The Global Infrastructure Facility (GIF) will cooperate with the World Bank in helping Vietnam address its rising demand for solar energy, with a committed support fund of US$1.5 million.
The GIF’s Governing Council has approved the fund to assist the World Bank in working with the government of Vietnam on the Solar Pilot Auction Program, according to a press release published on the bank’s website on December 18.
The GIF, working with the World Bank’s Energy Global Practice, will help the Vietnamese government to design and structure the auction program to transition from a feed-in tariff regime to a sustainable competitive auction scheme for solar generation.
The program will help to address Vietnam’s increased demand for energy and promote inclusive growth by strengthening the enabling environment for the private sector.
“We are working closely with the government to bring more private resources to the energy sector where the needs are huge and urgent,” Ousmane Dione, World Bank country director for Vietnam, was cited as saying in the press release.
“GIF’s support comes at a critical time to help the country overcome multiple remaining obstacles to further develop solar power, including financing and risk allocation.”
The Solar Competitive Bidding Program by Vietnam’s Ministry of Industry and Trade is part of the government’s broader efforts to accelerate investments in energy efficiency and renewable energy to increase the country’s diversification of electricity generation and reduce CO2 emissions.
The Southeast Asian country aims to bring 12 GW of solar energy onto the grid by 2030.
“This would be the first solar auction program to be implemented in Vietnam, which would have large-scale replicability,” said Jason Lu, head of the GIF.
“We are pleased to support the government of Vietnam as they mobilize private financing through standardized, transparent, and programmatic approaches.”
While Vietnam’s economic outlook remains robust, with a forecast of 6.5 percent growth in 2020 and 2021, it faces many challenges in meeting its infrastructure needs, particularly in the energy sector of growing demand.
Vietnam is actively seeking to attract private investment and use more public-private partnerships in the energy sector, but the country needs to adapt its current framework to enable competitive selection of independent power producers and minimize the cost of solar generation.
With the support of the World Bank and the GIF, the government is developing competitive bidding schemes to deploy utility-scale solar photovoltaic.
The Global Infrastructure Facility supports end-to-end transaction advisory services to governments in developing countries to build pipelines of bankable, sustainable infrastructure programs and projects that are attractive to private capital.
As a global collaboration platform, the GIF connects governments, multilateral development banks, private sector investors and financiers, and other infrastructure stakeholders to deliver climate-smart and trade-enabling infrastructure in developing countries.
The GIF is supported by the governments of Australia, Canada, China, Japan, Singapore, as well as the World Bank.