The purpose of the move is to advance renewable energy in order to help meet the country's growing demand for electricity.
The plan will see IFC provide a financing package of US$57 million to Thuan Binh Wind Power Joint Stock Company (TBW), a subsidiary of Refrigeration Electrical Engineering Corporation (REE).
This will therefore enable the construction of two onshore wind power plants, Phu Lac 2 in Binh Thuan province and Loi Hai 2 in Ninh Thuan province, with an overall capacity of 54.2 megawatts.
The plants are expected to generate approximately 170 million Kwh annually once they will be put into operation at the end of the year.
TBW, a dedicated wind power company founded in 2009, had successfully developed the 24 megawatt Phu Lac 1 plant in Binh Thuan, one of Vietnam’s first wind power plants.
Featuring a large pipeline of wind and solar power projects, a financial package from IFC will serve to help the company to channel renewable energy potential into full operation.
Moreover, the package from IFC includes financing mobilised by the multi-investor Managed Co-Lending Portfolio Program (MCPP) and will be managed by IFC's innovative syndications platform, therefore allowing institutional partners to commit funds for a set of future IFC loans.
"As REE expands its footprint in renewable energy, we are looking for long-term US$-based financing that is not readily available in the local market. We are confident that IFC's support will help us implement a strategic drive to green our power sector portfolio in the coming years. By agreeing to implement IFC's financial, environmental, and social requirements, REE confirms its readiness and willingness to contribute to Vietnam's renewable energy development," said Nguyen Ngoc Thai Binh, deputy chief executive officer of REE.
By leveraging its global experience in wind projects, IFC will help to ensure that these two projects follow best industry practices, as well as environmental, social, and governance practices.
"The wind power sector in Vietnam is still in its nascent stage but has very large-scale potential. IFC's engagement will demonstrate viability to investors and help mobilize the much-needed funding to help realize Vietnam's cleaner, renewable energy potential," said Kyle Kelhofer, country manager for Vietnam, Cambodia, and Lao of IFC.
"IFC is especially committed to supporting solid local corporates such as REE to scale up their renewable energy investments, supporting the country's transition to a lower-carbon electricity generation mix," he added.
Driven by robust economic growth, the country anticipates the necessity of a twofold expansion of its installed power capacity by 2030 to meet increasing electricity demand.
Renewable energy capacity, including rooftop solar power, is projected to increase by approximately 19 gigawatts to more than 36 gigawatts over the coming decade, with this being done at an estimated cost of roughly US$20 billion, the majority of which is expected to be developed and funded by the private sector.