to pour billions of dollars into LNG and wind energy plants," Thinh said.

Nguyen Tien Thoa, president of the Vietnam Valuation Association, recommended revising the Electricity Law to remove price limits.

With current regulations, either the state electricity firm EVN will go bankrupt, or the government will have to foot the difference between the cost of electricity and the retail price, he said.

Last week, the Ministry of Industry and Trade asked provincial authorities to work with investors to expedite wind energy and LNG projects.

Nonetheless, experts said the problems facing these projects were connected to various other laws, including the Land Law, Law on Property Auction, Electricity Law and other legal documents, all of which require adjustment.

Nguyen Quoc Thap, president of the Vietnam Petroleum Association, agreed that the National Assembly should issue special policies while simultaneously revising laws to help renewable energy projects.

Dr. Phan Duc Hieu, a standing member of the National Assembly’s Economic Committee, recommended the Ministry of Industry and Trade to form an expert task force for revising and drafting laws, as these tasks should not be done by solely the government without consulting other parties.

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