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solar panels on a green field

Solar power plants

By American Public Power Association on Unsplash

Solar power plants

Compare IOA
Country
Vietnam
Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Renewable Resources and Alternative Energy
Sub Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Alternative Energy
Indicative Return
Describes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
10% - 15% (in IRR)
Investment Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Medium Term (5–10 years)
Market Size
Describes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
> USD 1 billion
Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.
Forecast of the installation cost for a Solar Photovoltaic (Solar Photovoltaic) solar power plant in Vietnam: 900 USD/kW (not including IDC - Interest During Construction) in 2025 and 350 - 840 USD/kW in 2030 (7)
Direct Impact
Describes the primary SDG(s) the IOA addresses.
Affordable and Clean Energy (SDG 7)
Indirect Impact
Describes the secondary SDG(s) the IOA addresses.
Climate Action (SDG 13)

Business Model Description

Invest in the development of grid-connected solar power plants to supply solar power to Energy of Vietnam (EVN) and other industrial buyers (B2B). Examples of companies active in this space are:

Ha Tien Energy Corporation owns and operates a solar power generation system in Vietnam. It is based in Hoai Nhon, Vietnam Idemitsu Kosan Co., Ltd. acquired a 90% stake in Ha Tien Energy Corporation from TTCL Public Company Limited for approximately $11.7 million on October 14, 2021

Gunkul Engineering (Thailand) invested 39.9 million USD to take over Phong Dien II Solar Power Plant in Thua Thien Hue province invested by Doan Son Thuy, with a capacity of 50 MW. Previously, Gunkul Engineering acquired 2 solar power plants in Tay Ninh province with a total capacity of 60 MW, with an investment value of USD 30.3 million each (22)

TTC Phong Dien solar power plant 1 was invested in by TTC Group. The plant was built from Jan 2018 to Sep 2018 on 45ha of coastal sand land which is not suitable for growing agricultural crops. The plant has a capacity of 48 MW, located 2.6km from the grid connection point. The investment serves 33,000 households, reducing by 20,500 tons of CO2 emissions per year. (21)

Expected Impact

Solar Power provides jobs and contributes to securing electricity whilst reducing greenhouse gas emissions.

How is this information gathered?

Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.

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Disclaimer

UNDP, the Private Finance for the SDGs, and their affiliates (collectively “UNDP”) do not seek or solicit investment for programmes, projects, or opportunities described on this site (collectively “Programmes”) or any other Programmes, and nothing on this page should constitute a solicitation for investment. The actors listed on this site are not partners of UNDP, and their inclusion should not be construed as an endorsement or recommendation by UNDP for any relationship or investment.

The descriptions on this page are provided for informational purposes only. Only companies and enterprises that appear under the case study tab have been validated and vetted through UNDP programmes such as the Growth Stage Impact Ventures (GSIV), Business Call to Action (BCtA), or through other UN agencies. Even then, under no circumstances should their appearance on this website be construed as an endorsement for any relationship or investment. UNDP assumes no liability for investment losses directly or indirectly resulting from recommendations made, implied, or inferred by its research. Likewise, UNDP assumes no claim to investment gains directly or indirectly resulting from trading profits, investment management, or advisory fees obtained by following investment recommendations made, implied, or inferred by its research.

Investment involves risk, and all investments should be made with the supervision of a professional investment manager or advisor. The materials on the website are not an offer to sell or a solicitation of an offer to buy any investment, security, or commodity, nor shall any security be offered or sold to any person, in any jurisdiction in which such offer would be unlawful under the securities laws of such jurisdiction.

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Country & Regions

Explore the country and target locations of the investment opportunity.
Country
Vietnam
Region
  • Vietnam: Highland
  • Vietnam: Mekong Delta Region
  • Vietnam: Eastern South Region
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Sector Classification

Situate the investment opportunity within sustainability focused sector, subsector and industry classifications.
Sector

Renewable Resources and Alternative Energy

Development need
High volume of investment amounting to ~USD 14 billion/year is needed for the power grid and the power sources. (1) The share of renewable power is set to increase significantly to 42% by 2045 (7) to contribute to addressing the increasing trend of carbon emission per capita, from 1.75 tons in 2010 to 2.81 tons in 2018. (2)

At the COP26 conference, the GoV committed to achieving net-zero carbon emissions by 2050. Vietnam National Power Plan No.8 (being finalized) states that by 2045, total renewable energy sources, including small hydroelectricity, wind power, solar power, and biomass power, will account for 43%. Coal-fired power will reduce from 29% in 2020 to about 13% in 2045. (8)

Gender inequalities and marginalization issues
The energy sector is traditionally dominated by men, mostly engineers; top posts are usually occupied by men (11). Energy planning continues to be supply-side-driven, focusing more on technology requirements and maintaining prices, rather than demand-driven with a focus on end-users, specifically women and men’s specific energy needs in communities.

