Banks spur lending for wind and solar power
Banks spur lending for wind and solar power
More loans have come to wind and solar power projects recently.
Solar power projects are offering a new investment option for small and medium investors in 2020 in addition to real estate or savings whose returns are shrinking due to the Covid-19 pandemic.
More loans come to wind and solar power projects
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Catching this trend, a number of banks have arranged capital for many large-scale solar and wind power projects while offering preferential loans for individual customers and small and medium enterprises wishing to install and trade in solar power.
Since 2017, the Government has issued many policies to promote and attract investors to renewable energy projects. In February 2020, the Politburo issued Resolution No. 55-NQ/TW on the strategic orientation of the national energy development until 2045 with a focus on developing renewable energy.
One of its highlights is building breakthrough mechanisms and policies to encourage and strongly promote the use of renewable energy sources, replacing fossil fuels. Wind and solar energy are of priorities for electricity generation. Regions and provinces which have renewable energy advantage are encouraged to develop renewable energy centers.
Grasping opportunity in this industry, banks have studied and identified renewable energy as a prioritized sector for lending in 2020 and the coming years.
Since 2015, Military Bank (MB) has organized many seminars with participation of the top industry experts to learn about the industry. They also sent staff abroad to have deeper understanding about the renewable energy sector.
Since 2017, MB has conducted loan appraisals for many renewable projects and is the pioneer bank to provide credit for solar and wind power projects. Their funded projects are estimated to account for 15% of the total solar power generation capacity and about 12% of the total wind power generation capacity in the country.
MB has also arranged foreign capital for two solar power projects and five wind power projects under an export credit agency (ECA) financing program. The bank plans to continue investing in the renewable energy sector, arranging capital for 1,000 MW of wind power and 1,000 MW of solar power by year-end 2020 and 2021.
Targeting individual borrowers
In another direction, a number of banks selected a “niche” segment of this industry, targeting individual customers who wish to install energy power systems in their residence and small and medium enterprises who want to trade.
According to VPBank’s research, while the investment in hydro and wind power requires huge money which is suitable for big businesses, solar energy is more easily deployed from household scale to small and medium sized enterprises. This both saves money on electric bills each month for investors and generates long-term profits through selling electricity to the State.
Therefore, investment in solar power systems is forecast to attract many investors in the near future.
VPBank has cooperated with Viettel Construction to offers preferential loans for individual customers wishing to install solar power systems at homes. It also has a financial solution for corporate customers with the purpose of selling electricity with a limit of up to VND12 billion (US$521,000) (or 80% of total investment value).
