The Asian Development Bank (ADB) has approved $160.5 million to refinance the 240 megawatts (MW) Dau Tieng 2 Tay Ninh solar power project in Vietnam.
The approved financing structure include $24.5m from ADB, a $128m syndicated loan (B loan) and $8m from Leading Asia’s Private Infrastructure Fund (LEAP).
The Dau Tieng 2 is part of the 420MW Dau Tieng solar complex with its total cost at $393m which was developed by Thailand’s B. Grimm and Vietnam’s construction company Xuan Cau. Dau Tieng 1 and Dau Tieng 2 started commercial operation in 2019. Dau Tieng 3 plant, with the designed capacity of 150MW, is expected to be completed during 2021-2025.
Dau Tieng is considered as the largest solar project of its kind in southeast Asia. It is reported being able to produce around 688m kWh each year which is enough to meet the power needs of around 320,000 homes.
Infrastructure expert John Yeap of Pinsent Masons, the law firm behind Out-Law, said: “The approval by ADB of this facility, which comes soon after the IFC approved its financing of two onshore wind farms in Vietnam, is a positive endorsement on the finance ability of the Vietnamese onshore renewables contractual framework. With Vietnam pivoting away from coal, onshore renewables will play an increasingly important role, which may reinforce the confidence in and the viability of these projects.”
“However, as installed capacity of intermittent generation increases, investments into grid upgrades will also be required to fully release the potential for such projects. There is no doubt an important role here, and arguably an even more important one, for development agencies as well,” he said.
“Further, the scale and potential of onshore renewables will be dwarfed by the potential from offshore renewables. It remains to be seen if the debt and equity market are prepared to be equally bullish with the financing of these much larger and complex projects on the basis of current contractual structures,” Yeap said.
In 2020, ADB provided $27.9m loan to this project, among a $148.8m B loan funded by commercial banks and a $9.3m loan from LEAP.
LEAP was established in 2016 and it is an infrastructure co-financing fund focusing on delivering high-quality and sustainable private sector infrastructure projects.