Investment opportunities introduction
The annual growth rate of national electricity demand is forecasted to be 8.5% and 7.5% in the period 2021 – 2025 and 2026 – 2030 respectively; to meet this demand, 130,000 MW is needed by 2030(4). Expansion of transmission lines, energy-efficient equipment, and electric vehicles, including charging stations, are all also needed.

Key bottlenecks introduction
Regulatory framework is not yet fully developed, limited capacity of the national power grid, logistics support for renewable energy is underdeveloped.

Sub Sector

Alternative Energy

Development need
Estimated additional 20 GW of renewable energy is to be installed to deliver the target 25% share of renewable energy by 2030 (10). Capacity constraints hinder the supply from the national grid. The efficiency level of energy consumption is high at 380 koE/1000 USD GDP (2017), i.e. 30% and 40% more than that in Malaysia and Thailand. (2,8)

Policy priority
Resolution 55-NQ/TW of the PoliBureau considers renewable energy a mitigation measure for greenhouse gas (GHG) emissions. Priority is on the development of the renewable energy technology market, providing renewable energy services in the country, and strengthening the potential for research, development, transfer, and application of new forms of renewable energy. (6)

Gender inequalities and marginalization issues
Renewable energy resources are not exploited at various locations to benefit local communities that may include ethnic minorities, low-income groups, and women. Limited information and access to energy-efficient home appliances.

Investment opportunities introduction
Total potential size of large-scale solar power is about 386 GW (3); only 16 GW has been installed (5). The total potential of wind power is more than 130 GW (3), but only 5,7 GW has been installed (5). Vietnam's solar PV equipment market stood at USD 9,209 million in 2020, with a forecasted CAGR of 12.09% in 2021-2025. (9)

Key bottlenecks introduction
Incomplete legal framework for renewable energy development, lack of a database for project development, underdeveloped management capacity and infrastructure (e.g. for super-load transportation).

Industry

Solar Technology and Project Developers

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Pipeline Opportunity

Discover the investment opportunity and its corresponding business model.
Investment Opportunity Area

Solar power plants

Business Model

Invest in the development of grid-connected solar power plants to supply solar power to Energy of Vietnam (EVN) and other industrial buyers (B2B). Examples of companies active in this space are:

Ha Tien Energy Corporation owns and operates a solar power generation system in Vietnam. It is based in Hoai Nhon, Vietnam Idemitsu Kosan Co., Ltd. acquired a 90% stake in Ha Tien Energy Corporation from TTCL Public Company Limited for approximately $11.7 million on October 14, 2021

Gunkul Engineering (Thailand) invested 39.9 million USD to take over Phong Dien II Solar Power Plant in Thua Thien Hue province invested by Doan Son Thuy, with a capacity of 50 MW. Previously, Gunkul Engineering acquired 2 solar power plants in Tay Ninh province with a total capacity of 60 MW, with an investment value of USD 30.3 million each (22)

TTC Phong Dien solar power plant 1 was invested in by TTC Group. The plant was built from Jan 2018 to Sep 2018 on 45ha of coastal sand land which is not suitable for growing agricultural crops. The plant has a capacity of 48 MW, located 2.6km from the grid connection point. The investment serves 33,000 households, reducing by 20,500 tons of CO2 emissions per year. (21)

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Business Case

Learn about the investment opportunity’s business metrics and market risks.

Market Size and Environment

Market Size (USD)
Describes the value in USD of a potential addressable market of the IOA.

> USD 1 billion

Critical IOA Unit
Describes a complementary market sizing measure exemplifying the opportunities with the IOA.

4 GW of large solar plants are planned for the national grid up to 2025 and 48 GW after 2025 (3)

The annual revenue of EVN, the state-owned company monopolizing power distribution, was nearly USD 20b in 2021 (23). Renewable energy accounts for more than 10% (24) of total energy consumption.

Indicative Return

IRR
Describes an expected annual rate of growth of the IOA investment.

10% - 15%

Phong Dien 1 solar power plant has a capacity of 48MWp, a 22/110kV lifting substation with a capacity of 40 MWA, and an output of 60 million kWh/year. The investment capital of the plant is 44 million USD with an IRR of 12%. (21)

MOIT recently issued a new draft Circular on regulations on methods of building electricity generation price brackets for newly built solar and wind energy projects in which the financial IRR is suggested to be 12%. (4)

Investment Timeframe

Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.

