News & Analysis

Vietnam’s first commercial-scale wind farm makes progress

A Thailand-based renewables specialist is mandated to help the local and international sponsors deliver the first utility-scale wind farm through to financial close.

-

Vietnam’s Tra Vinh Wind Farm is kick-starting its first phase of development, which makes it set to be the first commercial-scale wind farm in the Southeast Asian country.

Modern Energy Management, a Thailand-based renewables specialist, has been mandated to assist in the coordination of the project development, following the signing of co-operation agreement between Korea’s Woojin Construction, local firm Tra Vinh Wind Power and Climate Fund Managers, who provided development funding for the scheme.

Climate Fund Managers is an emerging markets-focused boutique fund manager owned by the Development Bank of the Netherlands FMO and South African infrastructure firm Phoenix InfraWorks.

The regional government licensed the 48MW first phase back in 2015, with an investment cost of $112 million at that time, according to local reports. Once complete, the whole project is expected to have a total generating capacity of 144MW.

To date, investors have been struggled to overcome the relatively low FiT and high costs of capital, despite the market’s investment potential. Difficulties in achieving financial returns commensurate with the risk profile of projects located in the country and questions regarding the bankability of Vietnam’s PPA offering, have deterred further investment in the country’s renewables sector, noted MEM.

MEM said it would draw on its “unique Investment Grade Verification methodology” to bridge various financial, commercial and technical siloes in a bid to make the Tra Vinh wind farm first of its kinds to successfully resolve those issues, enable bankability and ensure the project maturity.

“Vietnam is one of our key markets, due to the government’s long-term commitment to clean energy and the strong renewable resources the country possesses,” said Nathan Schmidt, head of Asia at Climate Fund Managers. He added that MEM’s specialist knowledge will safeguard “strong returns for its investors”, as it looks to accelerate the delivery of renewable energy projects in emerging markets.

As demand for electricity grows on the back of the country’s strong economic growth, Vietnam targets to source 10 percent of its electricity generated from renewable sources by 2030.