Tran Thi Khanh Hien, Director of the Analysis Division at VNDirect Securities Company, speaks on the development of renewable energy in Vietnam (Photo: Courtesy of TNG) Exciting M&A with foreign investors
Tiong Hooi Ong, Deputy General Director and leader of the Transaction Serviceof PwC Vietnam, said despite macroeconomic obstacles in 2022, it was also anexciting year for M&A transactions, adding M&A activities continued toattract much attention from foreign investment funds.
He said: "We see an increase in strategic decisions to optimise portfoliosas traders divest to focus their resources on enhancing business capabilitiesand transforming business sectors through M&A."
Tran Thi Khanh Hien, Director of the Analysis Division at VNDirect Securities,said the development of renewable energy was an inevitable trend at a time whenVietnam's electricity consumption demand was estimated to grow more than eighttimes between 2022-2030. Furthermore, 78% of the world's major manufacturingcorporations would eliminate slow-moving suppliers by 2025.
"In Southeast Asia, Vietnam is leading the renewable energy race, with16,000 MW of solar power and about 5,000 MW of wind power. In particular,renewable energy has strongly promoted the privatisation of the electricityindustry," said Hien.
She added by the end of 2021 independent power plants accounted for 41.3% ofthe total installed capacity of the whole system, up from only 18.4% in 2018 whenthe solar wave was formed.
The proportion of renewable energy production increased sharply from 4-5% atthe beginning of 2020 to 14-15% in the first eight months of 2022.
At the same time, Hien said many M&A deals took place in 2022, marking asignificant milestone for 'green assets' in Vietnam, when EDP Renewablesacquired 87% shares of Sunseap; ACEN bought 49% shares of Sola NT Holding;B.Grimm Power acquired 80% of shares in TTVN's 48MW Quang Tri wind powerproject.
In addition, B.Grimm Power acquired all shares of the 240MWp Tay Ninh SolarPower Plant; Sustainable Hitachi acquired a 35% stake in Trung Nam's 152MW windfarm – Hitachi, Xuan Thien sold Thuan Bac Solar Power Plant with a capacity of255MWp to EDP Renewables (Portugal). In addition, Super Energy Group graduallyassembled a portfolio of more than 1GW of solar and wind capacity in Vietnam.
General data of VNDirect showed that Vietnam is in the top 20 countries withthe largest renewable energy capacity in the world and leading in SoutheastAsia, with 16GW of solar power and about 5GW of wind power.
The data also said the private sector has become prominent in the race to putprojects into commercial operation. The policies encouraging renewable energyattracted many enterprises to the market in the past two years.
VNDirect said Vietnamese private enterprises played a leading role in thedevelopment at the initial stops. However, currently, foreign enterprises havebecome prominent and active in acquiring projects.
KPMG data shows that the total value of M&A in Vietnam reached 5.7 billion USDin the first ten months of 2022, down more than 35% compared to last year.
However, renewable energy is becoming attractive in terms of sectors when it isworth nearly 600 million USD, an increase of about six times compared to thewhole of 2021.
In recent years, private businesses have taken advantage of local know-how toscale up renewable energy clusters rapidly. The advantage is mainly due to theregulation change to support private enterprises in the industry with theinitial draft. In particular, Power Plan VIII, updated to October 2022, hasincreased the planning structure for solar and wind power sources to meet thegoal of "net-zero carbon" by 2050.
Therefore, in 2022 - 45, the number of solar power capacity, including rooftopsolar power, was expected to grow by 8%, and wind power capacity is expected togrow at a compound rate of 16%.
General Director of Trung Nam Group Nguyen Tam Tien predicted that therenewable energy market in Vietnam, after the issuance of Power Plan VIII,would have fierce competition.
He added Trung Nam Group has come up with specific plans to access technology,equipment, cost control, bidding and financial solutions to ensure its growthgoals, affirm its position in the full-fledged potential and be in line withthe global trend as well as the local vision, saying: "If domesticenterprises do not have partnerships and are not prepared in advance, they arelikely to be rejected by foreign investors."
So far, many large corporations have been involved in the energy segment.Leading capacity was Trung Nam Group, with about 1,500MW, followed by Xuan ThienGroup with nearly 1,200MW, BCG Group with nearly 600KW and TTC Group with morethan 400KW.
Experts said when the National Assembly amends the Electricity Law, it willallow businesses to invest in the construction of the transmission grid,leading to the need for investment capital for the transmission grid in the2021-2030 period of about 14 billion USD, equivalent to about 1.4 billion USDper year./.
VNA