Medium Term (5–10 years)

Ground-mounted solar projects need to consider land rights, an issue that looms large in Vietnam. Though investors can benefit from exemptions from land-use fees and rents, administrative processes can take time and cause significant delays. (7)

Investors suggest an estimated 12-18 months to complete the construction and start up commercial operation. This will depend on the target size and conditions for land acquisition of the project.

Ticket Size

Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.

Forecast of the installation cost for a Solar Photovoltaic (Solar Photovoltaic) solar power plant in Vietnam: 900 USD/kW (not including IDC - Interest During Construction) in 2025 and 350 - 840 USD/kW in 2030 (7)

Market Risks & Scale Obstacles

Business - Supply Chain Constraints

Complexity in site clearance and potential inconsistencies between land planning and power development planning makes the land access difficult. Particularly, the Solar Park project will have to address the land use rights and the legal framework on the national grid connection.

Market - High Level of Competition

High competition is expected: There are 280 solar power projects registered for investment with a total capacity of up to 25,000 MW. In the near future, the bidding mechanism and auction to buy solar power will be applied between the power plants (25)

Market - Volatile

The unstable electricity purchase price policy of the Government of Vietnam (GoV) is a major risk. This makes it difficult for investors to calculate the efficiency of the project and the payback time. (26)
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Impact Case

Read about impact metrics and social and environmental risks of the investment opportunity.

Sustainable Development Need

Solar power is required as a development priority to create a breakthrough in ensuring national energy security, contributing to the conservation of energy resources, and minimizing negative impact on the environment in electricity production. (7)

Gender & Marginalisation

The development of large-scale solar projects that are usually located in undeveloped rural areas is needed to contribute to economic development, thus benefiting the local communities. (7)

In Vietnam, in the field of energy, specifically, wind energy, the proportion of male employees is higher than that of females - in both unskilled and skilled workers and in leadership positions. (11)

Expected Development Outcome

Solar energy accounts for a significant share of Vietnam's energy production. The master plan for solar capacity development is planned until 2045 with the "baseload scenario" as follows: 2020/17; 2025/17GW; 2030/19GW; 2035/30GW; 2040/42GW; 2045/55GW (7). Note: this scenario is being finalized.

Gender & Marginalisation

The investment in solar power plants in underdeveloped areas helps to develop the local economy, thereby creating jobs and improving the quality of life of the poor.

Primary SDGs addressed

Affordable and Clean Energy (SDG 7)
7 - Affordable and Clean Energy

7.2.1 Renewable energy share in the total final energy consumption

7.a.1 International financial flows to developing countries in support of clean energy research and development and renewable energy production, including in hybrid systems

Current Value

The renewable energy share in the total final consumption is approximately 12 - 17% (24)

Target Value

The proportion of renewable energy in total final energy consumption by 2030 will reach 32.3% (2)

Energy investors will spend about 150 billion USD to meet the growing demand for solar power in Vietnam in the next decade (1)

Secondary SDGs addressed

Climate Action (SDG 13)
13 - Climate Action

Directly impacted stakeholders

People

Accessibility issues can be solved with alternate sources of energy, and with higher contribution of RE to the total energy mix; people benefit from a cleaner environment too.

Gender inequality and/or marginalization

Women in rural areas benefit from accessible new sustainable electricity sources for the villages.

Planet

Renewable energy contributes to reducing carbon emissions, and reducing pollution caused by coal-firing energy sources.

Corporates

Businesses will benefit from a more reliable power supply from the grid, ensuring no disruption in operations.

Public sector

Increasing RE is not only in line with the Government's target to achieve net-zero emissions by 2045, but will also increase national energy security in the long term.

Indirectly impacted stakeholders

People

The population, in general, will benefit from the positive impact on the environment of renewable energy. Local communities in project areas will benefit from economic development.

Corporates

Businesses in the areas of solar energy generation projects will benefit from economic development.

Public sector

Government benefits from an increase in the supply of electricity, thereby avoiding power cuts which can hinder the industrial activities

Outcome Risks

Loss of land: every 1MW of solar power requires about 1.2 hectares of land. The solar project may not be justified if there are other better opportunities for economic development for the land (7).

Ecosystem effects: Large-scale solar PV increases the heat of the land below the panels and/or covers the water below the panels (if more than 15% of the water surface) (7)

For this investment opportunity to be profitable, smart grids and energy storage development are required to resolve the intermittency of renewable energy supplies

Impact Risks

Solar projects can be deployed behind schedule due to difficulties in land clearance or legal framework instability.

