Vietnam’s TTC Group, a sugar, energy, real estate and tourism conglomerate, is planning to spend up to $1 billion on solar projects to meet the increasing domestic demand for power.
“Vietnam always needs more power every year for its expanding economy,” CEO Thai Van Chuyen told Bloomberg in a Thursday report.
“The recent pricing set by the government is reasonable, development costs are much cheaper and coal-fired power plants have caused so many concerns,” he said.
The Ho Chi Minh City-based company wants to build 10 to 20 solar parks that are expected to start operation next year to generate as much as 1,000 megawatts annually.
As planned, it will fund 30 percent of those projects and is currently in talks with banks and financial institutions for the remainder, according to Bloomberg.
TTC Group’s Gia Lai Electricity Joint Stock Company will supervise 80 percent of the development, while TTC Sugar, which plans a Singapore listing in two years, will develop the remaining 20 percent, said the Bloomberg report.
Investing in renewable energy is an emerging trend in Vietnam and projects worth billions of dollars in total have been registered in this sector across the country, which is facing a power gap.
The increasing demand for energy and the limited amount of fossil fuel are the first reasons for this new investment trend in Vietnam, Nguyen Anh Tuan, a senior energy official at the industry and trade ministry, told VnExpress on Tuesday.
With the development of new technologies, the cost of producing clean energy has dropped from VND3,500 to VND2,200-2,500 per kilowatt-hour (kWh), Tuan said.
He added that privileges for solar power project investors are another reason for this trend. The government has raised the buying price from 7.8 to 9.35 U.S. cents/kWh, offered investors tax incentives and cut land use fees.
Vietnam will need to invest $74 billion in coal, gas, wind, solar and hydro power plants through 2025 as power demand doubles, Bloomberg New Energy Finance wrote in a report in March.
Last year, the government revised down its output target for coal-fired power plants to 53.2 percent of the total power generation by 2030 from the 56.4 percent previously projected.
Vietnam is aiming to produce 10.7 percent of its total electricity through renewable energy by 2030, mainly solar and wind energy, up from the 6 percent previously planned.