Norway's state-controlled energy giant Equinor ASA (NYSE:EQNR) has abandoned plans to invest in Vietnam's offshore wind sector, dealing a significant blow to the country's green energy ambitions.
According to the World Bank, over the past couple of years, Vietnam has attracted plenty of interest in its clean energy sector thanks to the country's strong winds in shallow waters near coastal, densely populated areas. Unfortunately, recent political turbulence in the country has paralyzed regulatory reforms and discouraged investors. For instance, last year, Danish offshore wind giant Ørsted A/S (OTCPK:DNNGY) paused its multi-gigawatt offshore wind plans, again due to regulatory challenges.
"We have decided to discontinue our business development in Vietnam and to close our office in Hanoi," Magnus Frantzen Eidsvold, an Equinor spokesperson, said in an interview.
This marks the first time Equinor has abandoned offshore wind development; in contrast, the company has previously exited more than a dozen fossil fuel projects to focus on renewables and low-carbon systems.
Currently, Vietnam has no installed offshore wind capacity but plans to install wind farms for 6 gigawatts (GW) by 2030, equal to 4% of its planned capacity. The offshore wind push is part of the country's goal to cut reliance on coal generation and reach net zero carbon emissions by the middle of the century. The communist government is pushing to assign to state-owned companies the first pilot project on offshore wind, a move that investors are opposed to because the domestic sector does not have enough capacity.
Currently, 40% of the global population lives within 60 miles of the ocean, making offshore wind an attractive clean energy alternative. Unfortunately, in recent years, dozens of offshore wind projects around the world have been delayed or canceled as costs have skyrocketed and supply chain disruptions have swelled. Last year, Ørsted canceled its highly anticipated Ocean Wind 1 and Ocean Wind 2 projects in the U.S., citing rising interest rates, high inflation, and supply chain bottlenecks. The two projects would have supplied just over 2.2 gigawatts to the New Jersey grid--enough energy to power over a million homes.
By Alex Kimani for Oilprice.com
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Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com. More