PNE Excluded from Hon Trau Wind Project
German renewable energy developer PNE AG has been excluded from developing the first phase of a major wind power project in Vietnam, despite having planned a substantial $4.6 billion investment. The project, known as the Hon Trau offshore wind power project (later reclassified as nearshore), will instead see its initial 750-megawatt (MW) phase developed by VinEnergo Energy JSC, a newly established subsidiary of the Vietnamese real estate conglomerate Vingroup. PNE expressed 'surprise' at the decision.
Project Details and Investment
PNE had been actively involved with the Hon Trau project since 2019, conducting feasibility studies and wind tests, and had invested millions of dollars in its development. The company's proposal envisioned a 2,000 MW offshore wind farm, to be constructed in three phases, with the first phase aiming for 750 MW operational by 2030. PNE had also opened a representative office in Ho Chi Minh City and signed a memorandum of understanding with Vietnamese authorities regarding electricity pricing.
The People's Committee of Gia Lai province approved VinEnergo's bid for the first 750 MW phase, which involves an investment of approximately 48.3 trillion dong (around $1.87 billion to $1.9 billion). This phase is scheduled for commissioning by the fourth quarter of 2029 and is expected to produce about 2.8 billion kWh of electricity annually.
Implications for Foreign Investment
The decision to award the project to a domestic entity is viewed as a significant setback for foreign investors in Vietnam's energy sector. This follows previous instances where Hanoi retroactively reduced subsidies for several renewable companies. Sources familiar with the situation indicated that Vietnamese authorities had raised concerns regarding PNE's financial commitment, with one source suggesting a request for PNE to deposit investment funds into Vietnamese accounts as a guarantee. VinEnergo's proposal was reportedly the only one that met all the requirements of the selection process.
Broader Context of Vietnam's Energy Goals
Vietnam aims to achieve 6,000 MW of offshore wind capacity by 2030-2035, alongside up to 38,000 MW from onshore and nearshore projects. The country's strategy appears to be increasingly favoring national champions like Vingroup, which has been expanding its business interests across various sectors, including energy.
5 Comments
Bermudez
Prioritizing a domestic entity like VinEnergo can streamline project approvals and potentially keep more economic benefits within Vietnam. However, it's crucial that such decisions don't create a perception of an unreliable investment climate, as foreign capital and technology are often vital for ambitious renewable energy targets.
Coccinella
PNE invested millions, only to be tossed aside. Unfair business practice!
Habibi
PNE's extensive feasibility studies and early investment provided valuable groundwork for the project, and their exclusion is certainly a loss of accumulated expertise. On the other hand, if VinEnergo can deliver on the project requirements more efficiently or with stronger local guarantees, it could still benefit Vietnam's energy goals.
Comandante
It's understandable that Vietnam wants to ensure financial commitment for such large projects, which VinEnergo reportedly met. However, the lack of transparency around PNE's exclusion and their surprise at the decision suggests a need for clearer communication protocols in these high-stakes ventures.
Bella Ciao
Finally, a country prioritizing its own companies and development.