Regulatory challenges force Equinor to halt Vietnam offshore wind project

Norway’s state-controlled energy giant Equinor ASA (NYSE:EQNR) 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, in the past two years, Vietnam has attracted a lot of interest in its clean energy sector due to the country’s strong winds in shallow waters near densely populated coastal areas. Unfortunately, recent political turmoil in the country has stalled regulatory reforms and discouraged investors. For example, last year the Danish offshore wind giant Ørsted A/S (OTCPK:DNNGY) has put its multi-gigawatt offshore wind plans on hold, again due to regulatory challenges.

“We have decided to discontinue our business development in Vietnam and close our Hanoi office”, said Magnus Frantzen Eidsvold, spokesperson for Equinor, in an interview.

This is 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 installation plans wind farms for 6 gigawatts (GW) by 2030, equal to 4% of its planned capacity. Offshore wind power is part of the country’s goal to reduce reliance on coal generation and reach net zero carbon emissions by mid-century. The communist government is pushing to award the first offshore wind pilot project to state-owned companies, a move investors oppose because the domestic sector lacks sufficient capacity.

Currently, 40% of the global population lives within 60 miles of the oceanmaking offshore wind an attractive alternative for clean energy. 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 increased. Last year, Ørsted canceled its highly anticipated Ocean Wind 1 and Ocean Wind 2 projects in the US, 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 power to power more than a million homes.

By Alex Kimani for Oilprice.com

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