Vietnam’s hydropower market to acquire USD 25 million from Singapore

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Vietnam’s hydropower market to acquire USD 25 million from Singapore

An investment of USD 25 million (SGD 34 million) in Vietnam’s Bitexco Power – Vietnam’s largest privately-owned hydropower company – was made by Singapore’s United Overseas Bank Limited (UOB) in an effort to tap into the rising electricity demand in Vietnam’s energy market.

Bitexco Power owns and operates 18 hydropower plants in Vietnam with a capacity of about 3,500 gigawatt-hours (GWh) per year. The agreement signing ceremony took place in Hanoi, on 1st September 2016.

Ahead of the deal making process, Mr Seah Kian Wee, managing director of UOB Venture Management said in a statement that they hope to participate in the growth of Vietnam’s power sector and play a key role in the country’s economic transition through investing in Bitexco Power. “Vietnam’s growth will continue to drive the demand for renewable energy”, he noted.

According to a white paper titled “Vietnam’s power sector: opening the way towards a greener future?” published by Asia-focused management consulting firm Solidiance, Vietnam’s power consumption from 2003 – 2012 reached to a CAGR of13.6%. In 2012, the country’s power consumption stood at 108 billion kWh, while installed power capacity accounted for 25 million kw with a CAGR of 11.7% from 2003. The fast growth rate in power consumption in Vietnam corresponds to an increasing rate in capacity.

Vietnam’s power consumption (billion kwh)

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Source: Solidiance white paper

Vietnam’s Installed Power Capacity (million kw)

2

Source: Solidiance white paper

 

As Vietnam’s power consumption keeps rising dramatically, so will demand. Estimates from the Vietnam government shows that the country’s electricity demand will increase by 10-12% a year, rising from 169.8 terawatt-hours (TWh) in 2015 to 615.2 TWh by 2030.

“Vietnam’s power sector will soon be transformed and move towards renewable energy fuelled by government reforms as well as a changing external environment”, according to Michael Sieburg, Associate Partner of Solidiance Vietnam.

Michael further said that the government’s comprehensive plans for transforming the power sector will create promising opportunities for private investors interested in both power generation and distribution.

In July 2012, Vietnam launched a competitive power generation market in hopes to attract more foreign investment, requiring about USD 4-6 billion of investments each year. Vietnam also plans to increase retail electricity prices to 9 cents/kWh by 2020 from 7.27 cents/kWh to expand the electricity market to private players.

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