Bamboo Capital, Trungnam could benefit from new renewables price frame: securities broker

Owners of renewable energy projects in Vietnam that missed deadlines for preferential feed-in-tariffs (FiTs) like Bamboo Capital and Trungnam Group could benefit from a newly-issued purchase price frame, according to top broker VNDirect.

These projects are often referred to as "transitional renewable energy projects".

In a report, VNDirect Securities said the new price frame of VND1,185 to VND1,816 (5.0-7.7 U.S. cents) is 21-29% lower than the incentivized FiTs applied to projects that met the FiT deadlines.

"We consider the new price bracket to be the first rescue signal for energy developers, as the transitional projects have been stalled for a long time after the expiration of the preferential FiTs," it wrote.

However, not all renewable developers will benefit from the price frame, the brokerage house added.

Under the Ministry of Industry and Trade's Decision 21 dated January 7, 2023 that came into force the same day, the maximum purchase price for "transitional" solar power projects is now VND1,185-1,508 (5.0-6.4 U.S. cents) per kWh, depending on the type and excluding VAT.

The ceiling price for "transitional" wind power projects is VND1,587-1,816 per kWh (6.8-7.7 U.S. cents).

This framework will provide the basis for state-run Electricity of Vietnam (EVN) to negotiate prices with developers of transitional renewable energy projects after a two-year wait.

The rates for transitional projects under the ministerial decision are lower than the incentivized FiTs applied to the projects that met the FiT deadlines.

The 20-year preferential FiTs are 9.35 U.S. cents per kWh (Decision 11/2017) and 7.09-8.38 U.S. cents per kWh (Decision 13/2020) for solar power projects that became operational by December 31, 2020; and 8.35-9.8 U.S. cents per kWh for wind power projects that became operational by November 1, 2021.

VNDirect said Bamboo Capital Group, coded on the Ho Chi Minh Stock Exchange (HoSE) as BCG, has the largest portfolio in renewable energy among listed firms. BCG is operating projects of 592 MW in solar energy and 180 MW in wind power.

The price frame for "transitional" projects would help the firm gain profits, including the 114MW Phu My 2 and 49MW Krong Pa 2 solar power projects, 80MW Tra Vinh GD1 and 100MW Khai Long G1 wind power projects.

Similarly, Trung Nam Construction Investment JSC (Trungnam Group) would benefit from its 170MW Trung Nam Thuan Nam solar power project.

Data from VNDirect shows that Trungnam Group and BCG are top players in renewable energy, account for 7% and 2.2% of the market’s power capacity.

The broker estimated 16 solar power projects and 62 wind power projects are subject to the price frame for transitional projects.

Moreover, the renewable energy sector in Vietnam has other advantages such as decreasing investment costs until 2030 and abundant capital with low interest rates, such as the $15.5-billion Just Energy Transition Partnership (JETP), according to the report.

VNDirect also named other notable beneficiaries of the new price frame, including power developers Gia Lai Electricity JSC (HoSE: GEG) and private conglomerate T&T Group, and power project builder PC1 Group JSC (HoSE: PC1).