JOURNALIST: - What do you think about the trend in investing in recycle energy projects in Vietnam, especially after getting support from the government?
Dr. CAN VAN LUC: - It is necessary to develop recycle energy for a more stable and sustainable economic growth. This is also now a global trend.
In Vietnam, developing recycle energy is one of the priorities of the government to reduce dependence on other traditional energy resources, protect the living environment and meet the rising energy demand. However, it is not easy to develop this energy as many constraints remain.
Vietnam’s economy is expected to grow 6.5-7.5%/year till 2030. Hence, energy development must be prioritized to meet the demand and maintain a sustainable growth rate within the country.
Furthermore, according to the electricity master plan approved by the government, the installed capacity in Vietnam will reach 130,000 MW by 2030, compared to current 47,000 MW. It means that about 83,000 MW will be further added.
- How attractive do recycle energy projects look to investors and bankers?
- For some time now, the recycle energy projects have been attracting many investments, including banks. For example, the State Bank launched a green credit campaign with total credit limit of VND 2,000bn at low interest rate of 1-3%/year. Or in other cases, green financial model, green bond and green bank.
We also see Get Fit of Germany do many things to support the development of recycle projects, including solar and wind power. This reveals that the potential for developing green power projects is huge for Vietnam, a tropical country with abundant natural resources like sunshine and wind.
Furthermore, the Vietnamese government has offered full support for the development of recycle energy projects.
Over the last 20 years, Vietnam’s GDP has been growing 6-7%/year on an average. The demand for electricity has grown 13%/year in 2000-2010, 11%/year in 2011-2016 and 10%/year in 2018. The thermal and hydro power projects have been facing many difficulties, the development of recycle energy is hence significantly needed to offset the energy shortage.
- What is the risk of investment in recycle energy projects as these investments are not guaranteed by the government?
- Firstly, the development plan for recycle energy projects lacks sustainability and feasibility features. The management and operation of green energy projects is quite new to investors as they lack professional know-how on such new technology.
Furthermore, the ability to manage cash flow as well as capability to make a long term financial plan by Vietnamese enterprises is not good.
Regarding the banks, recycle energy projects are considered high risk as this area is new to them. Some banks are confused about these projects as they lack any appraisal skills.
For example, BIDV, since the time they agreed to lend to recycle energy projects, had to hold many training education classes for their staff. BIDV even hired some foreign experts to educate their employees on how to appraise green power projects as this sector is very new and has many special technical terms.
Lastly, the policy risk for Vietnam is now very huge. Taking into account the input risk is not enough as the output risk is worth considering. The selling price is currently controlled by the government, not operated by market mechanism. A low selling price may impact the attractiveness of recycle power projects. However, a high selling price of electricity will impact the manufacturing activities and operations of other industries. Hence, this is a difficult problem to resolve. It needs a balance between economic development and suitable policies for all recycle energy projects.
- Thank you very much.
| By end 2018, Vietnam operated 8 wind power projects with total capacity of 243 MW and 10 biomass power plants with total capacity of 212 MW.
With regards to solar power, about 10,000 MW was registered and 8,100 MW of which was recently added. Two solar power projects are operating at total capacity of 86MW, contributing 2.1% to total electricity production.