On the morning of December 29, 2020, the seminar “Solutions to attract capital for green energy projects” took place in Hanoi with delegates from research institutes, government departments as well as enterprises and banks in Vietnam. The aims of the seminar are to promote the exploitation and efficient use of domestic renewable energy sources as well as to gradually increase the share of renewable energy in the national energy production and consumption. Mr. Nguyen Quang Huan, Chairman of of Halcom Vietnam JSC, attended and shared his practical experience in getting fund for the company’s renewable energy (RE) investment project, stated the difficulties in the access to domestic fund in investment activities in this field.
In the 21st century, green energy / renewable energy (RE) has become one of the most important concerns of the world. Vietnam is also in the game. The Government of Vietnam issued Decision 2068 / QD-TTg dated November 25, 2015 approving the Vietnam Strategy for renewable energy development to 2030, with a vision to 2050. Then, on November February 11, 2020, the Politburo promulgated Resolution No. 55-NQ / TW on the orientation of the National Energy Development Strategy of Vietnam to 2030, with a vision to 2045, with the goal of developing RE in the total primary energy supply is about 15-20% by 2030 and 25-30% by 2045. This is a quite large number and needs many incentives and mechanisms to promote development. This target is really feasible because Vietnam is a country with a long coastline, with many hours of lighting all year round, very suitable for the development of wind and solar power sources. Vietnam also has a large population, large amount of waste, in which there may be up to 40% of the appropriate amount of waste to convert into power, both reducing environmental pollution and ensuring power security.
In order to reach the target, the Government also issued documents on green credit to increase the efficiency of credit capital allocation for the socio-economic development requirements; promoted the development of “green credit – green banking” as well as increase the proportion of bank credit to invest in renewable energy, etc. to support businesses to invest in renewable energy. From those documents, commercial banks also study the construction and development of loan products for renewable energy projects with many incentives. However, Mr. Nguyen Quang Huan, Chairman of Halcom Vietnam JSC., said that funding is one of the difficult problems for businesses investment in RE. Currently, this field is mainly a fledgling business, so the capital source cannot be compared with other construction industries that have been operating for a long time.
The criteria in the bank’s appraisal process to make investment decisions, capital financing make it difficult for businesses to reach, such as: completing on schedule, connecting to the national grid; owner’s equity is at least 30% of the total investment; domestic commercial banks only lend projects in local currency, based on the investor’s financial capacity, not of the project. In Vietnam, there are more than 30 different papers that need to be prepared. For domestic investors, it will take about a year, and for foreign ones, it takes about 2-3 years due to lack of knowledge in the market. Therefore, many renewable energy projects have great potential but for the investors are all new to the field, their capacity is not strong enough, the ability to find funding source is still very low. ““The lack of long-term capital stems from the negligible difference between short-term and long-term loans, so banks have no motivation to grant loan to businesses. Renewable energy power projects also have long payback periods, 10-15 years, so banks are caught with safety limits ”, Mr. Huan said. He also suggested the State Bank to direct banks to allow investors to reduce their equity ratio by 20-25%, complete guidelines and build mechanisms for green credit. At the same time, there should be programs to support or connect with foreign financial institutions to refinance and issue preferential green bonds to banks and businesses participating in the green credit program.
However, when more and more green energy projects emerge, the main subject is still the business. Therefore, “businesses should not only rely on banks, apart from their own capital, investors should choose to cooperate with foreign partners, then try fund mobilization from shareholders’ capital or look for the support from investment funds. The most important thing is businesses themselves need to have feasible projects with high investment efficiency “, said Mr. Nguyen Quang Huan.
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