The Asian Development Bank (ADB) and other stakeholders have provided a $37.8-million loan for Vietnamese renewable energy company TTC Energy, according to an announcement.
The financing for the Gulf Solar Power Project will assist TTC Energy in developing and operating a 50-MW photovoltaic solar power plant in Tay Ninh province, southern Vietnam.
This is one of the first large-scale solar power project finance transactions in the country, ADB said.
The loan package is composed of an $11.3 million A loan and up to $18.9 million B loan, which will be funded by Bangkok Bank, Siam Commercial Bank and Standard Chartered Bank Thailand.
Meanwhile, an additional $7.6 million loan was provided by Leading Asia’s Private Infrastructure Fund, supported by the Japan International Cooperation Agency. The loan marks the first transaction under the fund’s non-parallel programme, ADB said.
The innovative finance structure of the loan will ensure the bankability of the project by catalysing commercial financing, the development bank added.
“Apart from providing much-needed financing to develop solar power in Vietnam, the project will also help reduce perceived risks in the country’s renewable energy sector,” said Jackie B. Surtani, director of the infrastructure finance division of ADB’s private sector operations department.
The Tay Ninh-located solar power plant will serve the electricity demand of residents and businesses of Ho Chi Minh City and surrounding areas. It is expected to reduce annual carbon dioxide emissions by 29,760 tonne by 2020.
TTC Energy is also operating another 69 MW solar power plant in the same province, and a 340 MW wind and solar project in Ben Tre.
Thai power generation company Gulf Energy Development (GED) owns 90 per cent each of the Tay Ninh facilities and 95 per cent of the latter.
The Vietnamese government plans to increase the share of renewable energy sources to 21 per cent of total installed capacity and reduce greenhouse gas emissions by up to 25 per cent by 2030.
While financing for renewable projects in the country has mainly come from development agencies and foreign strategic corporations, the sector has started to see participation from private equity players, such as Dragon Capital’s investment in Pacifico Energy Group, Vietnam-Oman Investment’s funding for BCG-CME Long An 1 solar energy plant, and IFC and Armstrong S.E. Clean Energy Fund backing Phong Dien, Vietnam’s first private grid-connected solar farm.