Booming Vietnam Solar Draws Thai Firms To Invest

Vietnam, one of the last sizeable markets that are still offering Feed In tariffs (FIT) in solar, has managed to attract international attention due to its plans. The company has a plan in place to build 18 GW of solar energy plants by 2030. Of this proposed 18 GW,  4.5 GW has already been installed by the country’s feed-in-tariff (FIT) 1 policy, and another 1.5 GW is likely to be added under FIT 2. The rest is likely to be a mix of tendered and aided projects, as the country transitions away from FIT to a tender and auction led regime.

For Thai firms, that makes the neighbouring market an attractive place for investment. Thai energy firm Gunkul Engineering, for example, has acquired the 50-megawatt Phong Dien II solar power plant in the central Vietnamese province of Thua Thien-Hue for US$39.9 million.

The facility started commercial operation on December 15 with a feed-in tariff (FIT) of 7.09 US cents(Rs 5.25 approx.)  per kilowatt-hour for 20 years.

The deal, completed in late November, includes the purchase of a 49% stake from Bangjak Green Energy, a subsidiary of Bangkok-based BS Industry Service, and 51% from two Vietnamese shareholders.

The acquisition is part of Gunkul Engineering’s plans to expand in Southeast Asia in the renewable energy sector, which it sees as low risk and high growth potential.

Gunkul is also buying the Tan Chau solar plant in southern Vietnam’s Tay Ninh province bordering Cambodia for a reported US$47 million, its fourth such acquisition in a row this year. The plant began operations in October with the same FIT of 7.09 US cents per kWh for 20 years.

Earlier, in February, the Thai firm also acquired two solar power plants with a combined generation capacity of 60MW for US$60.6 million in the province, which also borders Ho Chi Minh City, Vietnam’s economic powerhouse.

·    Tri Viet 1 and Bach Khoa A Chau 1, each with a capacity of 30MW, started commercial operations in May 2019. The country’s state utility EVN (Electricity Vietnam) buys its power at a FIT of 9.35 US cents per kWh for 20 years.

·    Meanwhile, Gulf Energy Development has increased its ownership in two solar farms, TTC 1 and 2, in the same province to 90%, from 49% in 2019. The deals were made with its Vietnamese partner Thanh Thanh Cong Group (TTC).

The two projects, expected to be switched on in 2021, will sell power to EVN for 20 years, although FITs have not been disclosed.

In Binh Phuoc province, close to Tay Ninh, Bangkok-based Super Energy Corporation is investing up to US$477 million in four solar power plants, Loc Ninh 1-4, with a combined capacity of 750MW. The facilities were scheduled to start operations this December.

Other Thai companies investing in Vietnam’s solar sector include B.Grimm Power, BC Container Glass, and Begistics on the manufacturing side. 

Vietnam has emerged as a quality manufacturing alternative too, for firms looking to escape punitive sanctions from the US as well as other markets. A position that was enjoyed by Malaysia, for example, until recently.