Environmental pollution can result from the solid waste of discarded solar panels which is forecasted to be 19,567-32,227 tons in 2030 and 58,058 tons-89,777 tons in 2045. (7)

Impact Classification

C—Contribute to Solutions

What

Building a solar power plant improves national energy security, contributes to energy conservation, and reduces Co2 emissions by replacing the coal power supply

Who

Consumers will benefit from the competitive bidding mechanism that leads to a reduction in wholesale price of solar PV and the retail price of electricity of EVN. (25)

Risk

Surface solar PV can have a negative impact on aquatic ecosystems. Solar battery waste can pollute the environment.

Contribution

As of 2021, private sector invested in 16,500 MW of solar energy. (36)

How Much

The government has planned to add 4 GW of large-scale solar plants for the period up to 2025 and 48 GW is being considered for inclusion in the planning for the next phase. (3)

Impact Thesis

Solar Power provides jobs and contributes to securing electricity whilst reducing greenhouse gas emissions.

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Enabling Environment

Explore policy, regulatory and financial factors relevant for the investment opportunity.

Policy Environment

GoV, 55-NQ/TW: provides orientation for the development strategy of Vietnam energy to 2030, vision for 2045; Prioritize the development of renewable energy at reasonable prices and with conditions that the system safety is ensured; Encourages the development of rooftop and on-water solar power (28)

National Power Planning No 8: This is being finalized. It is proposed that renewable energy (including small hydro, wind, solar, and biomass) will account for 25% and 42% of the country's total power capacity by 2030 and 2045 respectively (7, 10)

Green Growth Strategy: covers various strategic points for green growth, including the increasing of renewable energy and efficient use of energy (29)

Financial Environment

GoV, Decision 13/2020/QD-TTg: provides regulations on incentive mechanisms for solar power development in Vietnam. The electricity buyer is responsible for purchasing all electricity produced from grid-connected solar power projects. The contract term is 20 years (27)

Vietnam State Bank, Decision: 1552/QĐ-NHNN: Capacity building for banks to carry out green credit, develop solutions to promote banking products for green credit, supporting businesses to implement green growth (35)

Vietnam Environment Protection Fund has a preferential loan program for renewable energy projects with up to 80% of the total investment capital of the project, with an interest rate of 2.6-3.6%/year and a maximum term of 10 years (34)

Regulatory Environment

Law on Environmental Protection 2020: Producers and importers of solar equipment will be responsible for recycling. They will have to either organize the recycling or pay a premium to the Vietnam Environmental Protection Fund.

The MoIT is developing a bidding mechanism to support the development of renewable energy (31)

The private sector is being proposed to invest in transmission lines to connect their plants and other projects in the same area to the main grid (32).

Piloting: Direct power purchase agreement (DPPA) is being proposed to allow energy producers to sell and deliver electricity to corporate consumers instead of going through a state-owned electric utility company. (33)

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Marketplace Participants

Discover examples of public and private stakeholders active in this investment opportunity that were identified through secondary research and consultations.

Private Sector

Several solar plants at various locations: Loc Ninh Solar Power Plants (4 single projects); Dau Tieng Solar Power Complex (3 single projects); Trung Nam Thuan Nam Solar Plant; BIM/AC Renewables Solar Farm (3 single projects); Hong Phong Solar Power Plant (2 single projects);

Government

Ministry of Commerce and Trade, Municipal governments, Ministry of Resource and Environment, Ministry of Construction.

Multilaterals

European Union (EU), United Nations Development Programme (UNDP), Asian Development Bank (ADB), and World Bank (WB).

Non-Profit

Vietnam Energy Association, Vietnam Clean Energy Association, Vietnam Solar Energy, Vietnam Environment Industry Association (VEIA).

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Target Locations

See what country regions are most suitable for the investment opportunity. All references to Kosovo shall be understood to be in the context of the Security Council Resolution 1244 (1999)
country static map
rural

Vietnam: Highland

The South, the Southern Center, and the Central Highlands are regions with high sunshine intensity and favorable conditions for implementing solar power plant projects. Specific locations are provided in the National Power Planning No.8
rural

Vietnam: Mekong Delta Region

The South, the Southern Center, and the Central Highlands are regions with high sunshine intensity and favorable conditions for implementing solar power plant projects. Specific locations are provided in the National Power Planning No.8
rural

Vietnam: Eastern South Region

The South, the Southern Center, and the Central Highlands are regions with high sunshine intensity and favorable conditions for implementing solar power plant projects. Specific locations are provided in the National Power Planning No.8
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References

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