The International Finance Corporation (IFC), a member of the World Bank Group, has announced its decision to provide a financing package of US$57 million to Thuan Binh Wind Power Joint Stock Company (TBW), a subsidiary of Refrigeration Electrical Engineering Corporation (REE).

Construction of Loi Hai 2 wind power plant in Ninh Thuan province. Source: TBW

The fund will enable the construction of two onshore wind power plants — Phu Lac 2 in Binh Thuan province and Loi Hai 2 in Ninh Thuan province — with a total capacity of 54.2 megawatts to meet the country’s growing demand for electricity as Vietnam is transitioning to cleaner low-carbon power generation.

The plants will generate about 170 million kilowatt hours of clean energy per year once they start operating later in 2021.

The financing package from IFC includes financing mobilized by the multi-investor Managed Co-Lending Portfolio Program (MCPP), managed by IFC’s innovative syndications platform, which allows institutional partners to commit funds for a set of future IFC loans.

“As REE expands its footprint in renewable energy, we are looking for long-term US dollar-based financing that is not readily available in the local market. We are confident that IFC’s support will help us implement a strategic drive to green our power sector portfolio in the coming years. By agreeing to implement IFC’s financial, environmental, and social requirements, REE confirms its readiness and willingness to contribute to Vietnam’s renewable energy development,” said Nguyen Ngoc Thai Binh, REE Deputy Chief Executive Officer.

Leveraging its global experience in wind projects, IFC noted it would help ensure that these two projects follow the best industry as well as environmental, social, and governance practices.

“The wind power sector in Vietnam is still in its nascent stage but has very large-scale potential. IFC’s engagement will demonstrate viability to investors and help mobilize the much-needed funding to help realize Vietnam’s cleaner, renewable energy potential,” said Kyle Kelhofer, IFC’s Country Manager for Vietnam, Cambodia, and Lao PDR. He added, “IFC is especially committed to supporting solid local corporates such as REE to scale up their renewable energy investments, supporting the country’s transition to a lower-carbon electricity generation mix.”

Driven by robust economic growth, Vietnam foresees the need for a twofold expansion of its installed power capacity by 2030 to meet increasing electricity demand. Renewable energy capacity including rooftop solar is projected to increase by approximately 19 GW to more than 36 GW over the coming decade, at an estimated cost of around US$20 billion, mostly expected to be developed and funded by the private sector.