VIETNAM RENEWABLE MARKET by Mason Wallick Infunde Development is InfraCo Asia’s exclusive Developer for South East Asia (excluding Myanmar & Co-Development program)
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VIETNAM RENEWABLE MARKETby Mason Wallick
Infunde Development is InfraCo Asia’s exclusive Developer for South East Asia (excluding Myanmar & Co-Development program)
Exclusive InfraCo Asia DeveloperInfunde Development is responsible, on behalf of InfraCo Asia for project origination, pre-financial close project development, EPC management and financial structuring activities inSoutheast Asia.InfraCo Asia is a company of the Private Infrastructure Development Group a coalition ofdonors mobilising private sector investment to assist developing countries attaininfrastructure vital to boosting their economic growth and combating poverty. InfraCo Asia iscurrently funded by three PIDG members - Australian Department of Foreign Affairs andTrade (DFAT), the Swiss State Secretariat for Economic Affairs (SECO), and the UKDepartment for International Development (UKAid).
www.infracoasia.com
@InfraCoAsia
InfraCo Asia
@pidgorg
Private Infrastructure Development Group
www.PIDG.org
ROBUST ECONOMICS
Sources: Electricity Growth Rate: GDE (2015), IE (2015)GDP Growth Rate: World Bank (2015), tradingeconomics.com (2015) Total Installed Capacity: IE (2013), EVN (2014), GDE (2016)
1980 1985 1990 19950
20000
40000
80000
100000
120000
140000
2
4
10
12
14
16
2000 2005 2010 2015 2020 2025 2030 2035
Inst
alle
dca
paci
ty(M
W)
%
Potential VN Competitiveness Gap
Electricity Growth Rate (%)
GDP Growth Rate (%)
Total Installed Capacity (MW)0
8
660000
39GW (in 30 years @ca. USD 60 billion CAPEX)
90GW (in 15 years @min. USD 108 billion CAPEX)
RENEWABLE MARKET GROWING
5.4% 9.9% 12.5%21.0%
33.5%
42.7%
49.3%42.6%
22.5%
14.9%
15.6% 14.7%
37.3%30.1%
21.1% 16.9%
1.4% 2.4% 1.5%1.2%3.6%
2015 2020 2025 2030
Nuclear
Import
Hydro
Gas
Coal
RE
HIGH RENEWABLE TARGETS
0.90% 1% 1.20% 2.10%0.35% 0.80% 1% 2.10%0.02% 0.50% 1.60% 3%
2015 2020 2025 2030Biomas Wind Solar
800 MW
850 MW
2,000 MW
4,000 MW
6,000 MW
12,000 MW
135 MW 6 MW
Tota
l ins
talle
d ca
paci
ty &
% e
lect
ricity
pro
duct
ion
Source: National Power Development Plan VII
SIGNIFICANT WIND & SOLAR POTENTIAL
MSWBiomass / biogas
WindSmall
HydropowerSolar Geothermal
27,000 MWExpectedPotential164 MWInstalledCurrent
26,836 MWCould be
Exploited andInvested
130,000 MWExpectedPotential5.6 MWInstalledCurrent
129,994 MWCould be
Exploited andInvested
7,000 MWExpectedPotential
2,143 MWInstalledCurrent
4,857 MWCould be
Exploited andInvested
400 MWExpectedPotential2.4 MWInstalledCurrent
397.6 MWCould be
Exploited andInvested
350 MWExpectedPotential
0 MWInstalledCurrent
350 MWCould be
Exploited andInvested
Sources: N.D.Cuong, WB, MoIT, IE, EVNMOIT/GIZ Support Program, May 2017
8,500 MWExpectedPotential375 MWInstalledCurrent
8,125 MWCould be
Exploited andInvested
IMPROVING REGULATORY REGIME
• FIT issued for both Wind and Solar• Long term Standard Power Purchase Agreement (20yrs Wind & Solar PPA)
RE Sources Supporting Mechanism Price (US cents)
Solar PV Feed-in-Tariff (FIT) 9.35c/kWh
Wind FIT 7.8c/kWh
Small hydro-power Avoided cost Tariff (ACT) ~5c/kWh
Biomass FIT 7. 34 – 7.55c/kWh
Waste-to-energy FIT 7.28 – 10.05c/kWh
Sources: MOIT/GIZ Support Program, May 2017
BANKABILITY ISSUESA. Terms of PPA Contract term – normally 20 years and can be extended No government guarantee for EVN’s offtake’s obligation Foreign exchange issue: conversion, remittance No change-in-law mechanism No termination payment for extended force majeure events leading to termination Lack of direct agreement or acknowledgement and consent signed between lenders and
EVN Dispute Resolution: time costly procedures
Amicable discussion within 60 days; Mediation at GDE; or Decision 40: settlement by Electricity Regulatory Authority; unclear whether
arbitration or court settlement in case of disagreementB. Tariff Non-negotiable Participation of other sectors in the proposal and approval of amendment to the Tariff Unclear Tariff adjustment mechanism: current provisions do not take into account of CPI,
PPI No tariff payment in case of force majeure events affecting the Grid System. Force majeure clauses are inadequate
Source: MOIT/GIZ Support Program, May 2017
CONTACT USInfunde Development Pte. Ltd.10 Anson Road #26-10 International Plaza Singapore 079903T +65 6223 2069W www.infundedev.com
Mason Wallick – Managing Director Tien Nguyen – Investment ManagerE [email protected] E [email protected] +65 9457 5310 T +84 947 444 585
Eric Miller – Chief Investment Officer Linh Tran – Investment AssociateE [email protected] E [email protected] T +65 9459 6608 T +84 982 946 229
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