Commercial banks are rushing to provide loans for green energy projects amid a wave of investment in the growing industry, dubbed a landmark for the country’s renewable energy outlook.

Renewable energy in Viet Nam is expected to grow at 23 per cent annually during 2020-30.

Vietcombank has recently approved a VND785 billion (US$33.55 million) loan for the BP Solar 1 project, which has total investment capital of VND1.2 trillion with designed output of 46MW in the south central coast province of Ninh Thuận.

The bank last month also signed a contract with the Dai Hai Power Investment and Development SJC to fund its VND1 trillion Srepok Solar 1, which has a designed output of 50MW.

Another bank – HDBank – has so far also planned to set aside up to VND7 trillion for the construction of green energy projects from now to 2020.

Under HDBank’s plans, it will lend to projects which were approved by the Government and reach their commercial operation date before June 30, 2019.

To qualify for the bank’s loans, borrowers must have a minimum equity of VND150 billion and the equity ratio in their projects must be at least 30 per cent of the projects’ total investment capital. The bank also requires that all proceeds from the projects be transferred to the customers’ accounts at HDBank.

VietinBank has recently financed VND1 trillion for the 68.8 MW TTC 01 solar project in the southern province of Tay Ninh. The project has total investment of VND1.6 trillion.

Early this year, two banks – Agribank and Vietnam Development Bank – signed a contract to co-fund the Phong Dien solar power project in the central province of Thua Thien Hue.

The Phong Dien project, which has a designed output of 35 MW and total investment cost of VND838 billion, was recently inaugurated after just nine months of construction, becoming the first solar power plant to be put in to operation in the country.

The wave of investment in the renewable energy industry was spurred by the Government’s incentives and the country’s strong potential for solar and wind energy generation. Investors are also racing against time so their projects enjoy the Government’s preferential feed-in tariff (FiT).

According to the Government, only solar energy projects which reach commercial operation dates (COD) before June 30, 2019 qualify to enjoy the FiT of 9.35 US cents per kWh. The deadline for onshore and offshore wind power projects to get the FiT of VND1,928 (8.5 US cents) and VND2,223 (9.8 US cents) per kWh, respectively, is November 1, 2021.

With such prices, if they meet the deadline, renewable power projects will make significant profits as the power retail price currently averages at only VND1,720.65 per kWh (7.54 US cents).

The financial and business information corporation Stoxplus said that foreign and local investors are excited about renewable energy in Viet Nam, which is expected to grow at 23.2 per cent annually during 2020-30.

There are some 245 renewable energy projects in Viet Nam, including wind and solar power as well as biomass electricity, which are being deployed at different stages. If all these projects begin operation, the total capacity of the country’s renewable energy should reach 23.2GW, which is nearly 10 times higher than the target of 2.65GW by 2020 as indicated in the country’s Revised National Master Power Plan VII. — VNS