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The quiet rise to prominence of Vietnam's renewable energy corporates

September 06, 2022
Thu Vu
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Key Findings

Homegrown businesses have been the key driving force behind the explosive deployment of solar and wind power capacity in Vietnam in recent years. Many aspiring domestic market leaders have signaled a long-term commitment to the local renewables space.

Cost competition and expansion plans will force these players to explore more diversified financing channels in the post-FIT development stage.

Assessing how the local corporates’ growth and funding strategies will reshape Vietnam’s green finance needs will be of critical importance to the foreign investors and banks.

Executive Summary

Sitting at the helm of Vietnam’s power sector transformation in recent years has been the country’s private corporations.

Renewable energy has ushered in a new generation of highly diverse and resourceful homegrown power producers to support Vietnam’s growth needs, disrupting a sector whose capacity expansion in the past five decades has been in the hands of three state-owned companies and a few global energy majors.

Aspiring domestic market leaders have signaled a long-term commitment to the renewable energy space.

Vietnam’s breakneck speed of renewable energy buildout coincided with the spectacular rise and domination of domestic renewables corporations, many without prior experience in the industry. These players came to lead market growth thanks to their competitive strengths in local infrastructure project development experience and the modular nature of renewable energy that enabled financing from the domestic capital market.

Local businesses have also been crucial to the market entry strategy of regional developers and investors.

Vietnam’s net-zero emissions target presents renewable energy businesses with abundant scale opportunities in the decades to come. Building on recent successes, many aspiring domestic market leaders have set bold growth targets, signaling a long-term commitment to the local renewables space.

In the same way that domestic private corporations were not expected to spearhead the industry’s growth in the past five years, it is perhaps unthinkable now to picture Vietnam’s future low-carbon power sector without their presence.

Nevertheless, these players will face new market dynamics as competition with foreign developers intensifies and as the state utility Electricity of Vietnam (EVN) progresses toward a tighter procurement regime that replaces earlier preferential feed-in-tariffs. Cost competition and expansion plans will force leading domestic corporates to explore more diverse and rigorous financing channels in order to stay relevant.

The next few years will offer key insights into how Vietnam’s renewable energy ecosystem will develop. For foreign investors and banks, in particular, it will be important to assess how the domestic corporates’ growth and evolving funding strategies will reshape Vietnam’s green finance needs.

Read the report in Vietnamese here: Sự Trỗi Dậy Âm Thầm Của Các Tập Đoàn Năng Lượng Tái Tạo Việt Nam

Thu Vu

Thu Vu is a former energy finance analyst leading the Vietnam market coverage for IEEFA. Thu writes about policy developments and investment trends that facilitate the transition of Vietnam’s power sector towards a cleaner and economically sustainable future.

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