Thai Giant Acquires Solar Power Project in Vietnam

Many foreign investors have chosen Vietnam as a destination to invest in solar power project in Vietnam.

Together with the explosion of solar power projects, 2019 is considered to be the peak year of the ‘underground waves’ surrounding the race for additional licenses for solar power planning in all levels from central to local. The situation of license trading, project transfer to foreign investors also appeared.

Along with the rush of solar power projects, in recent days, a series of news that many weak investors still have acquired large-scale renewable energy projects, then quickly transferring to foreign investors to make profit gradually appearing in many forums about renewable energy. Even, according to the announcement of foreign investors, the transfer of solar power projects in Vietnam is taking place very excitingly.

Most recently, the Board of Directors of Super Energy Corporation Company Limited (Super Energy) of Thailand announced that at the end of March 2020, they have sent a letter to the Thai Securities Commission announcing the decision to spend no more than 456.7 million USD to invest in 4 solar power plant projects, including Loc Ninh 1 (200 MW), Loc Ninh 2 (200 MW), Loc Ninh 3 (150 MW) and Loc Ninh 4 (200 MW) in Binh Phuoc province (Vietnam).

According to the announcement, the investment in Loc Ninh 1 solar power project is 99.7 million USD; in Loc Ninh 2 is 140 million USD; in Loc Ninh 3 is 105 million USD and in Loc Ninh 4 is 112 million USD. In order to raise the ownership rate at businesses implementing the 4 solar projects, the Super Energy project has to pay a total of 72.9 million USD as scheduled. In particular, the amount paid in March 2020 is more than 5.7 million USD. Specifically, the payment in March 2020 was 13,667 million USD. The amount payable in June 2020 will be 32.4 million USD and the amount payable in November 2020 will be 11.6 million USD. Under the agreement, if the purchase price is different from the forecast of 7.09 US cents/kWh, the value of the stock will be adjusted according to the actual purchase price.

However, according to initial information, not all Vietnamese partners (many believe that subsidiaries of Hung Hai Group) will receive all this money. Currently the first payment took place with the amount of 5,732 million USD. The remaining payments will be accompanied by detailed conditions such as when there is land lease decision, construction permit, grid contract, land use right certificate, or certificate of eligibility for commercial electricity generation with the purchase price of electricity is 7.09 UScents/kWh…

Notably, before the acquisition of the 4 mentioned projects, the Thai energy company owned 6 solar power projects in Vietnam. As of March 2020, these 6 projects alone had a total capacity of up to 286.72 MW, equal to half of the total capacity of 100 solar power projects in Thailand that SEC owns.

A special feature is that all 6 power projects in Vietnam that Super Energy acquired earlier only had the return on investment (EIRR) of 12-13%. And power projects under Loc Ninh project cluster have much higher EIRR, from 16.59% to 17.4%. In addition to solar power projects, the SEC also owns 4 wind power projects in Vietnam, in Bac Lieu, Soc Trang, Phu Yen and Gia Lai provinces. These projects are expected to be fully or partially operational from Q4/2021.

According to research, through the form of joint venture, transfer of shares with Vietnamese enterprises, many foreign energy and investment corporations have owned dozens of solar and wind power projects and enjoyed preferential prices of 9.35 UScents/kWh for 20 years in Vietnam.

Among these are the two solar power plants TTC 1 and TTC 2 in Tay Ninh, invested and operated by Thanh Thanh Cong Group and Gulf Energy Group (Thailand), operated in the middle of 2019. At that time, Thai group owns 49% of the capital but in the latest change, Gulf has increased its holding to 90%. Apart from the solar power projects in Tay Ninh, Thai group also holds wind power projects in Ben Tre with 95% ownership.

In addition to the above mentioned projects, Super Energy has also invested in the form of buying shares in solar power projects in Ninh Thuan, An Giang… In addition to Thailand, many investors come from Singapore, China, Philippines… also owns dozens of solar and wind power projects in Vietnam through shares and joint ventures.