Wave Energy Could Power Vietnam’s Islands, But Start-Ups Need USAID’s Help
USAID is supporting renewable energy in Vietnam — through strategic, discrete interventions to remove barriers for the private sector.
By Kristin Kelly Jangraw, INVEST Director of Communications
For all its faults, 2020 was a record-breaking year for investments in climate finance, decarbonization, and clean energy. This summer, private equity giants raised billions of dollars for vehicles like the TPG Rise Climate Fund and the Brookfield Global Transition Fund, and, since 2013, venture capital investments in climate tech have grown much faster than start-up funding overall.
Donors recognize this momentum, and they are chipping away at lingering barriers to channel private capital to where it can do the most good. This includes ensuring that the benefits of clean energy are broadly shared and do not leave some communities behind.
To provide enough clean energy in every community, developers must match different technologies to different environments — geothermal in Iceland but hydropower in Brazil, wind in Scandinavia but solar in India. Vietnam, for instance, has a vast network of islands that can be difficult to connect to the grid and would benefit from a technology that generates power locally. Enter wave energy: a newer innovation that taps powerful ocean waves to do just that. Vietnam’s miles of coastline and islands offer not just beautiful beaches but a reliable, renewable source of energy as well.
Unfortunately, the technology is still in its early days and not yet commercially viable. While numerous studies recognize the tremendous potential of wave energy, experts agree that it remains decades behind other forms of renewables, with large amounts of money and research required for it to even begin to catch up.
USAID’s Mission in Vietnam is working through the USAID INVEST initiative to advance this technology — alongside other renewable energy innovations — and demonstrate its viability. By providing technical assistance to help navigate regulatory and environmental hurdles, USAID will support Korean wave energy company Ingine in its efforts to pilot a new wave energy plant on Vietnam’s Ly Son island.
Ingine has been running a demonstration plant off the coast of Korea for more than five years, and the company is dedicated to improving the technology and helping bring it to scale. “The question is: How can we shorten the time to actually make things happen and change the world?” says Ingine’s Daehyun Kim. “It could happen in an even shorter time period than for wind technology. I’m guessing we will have a large wave farm in the next ten years.”
Kim sees in Vietnam a good fit for the technology and a sizable market opportunity. Ingine will fund nearly all of the project, with USAID playing a discrete, catalytic role. “We were looking for renewable energy project developers who had projects that were ready to move forward but needed some technical assistance to accelerate their pace or move something forward that was getting stuck,” says INVEST’s Nora Brown. Ingine’s staff have deep expertise in wave energy and engineering, but limited experience navigating Vietnam’s regulatory environment. And, while the technology seemed harmless to the environment, Ingine had limited data to prove this point to regulators.
“Of course, we knew it would have less environmental impact than a fossil fuel power plant,” says Kim. “And we don’t use any hydraulic systems, so there is no oil leakage. We did a small impact study for our Jeju demonstration plant, and we didn’t see potential issues for the environment. But we didn’t have the full package of an environmental impact assessment.”
To address this issue and make it possible for Ingine to operate in Vietnam, USAID engaged the International Centre for Environmental Management to provide technical assistance. ICEM specializes in helping governments and companies with sustainable development, focusing on climate change, biodiversity, water, and energy. The company will conduct a full Environmental Impact Assessment (EIA) on behalf of Ingine, as well as a learning report and gap analysis comparing Vietnamese environmental law and international standards for EIAs.
“Environmental impact assessment law has been evolving in Vietnam since 1993, when the country’s first law on environmental protection was enacted. To keep up to date with the changes and navigating them is specialized work,” says ICEM’s Mike Stephens. “ICEM has been working in Vietnam for over 20 years now. We understand the institutional framework that governs EIAs in Vietnam and we have team members who’ve worked in government agencies. We can draw together experts in marine biology and coastal engineering and social economics to provide a really high-standard, integrated assessment — so it puts us in a good position to work with Ingine on a project like this.”
ICEM will help Ingine navigate the regulatory environment so the company can focus on technology development and implementation. But ICEM’s learning report and gap analysis will also lay out a roadmap that future market entrants can follow. It will provide a template for conducting a wave energy EIA and capture local nuances like the consultative nature of development in Vietnam, which requires extensive engagement with government ministries and agencies. These resources will help open up a new market for wave energy and make it possible for private companies to scale this technology in the future without donor support.
“This work can show private investors and businesses what opportunities there are in emerging markets and show them how to navigate these emerging markets effectively,” says Stephens. “And I think that private investment done right can be a really powerful tool in development.”