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Philippines' AC Energy keen on renewables in Vietnam

Released at: 09:37, 12/09/2017

Philippines' AC Energy keen on renewables in Vietnam

Illustrative image (Source: news.zing.vn)

Company announces plans to build renewable energy plants in Vietnam over next two or three years.

by Quang Huy

AC Energy Holdings Inc., the power generation unit of conglomerate Ayala Corp., has unveiled a plan to build renewable energy plants with a combined capacity of several hundred megawatts in Vietnam over the next two to three years.

AC Energy’s President Mr. John Eric Francia said the company was in talks with several potential partners in Vietnam to implement the strategy. The move to look for potential renewable projects in Vietnam is part of its thrust to reach 2,000 MW of attributable capacity by 2020, with half coming from renewable energy projects.

Mr. Francia said that while the company was open to all types of technologies, it was keenly interested in renewable energy. “The market in Vietnam is growing in the double digits and my view is that there is a need for greater supply,” he said. “They have no reserve margin with double digit growth, so are in need of additional investment.”

Affirming that Vietnam was offering positive investment opportunities, he said he was hoping that a deal would be finalized soon. “We are trying our best,” he said.

Currently with 1,300 MW of capacity, including 300 MW of renewable energy, AC Energy recently acquired Bronzeoak Clean Energy, one of the leading renewable energy developers, having built over 250 MW of solar and biomass projects, as well as San Carlos Clean Energy.

Ayala Corp., the Philippines’ oldest conglomerate, entered Vietnam in 2008 through its subsidiary Manila Water’s $44-million water loss reduction project in Ho Chi Minh City.

It became a strategic investor in the Ho Chi Minh City Infrastructure Investment Joint Stock Co. (CII), the leading infrastructure developer in the southern city, in 2012, and now holds an 8.8 per cent stake in CII via its unit VIP Infrastructure Holdings Pte. Ltd. Through Manila Water, Ayala now owns a 38 per cent stake in Saigon Water Infrastructure JSC (SII).

Vietnam is trying to generate enough energy to sustain the country’s growth and to connect the millions of people who still do not have access to power, while gradually shifting towards clean and low-carbon energy. Last year, the government revised down its output target for coal-fired power plants to 53.2 per cent of the country’s total power generation by 2030 from the previous 56.4 per cent.

The country is aiming to produce 10.7 per cent of its total electricity through renewable energy by 2030, mainly through solar and wind energy, up from 6 per cent previously. In May this year, the government issued long-anticipated regulations on solar energy projects.

A raft of incentives to support renewable energy will be in place to June 2019 and have been dubbed a “landmark” in the country’s solar energy outlook. Other than exemptions on import duties and incentives including breaks in taxes and land use fees for solar power projects, raising the bid price to purchase solar energy to 9.35 US cents per kWh is a key measure.

Most recently, the Ministry of Industry and Trade has asked the government to raise the buying price for wind power in an effort to help investors cover high input costs, suggesting that the price should be lifted to 8.7 US cents per kWh for wind energy projects on land and 9.95 US cents per kWh for offshore plants.

Since 2011, the buying price for wind energy has stood at 7.8 US cents for all land-based projects in Vietnam, with 6.8 US cents paid by State-run power monopoly Electricity of Vietnam (EVN), and the remainder coming from the country’s Environment Protection Fund. For the country’s only offshore plant, in the Mekong Delta province of Bac Lieu, the current price is 9.8 US cents per kWh.

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