Ørsted joins forces to compete in Vietnam’s new offshore wind market

Ørsted, a leading offshore wind farm developer, has agreed to collaborate with T&T Group, a Vietnamese conglomerate, on the building of large-scale offshore wind farms off Vietnam’s southeastern coast.

The deal between Ørsted and T&T provides a single pipeline of multi-gigawatt wind projects off the shores of Binh Thuan and Ninh Thuan provinces, which are thought to be Vietnam’s best offshore wind development sites. They’ll work together to progress the pipeline and promote the development of a functioning regulatory framework for offshore wind in Vietnam.

Vietnam is a high-potential growth market for Ørsted. Vietnam’s EEZ boasts some of the finest offshore wind speeds in Asia, and the World Bank estimates that the country’s overall resource potential is in the region of 500 GW, which is more than five times the world’s installed offshore wind capacity.

Aside from its world-class potential, Vietnam faces a fast expanding power demand and a coal-dependent system. It also has the capacity to fulfill domestic offshore wind supply chain demands. These elements, taken combined, support Ørsted’s choice to join forces and enter the market.

By 2030, the Vietnamese government wants to support the building of offshore wind farms with a capacity of 6-15 gigawatts. The future of its subsidy scheme has lately become less uncertain. According to worldwide tax law firm CMS, its guaranteed feed-in tariff of $0.098 per kilowatt-hour for offshore wind was supposed to expire in November 2021, but in June 2020, its government decided to extend the deadline until the End of 2023. In keeping with current worldwide trends, it will most likely transition to an auction system after 2023.

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Ørsted has a long history in the industry, having established the world’s first commercial offshore wind farm off the coast of Denmark in 1991, and today having a market-leading global presence. In East Asia, the company is also interested in the nascent Japanese market, where it is competing for lease areas off the coast of Akita Prefecture with the Japan Wind Development Company and Eurus Energy. The winner of the auction will construct and run Japan’s first fixed-bottom wind farm in the Sea of Japan.