Investors see renewable energy as economic driver

By Kim Ngan
Mon, December 19, 2022 | 8:40 am GMT+7

Renewable energy, LNG power and hydrogen are attracting new interest from foreign investors in Vietnam. The Investor talks with Tony Foster, managing partner of Freshfields Bruckhaus Deringer's Vietnam offices, about investment opportunities in these areas.

Renewable energy has emerged as an attractive investment field for both domestic and foreign investors. Among the prominent foreign brands eyeing renewables in the country are PNE AG, ThomasLloyd Energy, Orsted, Copenhagen Offshore Partners, BP, Acciona Energia, Equinor, and JERA. What do you think lies behind this interest?

The companies you mention do not necessarily have the same interests. Some may be driven purely by the prospects of profit from the project. Others may pool the project into a portfolio where the sum of its parts is more valuable on the financial markets than the individual parts.

Others may be interested in selling equipment. Some may need greater green credentials to balance other dirtier businesses that they run. Some may have more nationalistic or even quasi-governmental motives.

The common denominator is that they all believe in the future of renewable energy as a driver of the world economy and they are therefore positioning themselves as best they can as early as they can, knowing that some of their positions will work and some will fail.

Seeking approval for renewable projects, negotiating power purchase agreements, and ensuring smooth links with the country’s transmission grids can be tougher-than-expected issues in Vietnam. Do you think investors should exercise more caution and apply greater diligence?

Investors are well aware of many of the difficulties of developing power projects in Vietnam. They evaluate the risks and the potential rewards and make a decision on whether to pursue a particular opportunity.

The main questions are (i) are they aware of all of the difficulties that are likely to arise and (ii) do they have the correct inputs on the risks that they will be taking. Our experience over many years in this sector is that different entities have different processes that result in different answers to these questions. But one cannot say that one process is right and the other is wrong - if one focuses too much on the difficulties and the risks, one will never do anything in Vietnam.

The country’s controversial power development plan VIII (PDP VIII) is taking more time to receive approval than expected. What recommendations can you make about the content given that you are a consultant for investors in this field?

Trying to get PDPVIII right is about as hard an exercise in planning as I have seen in Vietnam. Weighing all the factors and risks, upfront, for a 10 year period is almost impossible to do in a manner that turns out to be correct and accurate.

In light of this, one has to ask if the planning demand is itself in the right place. Given how swiftly and unpredictably the energy world is evolving, a less static, more dynamic planning process, which allows for easier change, may be something to consider for the future.

The ratio of LNG-to-power out of the country’s future energy mix in the latest draft of PDP VIII has fallen due to government concerns about future supply and price uncertainties. What is your assessment of the investment opportunities in this area given that it has attracted the interest of big firms like AES, Tokyo Gas, Marubeni, Hanwha Energy, Korea Gas, and Korea Southern Power?

If coal is out, nuclear is not currently on the cards, hydrogen is too early, hydro is maxed out, and renewables are intermittent, the only real choices of fuel left for baseloads are domestic gas and LNG. Extraction of domestic gas from Block B/52 is complicated; the cleanliness of domestic gas in Blue Whale seems complicated. As that leaves only LNG, one can appreciate the interest in it, despite the evident supply and price issues.

What do you think about the investment opportunities to develop hydrogen fuel in Vietnam?

It is early days for hydrogen. But with the renewable resources available to the country to produce green hydrogen, it is an opportunity for the country to make a mark on the world stage. As with VinFast, the country should grasp green ambition with both hands.

Comments (0)
  • Read More
Attracting quality FDI to tap new opportunities: association

Attracting quality FDI to tap new opportunities: association

Vietnam needs to promote its inherent strengths to attract FDI, especially from major powers, to become not only a “workshop” of the world, but also a powerhouse for chip production, said Prof. Dr. Nguyen Mai, chairman of the Vietnam's Association of Foreign Invested Enterprises (VAFIE).

Investing - Wed, March 20, 2024 | 8:31 am GMT+7

Vietjet opens Hanoi-Sydney routes after Vietnam-Australia relationship upgrade

Vietjet opens Hanoi-Sydney routes after Vietnam-Australia relationship upgrade

Vietnamese budget carrier Vietjet has announced the launch of a direct air link between Hanoi and the port city of Sydney, days after Vietnam and Australia upgraded their diplomatic ties to a comprehensive strategic partnership.

Travel - Tue, March 19, 2024 | 11:06 pm GMT+7

Vietnam in talks on visa exemption with 15 countries to boost tourism

Vietnam in talks on visa exemption with 15 countries to boost tourism

The Vietnamese foreign ministry is in negotiations with 15 countries to mutually exempt visas for their citizens as the Southeast Asian seeks to lure more international arrivals amid fierce regional competition.

