Vietnam’s final solar PPA still short of bankability

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on reddit
Reddit
Share on email
Email
A vietnam-focused asset manager has said that despite some changes, no foreign bank will fund projects with the new PPA. Credit: MOIT

Vietnam’s final solar power purchase agreement (PPA) has to a large extent ignored recommended changes from a group of international Chambers of Commerce and therefore its attractiveness to foreign investors remains in doubt, according to representatives from law and finance sectors.

The Ministry of Industry and Trade (MOIT) officially released a Circular including the revised solar PPA this week, acting as a mandatory template for utility-scale and rooftop solar projects.

The Vietnam Business Forum (VBF), an umbrella group for multiple international Chambers of Commerce, had expressed a long list of concerns about the original draft PPA back in May.

However, Gavin Smith, director, clean development, Vietnam-focused asset manager Dragon Capital, told PV Tech that the “only significant change” in the newly-amended PPA is in relation to a currency convertibility issue involving the VND/USD exchange rate. This has been clarified with new wording, which Smith described as “very welcome”.

On the other hand, Smith noted: “In the case of all the other significant changes that were requested by the Foreign Chambers of Commerce there's been no change whatsoever; no improvement.

“And those remaining issues mean that no foreign bank will fund projects with that PPA.”

A release from law firm Duane Morris Vietnam also highlighted the lack of change, and declared that it “creates bankable issues for solar projects and a hindrance to foreign investors planning an investment in the sector”.

The company also noted that only minor changes are expected to be permitted during PPA contract negotiations.

As before, monopoly utility EVN is obliged to purchase solar power, except in certain outstanding circumstances, such as if the transmission grid or the distribution grid connected to EVN’s grid is facing difficulties. These outliers still leave solar developers unprotected with uncertainty for investors in securing revenue from PV projects.

This was just one of many more concerns listed by VBF back in May, which have not been addressed, according to Smith.

Before VBF’s warning, multinational law firm Baker McKenzie had also said that MOIT’s solar guidelines failed to address a range of issues that could impact large-scale project bankability, while criticising the ‘non-negotiable’ template drafted for all grid-connected solar PPAs.

This week an official from MOIT told PV Tech that the PV industry response to the new solar feed-in tariff (FiT) had been “overwhelming”, with more than 1,700MW of solar either applied for, under development or awaiting approval at present. The official had also said there were no major plans to alter Vietnam's previously announced solar policy.

Read Next

April 14, 2021
While recent solar auctions in Spain and Portugal have made headlines with low prices and high levels of participation, the power purchase agreement market will be key to helping both countries reach their 2030 solar deployment targets, it was suggested during a panel discussion.
April 14, 2021
Solar industry players should collaborate with governments and regulators to overcome floating PV permitting and bankability issues and unlock the potential of the technology in Europe, a panel has concluded.
April 12, 2021
A consortium between Abu Dhabi-based Masdar, EDF Renewables and Nesma Holding Company has broken ground on a 300MW PV project in Saudi Arabia.
April 12, 2021
The April 2021 episode of the Solar Media Podcast, sponsored by Honeywell, is now available to stream, featuring lessons from Asia on how to push floating solar forward.
April 8, 2021
Utility group Black Hills Energy has signed a 15-year power purchase agreement (PPA) with solar energy company 174 Power Global for its first large-scale solar power project in Colorado, US.
April 7, 2021
Saudi Arabian developer ACWA Power has finalised agreements for the 200MW Kom Ombo solar plant in Egypt, with construction work set to begin later this year.

Subscribe to Newsletter

Upcoming Events

Solar Media Events
April 20, 2021
Upcoming Webinars
April 28, 2021
4:00 - 4:30 PM CET
Solar Media Events
May 11, 2021