Investment in the country's utilities is rising, marked by B.Grimm Power's $34m investment in a 420MW project.
When B.Grimm Power agreed to pay $34m to buy a stake in a 420MW solar photovoltaic (PV) project in southwest Vietnam in July 2018, it became one of the new solar power projects marking the surge of investment in the country.
Trung Nam Solar Power had a slightly larger investment of $216.5m to build a 204MW solar PV project in the Ninh Thuan province, whilst Sunseap International also broke ground for a 168MW solar project in the same province for about $150m.
“The solar project pipeline has expanded notably,” said Fitch Solutions. These new projects are expected to come online and boost solar capacity to 850MW by 2027. But Vietnam is not only powering up with solar as it is also making strides in boosting its wind capacity.
Wind capacity is expected to go over 700MW by 2027. Recently, the People’s Committee of Quang Tri Province approved two wind projects. A 30MW Huong Hiep 1 wind project proposed by Tan Hoan Cau Corporation is estimated to cost more than $68m and is planned to be put online in December 2020.
According to Fitch Solutions, this trend indicates a surge of new non-hydro renewables projects in Vietnam that are opportunities for future investment. It projected that non-hydro renewables capacity could reach 1.8GW in 2027, up from its previous 1.2GW forecast.
Dang Duong Anh, managing partner, Vietnam International Law Firm, also commented, “The surge in activity includes project approvals as well as project transfers to technically experienced and financially capable developers, which is a positive trend, but whether it can fulfil the nation’s renewable energy potential remains to be seen.”
The government has suspended the approval of other projects for a national master plan for the development of solar power. Over 70 projects with a total capacity of 3GW have been approved within relevant master plans.
Fitch Solutions noted major challenges remain for the industry. “Low subsidies on offer to developers and an underdeveloped regulatory framework for renewables formed a major bottleneck to growth in the sector,” it said.
“We note that despite some lingering uncertainties with regards to the country’s feed-in tariff programme, the investment environment has improved, in line with the government’s increasing support for the sector. New preferential policies, reportedly involving tax incentives, and a string of project approvals has boosted the project pipeline significantly,” it added.
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