HSBC Lends $23Mn To Malaysian Firm For Vietnam’s Solar Project

HSBC and Leader Energy of Malaysia have inked a financing deal worth 593 billion Vietnamese dong ($23.3 million) for a solar power plant in the southern Vietnamese seaside province of Binh Thuan.

Leader Energy will use the seven-year loan to refinance its power plant, which generates 83,000 megawatt-hours of electricity a year, offsetting 75,000 metric tonnes of carbon, according to a statement on Monday. Group CEO Jenny Ng said investments in Vietnam will help her company hit its target of net-zero greenhouse gas emissions by 2050. The power producer is transitioning from coal and diesel to renewable energy.

As Southeast Asia’s top solar power producer and solar panel exporter, Vietnam has attracted investment from countries beyond Malaysia. B. Grimm Group of Thailand operates one of the region’s biggest solar farms here, while the top U.S. panel producer by market capitalization, First Solar, owns a massive factory in Ho Chi Minh City.

Vietnam is ramping up production of alternative energy as fears of power outages plague the supply chain hub.

“Contributing to the energy transition is a key component of Leader Energy’s strategy to mitigate climate change,” Ng said.

Despite the tropical country’s abundant sunshine, companies said some solar projects haven’t been “bankable” since the one-party state stopped offering generous fees to producers in 2019. Leader Energy was able to secure new financing in part because its plant locked in those fees for a 20-year term before Hanoi phased them out.

“This deal demonstrates how the financial sector can play an active role in unlocking the renewable energy potential for Vietnam,” said HSBC Vietnam’s head of wholesale banking, Ahmed Yeganeh.

Vietnam’s coal use rose this year to avert blackouts, and environmentalists have been imprisoned after campaigning against the fossil fuel. Costs have slowed down its green transition, though the country plans to shutter coal plants early through an Asian Development Bank program.

Binh Thuan, home to the popular beach destination Mui Ne, hosts multiple solar power plants, including those belonging to a subsidiary of Dragon Capital, Vietnam’s oldest asset manager, and Thien Tan Group, a conglomerate known for producing sugar. A new highway shaves more than an hour off travel to the business metropolis of Ho Chi Minh City, now about three hours away.