Dragon Capital bets $44m on Vietnamese solar

The Vietnam-based firm is making its first move into the sector with a 129MW facility, despite industry doubts about the government’s draft PPA.

Ho Chi Minh City-based Dragon Capital is planning to build a 129MW solar energy facility in Vietnam with an initial investment of 1 trillion Vietnamese dongs ($44 million; €37.5 million). 

During a working group session with local authorities last week, Gavin Smith, director of clean development at the firm, said the company would begin feasibility studies in August, with construction to be started in the first quarter of 2018. The project will be done in two phases, with 29MW to be developed initially followed by a 100MW second phase. 

Local government authorities suggested two sites in O Mon industrial park for the potential development of the plant and asked Dragon Capital to submit detailed reports on the construction of radiation measurement stations and the plant’s technical data.

The Vietnamese government announced a draft PPA for ground-mounted, grid-connected solar projects in April, which local business groups deemed as “non-bankable” just last month.

“There is a huge interest in Vietnam’s solar market from investors, given that the market remains underdeveloped and has great renewables resources,” Smith told Infrastructure Investor at the time. However, he pointed out the draft did not address the three key risks that concern investors the most – termination arrangements, the absence of neutral ground for arbitration and access to the grid.

Smith was not available to comment on what had changed to make him comfortable with the framework since then.
Dragon Capital manages $2.29 billion in listed equity, clean-tech, fixed income and real estate for international pensions, sovereign wealth funds and endowments, as of end of this June.

The firm invests in renewable energy, energy efficiency, water and waste treatment projects across the region through the $40 million Mekong Brahmaputra Clean Development Fund. Its portfolio in Vietnam includes a 29MW hydropower plant near Buon Me Thuot.