All About Solar

SOLAR 101

Your Financing Options for Rooftop Solar in Vietnam

Most rooftop solar developers use one of these solar project finance approaches to pay for solar facilities:

  1. Cash Purchase

If the developer has plenty of cash, which won’t be relocated soon and would like to keep the process simple, then an all-cash purchase can be a good option. A well designed solar facility in sunny climates will generate enough savings to break even in a few years, and if well operated and maintained, it will generate green energy and savings for generation.

  1. Solar Loans

A solar loan is what it sounds like: a loan that allows you to purchase a solar energy system and pay it off over time. For example, HSBC Bank (Vietnam) Ltd has unveiled a loan product named “Green Loan” with the special preferential interest rate from 11.99% when installing the rooftop solar energy system. However, solar loans are not considered as the common types of rooftop solar financing option in Vietnam due to its lack of cost-effectiveness.

  1. Green Bond for Long-Term Loan Instruments

According to the National Strategy for Green Growth 2011–2020 and the vision to 2050, from 2012, Vietnam has had an orientation toward green finance and green financial products for the Vietnam stock market to create financial resources for green growth. In the road map for bond market development in 2017–2020, with a vision to 2030 (Decision No. 1191/QD-TTg of the Prime Minister dated 14 August 2017), the mechanisms and policies for the distribution of the green bond market aim to enable issuers to raise capital through the issuance of bonds to carry out green projects.

  1. Green Credit Programs to Facilitate Access to Finance for RE Projects

It is important to create an enabling framework that consists of clear and enforceable rules, economic incentives, and information. Often banks refrain from lending to certain companies or sectors – for example, dedicated green business models focusing on renewable energy or energy efficiency – because they are unwilling to or cannot take additional risks, especially within the strict banking standard Basel II with higher reserves in banks in response to higher risky loans. Traditionally, Vietnamese banks have lent to large state-owned enterprises and conventional business activities.

 

Reference: Helio Power, ADB