HO CHI MINH CITY -- Fund manager VinaCapital will pour $100 million into solar power in Vietnam, the world's No. 3 solar market but also a heavy coal user that is expected to feel the impact of China's recently announced divestment from coal.
VinaCapital said France's EDF Renewables has invested in its SkyX Solar holding company but declined Nikkei Asia's request to disclose the amount. The combined $100 million will go toward developing 200 megawatts peak of rooftop solar energy in the next two to three years. VinaCapital previously told Nikkei it also was developing a $3 billion liquefied natural gas plant with South Korea's GS Energy.
Vietnam's domestic "sector has grown from virtually nothing into Southeast Asia's leading solar market" in the space of a few years, VinaCapital said on Wednesday.
The country is the region's largest market for wind and solar power, installing more solar capacity than all but two countries in the world in 2020, Wood Mackenzie told Nikkei.
The energy consultancy also said Vietnam and Indonesia could be most affected after Chinese President Xi Jinping told the United Nations in September that his country would scrap coal investments abroad.
Vietnam has ramped up electricity across the board to fuel one of the world's fastest-growing economies. This contributed to the Climate Action Tracker's conclusion that the country's actions are "critically insufficient" to meet Paris carbon reduction goals, even when taking into account Vietnam's smaller share of global obligations.
Think tank Carbon Tracker said in June that China, India, Vietnam, Indonesia and Japan "are responsible for 80% of the world's planned new coal plants." But Vietnam has canceled some of those plants and intends to "reduce coal-power sources" in its upcoming Power Development Plan 8, according to the trade ministry. The country also is likely to participate in an Asian Development Bank project to shutter coal plants up to a decade early.
"We are delighted to partner with VinaCapital and invest in SkyX Solar, which has quickly scaled up providing world-class rooftop solar solutions to meet the high demand for low-carbon sources of energy from commercial and industrial customers," said EDF Renewables Southeast Asia director Yalim Ozilhan.
SkyX's clients include factories and warehouses in and around Ho Chi Minh City, Vietnam's business hub, which are looking to install solar panels.
Its joint venture comes a week after HSBC announced its first loan for a wind project in Vietnam, following solar-related loans that it said were the country's first in the renewable-energy sector.
"To attract more [foreign investment] and provide overseas companies with more sustainable energy, Vietnam has demonstrated a strong commitment to renewables," said HSBC, another party to the ADB project, the details of which will be announced at the United Nations' COP26 climate talks in Glasgow this month.
The government power plan also would increase LNG use, based on a controversial claim that it's less polluting than coal. The Trump administration pressured Vietnam to buy U.S. LNG but now, with concerns about cost, foreign contractors' levels of experience, and fossil fuel scrutiny, these purchases are far less likely to pan out, according to Institute for Energy Economics and Financial Analysis research.
