Global Climate Partnership Fund: Supporting small and medium scale solar PV projects
Start & End Date: 2019-Ongoing
Country/Countries: Vietnam
Multilateral Institution(s) Involved: KfW Development Bank
The development of a renewable energy industry is essential to the Vietnam’s ambition to move away from a coal-based economy towards one based on renewable energy. EVN Finance plays a critical role in supporting this transformation. It is a financial non-banking institution that has increased its focus on providing loan products to support the development of rooftop solar products across the rapidly developing country over the last several years. The institution offers loan facilities to small and medium-sized project developers for the installation of solar rooftops. Many of these local developers can only reach out to regional commercial banks, the vast majority of which do not see this market segment as a priority. EVN Finance fills this financing gap. Through EVN Finance’s partnership with GCPF, that strategy has evolved with a growing focus on supporting small and medium scale solar PV projects.
GCPF supported EVN Finance in their efforts to develop private small scale solar market potential in Vietnam. Thanks to the GCPF TA Facility, a team of finance specialists guided EVN through the development of a professional credit underwriting process designed specifically for PV asset finance. In parallel, GCPF TA Facility commissioned local environmental and social (E&S) experts to visit 11 small scale solar projects to validate their cumulative E&S impacts and check if current measures are adequate to meet GCPF’s E&S risk management requirements. In addition, GCPF TAF also mandated a specialised consulting firm to support EVN Finance in developing an E&S risk management system in line with GCPF requirements
The Financial Institution gained the relevant underwriting skills to confidently assess the credit risk of private offtakers. Thanks to these efforts, EVN Finance is now wellequipped to develop a sound portfolio of small-scale renewable energy loans. This achievement creates a demonstration effect in the competitive financial market of Vietnam. Since EVN Finance partnered with GCPF, it has received offers of over USD 140m in additional funding. The uptake of financial services by local banks for private solar projects is critical to develop the local financial sector to support a net zero transition. Building on the findings of the E&S experts, 11 E&S action plans were defined and discussed by EVN Finance with the individual project promoters. Based on these findings, EVN Finance was able to understand the relevance and required level of E&S due diligence for handling small scale solar projects and beyond. EVN Finance adapted an E&S policy and shows full commitment to the required implementation efforts. As a result, EVN Finance is in a better position to manage such risks, which will allow for further expansion of green lending in the future.