InfraCo Asia, an infrastructure development and investment firm, is partnering Singapore’s Sunseap International to jointly develop one of the first utility-scale solar farms in Vietnam.
The emerging Asia-focused fund manager is investing in a minority stake in the 168MW project, alongside another existing partner, CMX Renewable Energy Group of Canada, while clean energy developer Sunseap will retain a majority stake in the project. Neither transaction details nor the cost of the project were disclosed.
The Ninh Thuan solar project, which takes its name from the province in which it is located, is expected to commence commercial operation by June 2019 and aims to serve as a catalyst for further private sector investment in the country’s renewables space, according to Allard Nooy, chief executive of InfraCo Asia.
“It will support Vietnam – which is currently reliant on coal – in creating a cleaner energy mix for the future,” said Nooy. “Projects like Ninh Thuan Solar create a ‘demonstration effect’ that serves as a beacon for future development.”
With demand for electricity growing at a pace of 12 percent annually and coal accounting for 34.4 percent of power generated, Vietnam aims to gradually increase the share of energy produced from renewable sources and reduce its reliance on fossil fuels. To that end, in April 2017, the government fixed the price of solar power at $0.0935 per kWh and set a June 2019 deadline for solar power plants to be built and connected to the grid in order to receive the guaranteed feed-in-tariff.
According to the Vietnamese government’s targets, solar power is expected to become the main new renewable energy source, increasing from around 6MW to 7MW currently, to 850MW by 2020 and 12,000MW by 2030, accounting for 1.6 percent and 3.3 percent of the country’s total power generation, respectively.
InfraCo Asia, the commercially managed infrastructure investor of the Private Infrastructure Development Group, has been busy making deals in Vietnam recently. Earlier this month, Nooy told Infrastructure Investor it was investing in a hybrid renewable energy project comprising 50MW of solar and 30MW of wind energy, in collaboration with a local partner. At the same time, the firm is looking to sell its 33.4 percent stake in Coc San Hydro Plant, a 29.7MW run-of-river facility, which began operating in April 2016.
While InfraCo Asia funds pre-financial close, early-stage and high-risk infrastructure projects in Asia’s emerging markets, it exits each project – partially or fully – as near as possible to financial close or commercial operation. It does so, “in order to catalyse private sector investment and participation into the projects and countries it is involved in”, it says.
InfraCo Asia is currently funded by three of the seven donor countries backing PIDG – the Australian department of Foreign Affairs and Trade, the Swiss State Secretariat for Economic Affairs and the UK Department for International Development.