Harnessing Sunshine in Phu Yen

Privatizing Power

Spreading across 256 hectares on the vast plains of the Phu Yen province on Viet Nam’s southern coast, the Phu Yen Solar Power Plant produces 257 megawatts of electricity for the nearby coastal cities of Quang Ngai and Nha Trang—a region emerging as one of the country’s key tourist destinations. It also provides power to rural villages in Phu Yen.

The power plant is part of the government’s master plan to expand power generation and transmission infrastructure, reduce the use of fossil fuels, and diversify energy sources by harnessing renewables, such as solar and wind power.

Next to Indonesia, Viet Nam is the largest power market in Southeast Asia, with electricity demand projected to grow at roughly 9% per year through 2030.

To meet this demand, Viet Nam needs to invest about $148 billion in power transmission and generation infrastructure from 2016 to 2030. In 2017, the government turned to the private sector for greater investments, offering a 20-year feed-in tariff for large-scale solar power projects. Under this arrangement, electricity generated from renewable sources is purchased at a higher market price, essentially guaranteeing a higher return for investors.

The Phu Yen Solar Power Plant is among those developed through private sector finance.

Despite the added tariff, private sector developers found securing more flexible and longer-term financing challenging because of the country’s tight fiscal policies. Among these developers is Phu Yen TTP Joint Stock Company (Phu Yen JSC), the builder and operator of the Phu Yen Solar Power Plant. Phu Yen JSC needed sustainable financing solutions to support the operations of the Phu Yen Solar Power Plant.

Certified Green

In October 2020, ADB and Phu Yen JSC signed a $182 million financing package to support the long-term operation of the Phu Yen Solar Power Plant and ensure its viability.

Apart from a $27.4 million ADB loan, the financing package includes a $145.9 million syndicated loan funded by commercial banks with ADB as lender of record and a $9.1 million loan from the ADB-administered Leading Asia’s Private Infrastructure Fund financed by the Japan International Cooperation Agency.

The Phu Yen Solar Power Plant is expected to help reduce the country’s greenhouse gas emissions by 123,000 tons of carbon dioxide annually, a modest but important contribution to the volume that Viet Nam needs to reduce.

The syndicated loan is Viet Nam’s first “green B loan,” certified by the Climate Bonds Initiative, which administers the international Climate Bond Standards and Certification Scheme. Green loans are used to fund new or existing projects that deliver environmental or climate-related benefits. Financing partners for the B loan include the Bangkok Bank, Kasikorn Bank, Kiatnakin Bank, Industrial and Commercial Bank of China, and Standard Chartered Bank.

Phu Yen JSC was established in November 2016 and is owned by B.Grimm Power Public Company Limited (B.Grimm Power), Truong Thanh Viet Nam Group Joint Stock Company, and Shikoku Electric Power Company. ADB’s ongoing work with private power producers such as B.Grimm Power, one of Thailand’s largest and experienced regional renewable energy developers, helped seal the deal.

“For many countries, the mix of fossil fuels and renewables is changing dramatically. There is no time to waste. Viet Nam is smart to push forward on renewable energy and the Phu Yen Solar Power Plant is a key part of Viet Nam’s strategy to get greener and diversify its power supply. ADB is proud to work with the private sector, such as B.Grimm Power, to deliver solar power to Viet Nam,” said Daniel Wiedmer, director for infrastructure finance at ADB.

ADB and B.Grimm Power are also trusted partners in a separate solar power project in Tay Ninh Province, southern Viet Nam.

Power and Gender

The power sector has been traditionally a predominantly male field, and Phu Yen JSC is no exception. For example, only 1 of 15 staff at a remote project site is a woman. Because of this, prior to the partnership with ADB, Phu Yen JSC had no policies that promoted gender equality.

Phu Yen JSC has now adopted gender equality measures aligned with ADB’s Policy on Gender and Development. It plans to diversify its workforce to include more women, especially in technical and managerial positions. Phu Yen SJC plans to improve its human resources policies regarding equal pay for women and men and access to social security benefits. It will also institute anti-sexual harassment policies and guidelines to create a safer workplace for women.

“A more diverse and inclusive workforce, with more women managers, could be the key to the Phu Yen Solar Power Plant’s long and productive future,” Daniel Wiedmer said.