Tens of solar power projects have been bought by foreign investors through M&A deals.

The high electricity selling price and the possibility of recovering capital early are attracting investors to the Vietnamese clean energy market, according to an analyst.

The FIT (feed in tariffs) electricity price of VND2,100 per kwh, or 9.35 cent, applied to power projects operational prior to July 2019 for 20 years is an attractive feature.

“Foreign investors can seek capital in dollars with low costs and with this electricity price, they will be able to recover the investment capital and make a profit,” the analyst said, adding that the stable price for 20 years is a strong point worth considering.

He estimates that with a 50 MW solar power project in areas with high sunshine levels such as Ninh Thuan and Binh Thuan, investors can earn VND500 million a day from electricity sale, and VND150 billion a year.

If noting that a 50 MW project costs about VND1 trillion, investors would be able to take back investment capital after 6-7 years.

While experts agree that foreign investors are acquiring more licensed projects to jump into the renewable power sector in Vietnam, they have different opinions about whether the movement will affect Vietnam’s power security.

While experts agree that foreign investors are acquiring more licensed projects to jump into the renewable power sector in Vietnam, they have different opinions about whether the movement will affect Vietnam’s power security.

A high ranking official affirmed that the foreign ownership of a series of solar power projects will not have any effects on the national electricity system. The state doesn’t set limitation on foreign ownership ratios in power plants.

The massive foreign investment shows the high profitability of the Vietnamese market.

Also according to the official, solar power output accounts for less than 3 percent of total output, 10 billion kwh of the total 250 billion kwh. The 3 percent is created by both Vietnamese and foreign invested projects.

Ha Dang Son, director of the Center for Energy Research and Green Growth, said the ownership transfer transactions must be considered normal activities in a market economy.

The projects which promise good financial indexes will attract buyers.

However, Son said because of the special importance of the projects in the energy sector, there must be supervision by appropriate state agencies.

It is necessary to clarify if the transfer deals have latent risks for power energy security.

He warned that when the proportion of renewable energy projects increases to a certain high level, accidents that occur at the same time at the projects may have serious impact on the national grid. 

Luong Bang

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