Economy - Tue, March 19, 2024 | 9:28 pm GMT+7

Thai researchers turn food waste into biochar

Thai researchers turn food waste into biochar

A team of researchers from the King Mongkut’s University of Technology Thonburi (KMUTT) has devised a technique for turning two types of food waste into fuel comparable to low-grade coal, the Thai media has reported.

Southeast Asia - Tue, March 19, 2024 | 6:15 pm GMT+7

Man to face trial for allegedly smuggling seven Vietnamese into UK

Man to face trial for allegedly smuggling seven Vietnamese into UK

Anas Al Mustafa, from Heather Crescent, Swansea, is set to go on trial on August 5 for allegedly trying to smuggle seven Vietnamese migrants into the UK in the back of a specially adapted van.

Society - Tue, March 19, 2024 | 6:13 pm GMT+7

FDI businesses call for stable power supply in Vietnam

FDI businesses call for stable power supply in Vietnam

Foreign-invested companies in Vietnam have expressed concerns over power shortages and called on authorities to provide stable electricity for industrial parks to ensure production.

Energy - Tue, March 19, 2024 | 5:33 pm GMT+7

US firms keen on boosting presence in Vietnam after historic relationship upgrade

US firms keen on boosting presence in Vietnam after historic relationship upgrade

A U.S. business delegation, including 3M, AES, Amazon, FedEx, and Meta, is exploring business opportunities in Vietnam, the largest visit of its kind since the U.S. and Vietnam double upgraded their relations to a Comprehensive Strategic Partnership.

Companies - Tue, March 19, 2024 | 4:22 pm GMT+7

Vietnam should promote workforce investments, clear regulations: Bosch

Vietnam should promote workforce investments, clear regulations: Bosch

Vietnam should encourage the government and businesses to invest more in human resources and build a clear regulatory framework, Dominik Meichle, managing director of Bosch Vietnam, said at the Vietnam Business Forum (VBF) on Tuesday.

Economy - Tue, March 19, 2024 | 4:07 pm GMT+7

Vietnam third largest cryptocurrency gainer in 2023: US analysis firm

Vietnam third largest cryptocurrency gainer in 2023: US analysis firm

Vietnam ranked third in the world for cryptocurrency gains in 2023, only after the U.S. and UK, with nearly $1.2 billion, according to U.S. blockchain analysis firm Chainalysis.

Finance - Tue, March 19, 2024 | 2:45 pm GMT+7

Hai Phong proposes southern economic zone to draw investment

Hai Phong proposes southern economic zone to draw investment

Vietnam's northern city of Hai Phong is urgently finishing documentation, procedures, and other related work to submit to Prime Minister Pham Minh Chinh for a project to establish a coastal economic zone in the second quarter.

Industrial real estate - Tue, March 19, 2024 | 1:53 pm GMT+7

F88 sponsors gender equality promotion

F88 sponsors gender equality promotion

Pawnshop chain F88's initiatives in supporting self-employed low-income women and promoting opportunities for female employees are highly appreciated by international organizations.

Companies - Tue, March 19, 2024 | 11:46 am GMT+7

Intel commits to long-term investment in Vietnam: representative

Intel commits to long-term investment in Vietnam: representative

Intel appreciates the continued support of the Vietnamese government and is committed to long-term investments in the country, Intel Vietnam representative Phung Viet Thang said at the Vietnam Business Forum (VBF) on Tuesday.

Companies - Tue, March 19, 2024 | 11:17 am GMT+7

Industrial Center Yen Phong 2C ranked among top 10 potential industrial park real estate projects in 2024

Industrial Center Yen Phong 2C ranked among top 10 potential industrial park real estate projects in 2024

Industrial Centre Yen Phong 2C has been ranked among the top 10 potential industrial park real estate projects in 2024.

Companies - Tue, March 19, 2024 | 10:59 am GMT+7

Importance of US companies in Vietnam far beyond mere FDI statistics: business council

Importance of US companies in Vietnam far beyond mere FDI statistics: business council

Statistics on foreign direct investment (FDI) announced by the Vietnamese government do not fully reflect the importance of U.S. companies to the country’s economic and export growth, said a representative of the U.S.-ASEAN Business Council (USABC).

Economy - Tue, March 19, 2024 | 10:10 am GMT+7

Vietnam gov’t seek better understanding with FDI firms via annual forum

Vietnam gov’t seek better understanding with FDI firms via annual forum

The Vietnam Business Forum (VBF), under the theme “FDI enterprises pioneer in implementing green growth strategies,” took place on Tuesday, serving as an annual platform for dialogue between the Vietnamese government and the foreign business community.

Economy - Tue, March 19, 2024 | 9:05 am GMT+7

Inside Hanoi's The West building after ownership change

Inside Hanoi's The West building after ownership change

The main lobby, office, elevator interiors, and pantry in The West building at 265 Cau Giay street in Hanoi have all been comprehensively renovated as part of the new owner’s plans to upgrade tenant experience and deliver improved service quality.

Real Estate - Tue, March 19, 2024 | 9:00 am GMT+7