The International Finance Corporation (IFC), a member of the World Bank Group, is funding the development and construction of two wind power projects in central Vietnam as the country transitions to cleaner low-carbon power generation to help meet the growing demand for electricity.
IFC on May 26 announced that it is providing a financing package of US$57 million to Thuan Binh Wind Power Joint Stock Company (TBW), a subsidiary of Refrigeration Electrical Engineering Corporation (REE). This will enable the construction of two onshore wind power plants – Phu Lac 2 in Binh Thuan province and Loi Hai 2 in Ninh Thuan province – with a total capacity of 54.2 megawatts ((MW). The plants will generate about 170 million kilowatt-hours of clean energy per year once they start operating later in 2021.
A dedicated wind power company founded in 2009, TBW developed one of the first wind power plants in Vietnam – the 24MW Phu Lac 1 plant in Binh Thuan province. It has a large pipeline of wind and solar power projects, and the financing package from IFC will help the company channel some of that renewable energy potential into operation. The IFC financing package includes funding mobilized by the multi-investor Managed Co-Lending Portfolio Programme (MCPP), managed by IFC's innovative syndications platform, which allows institutional partners to commit funds for a set of future IFC loans.
Commenting on the financing, REE deputy CEO Nguyen Ngoc Thai Binh says: “As REE expands its footprint in renewable energy, we are looking for long-term US dollar-based financing that is not readily available in the local market.”
He adds the IFC support will help the company implement a strategic drive to green its power sector portfolio in the coming years. “By agreeing to implement IFC's financial, environmental and social requirements, REE confirms its readiness and willingness to contribute to Vietnam's renewable energy development.”
Leveraging its global experience in wind projects, IFC says it will help ensure that these two projects follow best industry as well as environmental, social and governance practices.
"The wind power sector in Vietnam is still in its nascent stage but has very large-scale potential. IFC's engagement will demonstrate viability to investors and help mobilize the much-needed funding to help realize Vietnam's cleaner, renewable energy potential,” says IFC country manager for Vietnam, Cambodia and Lao People’s Democratic Republic Kyle Kelhofer. “IFC is especially committed to supporting solid local corporates such as REE to scale up their renewable energy investments, supporting the country's transition to a lower-carbon electricity generation mix."
Driven by robust economic growth, Vietnam foresees the need for a twofold expansion of its installed power capacity by 2030 to meet increasing electricity demand, IFC says. Renewable energy capacity, including rooftop solar, is projected to increase by approximately 19GW to more than 36GW over the coming decade, at an estimated cost of around US$20 billion, mostly expected to be developed and funded by the private sector.