Japanese Bank Supports Renewable Energy Projects in Vietnam
The Japan Bank for International Cooperation (JBIC) has signed a loan
agreement with Vietnam’s state-owned commercial bank Vietcombank to
set up a credit line of US$200 million for financing renewable energy
projects in the ASEAN member state.
JBIC has a portion of US$100 million of the credit line and is also
providing a partial guarantee for the co-financed portion. The credit line is
co-financed with MUFG Bank (lead-arranger), Mizuho Bank, The Joyo
Bank, and The Nishi-Nippon City Bank, JBIC said in a statement on 26
The US$200-million credit line is intended to finance via Vietcombank
renewables projects, such as solar power generation, in Vietnam, as part
of JBIC’s Global Facility to Promote Quality Infrastructure Investment for
Environmental Preservation and Sustainable Growth.
This is the first credit line that the Japanese bank has extended to
Vietnam under the Global action for Reconciling Economic growth and
ENvironmental preservation (GREEN) programme .
Vietnam’s power demand has grown rapidly in recent years, with load
rising at an average pace of some 10 percent every year in the past five
years, McKinsey & Company said in an analysis earlier this year, noting
that “renewables have the potential to become the lowest-cost option for
Vietnam to meet its energy needs.”
Vietnam’s rising demand will need additional electricity capacity, which in
turn will need upgrading Vietnam’s power system. According to estimates
from Electricity of Vietnam (EVN), the country will need to attract US$150
billion in new capital investment in order to upgrade the power system.
The continuously falling costs of solar and wind power, combined with
Vietnam’s natural endowments of solar and wind, have already made
renewables the cheapest form of new power generation on a levelized cost
of electricity (LCOE) basis, according to McKinsey’s review of market data
and interviews with industry experts.
In addition, renewable energy projects can be built more quickly
compared to traditional sources of generation, while Vietnam’s potential to
add flexible natural gas-fuelled power generation due to its domestic gas
reserves allows renewable energy to be integrated into the grid at low
cost, compared with many markets, McKinsey & Company reckons.