A new loan funded by the Asian Development Bank is expected to fuel Southeast Asia’s largest floating solar power plant in Vietnam, paving the way for the country to promote public-private partnerships this kind.
The Asian Development Bank (ADB) last week inked a $37 million deal with Da Nhim-Ham Thuan-Da Mi Hydro Power JSC (DHD) in order to help DHD install the 47.5MW floating solar power plant on a man-made reservoir at its existing 175MW Da Mi hydropower plant which was constructed in the 1990s with the financial support from Japan.
“This project will help boost the share of renewable energy in Vietnam’s overall energy mix and decrease the dependence on imported fossil fuels such as coal,” deputy director general of ADB Private Sector Operations Department Christopher Thieme said at the signing ceremony last week in Hanoi.
“The pairing of these two clean energy technologies – hydropower and solar – is a simple but highly innovative achievement which can be replicated elsewhere in Vietnam and across Asia and the Pacific,” he said.
The mega project is part of Vietnam’s plan to reduce its dependency on coal and boost energy production from renewable sources.
Thieme also told VIR, “We are working on a number of projects in Vietnam. We hope to increase confidence in the market and that Vietnamese banks and international commercial banks will take a more integral role in power sector financing.”
The $37 million loan includes $4.4 million from the Leading Asia’s Private Infrastructure Fund which also covers capital from the Japan International Cooperation Agency.
In addition, the loan also includes around $15 million coming from the Canadian Climate Fund for private sectors in Asia, with a press release stating that it is a Canadian government initiative to encourage Asian countries to adopt green projects.
However, the ADB confirmed that they will also fund loans for the transmission sector if they receive a government guarantee.
The ADB and Singapore-based Infrastructure Asia have also signed a co-operation agreement to help governments in Southeast Asia adopt green finance approaches for clean energy infrastructure.
The ADB recently shared the tender for Cambodia’s solar power project with the Vietnamese Ministry of Industry and Trade (MoIT) and discussed the prospects of Vietnam’s first solar bidding pilot project.
The bank also suggested that the government should create a comprehensive framework for investment.
In its latest report submitted to the prime minister, the MoIT said that it is actively working with international organisations to study the tendering mechanism for renewable energy development in Vietnam.
The MoIT has announced that Vietnam is expected to start bidding after 2021, at a time when the country pledged to reduce energy consumption by 8-10 per cent in the 2019-2030 period.