Acquisitions prepare for energy wave

EDP Renewables (EDPR), a development arm of Spanish giant EDP, is demonstrating ambition in pouring $1 billion into the renewable energy sector in Vietnam, according to its CEO for Asia-Pacific, Miguel Fonseca, who visited Vietnam in June.

EDPR has expanded in Vietnam through acquisition deals. In 2021, it purchased the 28-MW Trung Son solar plant in Khanh Hoa province from China’s Trina Solar. In 2022, it strengthened its portfolio in Vietnam after the acquisition of two operating solar photovoltaic projects totalling 200MW in Ninh Thuan province. With that transaction, EDPR doubled its operational capacity in the country.

EDPR has a pan-regional presence across nine markets in Asia-Pacific, and has a target of 2.4GW of renewable installed capacity in the region by 2026.

Acquisitions prepare for energy wave, illustration photo

“Vietnam’s dynamic industrial economy growth is driving 8 per cent compound annual growth rate for 2020-2030 in electricity demand. Vietnam is not only meeting its own increasing energy demands but also setting a benchmark for renewable energy adoption with its Power Development Plan VIII (PDP8) targeting half of renewables generation share by 2030,” Fonseca wrote on his social media accounts.

Khanh Hoa and Ninh Thuan are two south-central provinces on the group’s radar in particular. “Khanh Hoa presents very good solar resources and we will continue to work with the province to enhance cooperation for new opportunities of investment,” Fonseca said. “Ninh Thuan still has significant potential for the development of renewable projects and we are working on a promising pipeline.”

Meanwhile, Sembcorp Solar Vietnam, a subsidiary of Sembcorp Group, announced on June 19 that it had completed the acquisition of majority stakes in three subsidiaries of GELEX Group. The acquisitions add a total of 196MW of operational wind and solar assets to Sembcorp’s portfolio.

Sembcorp will also purchase 73 per cent of another GELEX subsidiary that possesses a 49MW hydropower asset. With regulatory approvals still pending, this transaction is anticipated to close in the second half of 2024.

Sembcorp is assisting in the decrease in carbon emissions, the advancement of environmental sustainability, and the expansion of clean energy sources by increasing its renewable capacity, company represenatives said. In the field of renewable energy, these investments also open doors for employment development, economic expansion, and technological advancement.

“It is easy and convenient for foreign investors to enter the energy sector through purchasing shares of domestic private enterprises because the initial preparation of solar power and wind power projects takes a lot of time and effort due to consuming a lot of land,” said Le Duong, counsel at Bizconsult Law Firm. “Due to the overabundance of ongoing projects, which exceeds the government’s intended ratio of renewables supply capacity to total energy capacity in Vietnam, the approval process for new projects is slowing down.”

PwC’s report on global merger and acquisition (M&A) trends in energy, utilities, and resources released early this year noted that these industries will be a bright spot for dealmaking activity in 2024 as the energy transition continues to attract investor interest.

“With game-changing reforms such as Vietnam’s Law on Investment, the region has attracted the interest of foreign buyers. Southeast Asia has become an enticing destination for international players seeking expansion opportunities. As a result, Southeast Asia M&A activity is poised to remain strong, promising an exciting future as the region becomes a hub of dynamic business growth and innovation,” said the report.

Locally invested firms such as Gia Lai Electricity JSC and Ha Do Group are also in the race to attain more projects through acquisition deals.

At its AGM last week, Gia Lai Electricity said it will promote M&A activities of energy projects and focus on completing the legality of wind power production projects combined with hydrogen production this year.

In the solar power segment, Gia Lai has six projects with a total capacity of more than 342MWp, and 34 rooftop solar power systems at 32MWp. The company also directly and indirectly owns 12 hydropower plants with a total capacity of 81MW, mainly concentrated in the Central Highlands region (93 per cent), and five wind power plants with a total capacity of 260MW.

“To avoid major fluctuations in upcoming business results, our key task is to seek and develop new energy projects as well as M&As of effective energy projects to deploy construction investment, put into operation to ensure future revenue,” said Tan Xuan Hien, chairman of Gia Lai’s board of management. “In addition, the company continues to seek to expand relationships with units/organisations with financial capacity, experience, and expertise in renewable energy to cooperate in developing new projects.”

At its own AGM, Ha Do Group leaders said that they are researching and implementing M&As of hydropower and wind power projects with complete legality and economic efficiency.

“This year, the energy segment will still bring in the largest source of revenue for the group,” the company said. “Ha Do Group aims to have 1GW of electricity generation capacity by 2030. While the development of renewable energy projects is temporarily stopped, the group is still active in M&A hydroelectric projects to realise the goal.”

Energy players look to deeper innovation to boost transition Technological innovation will help promote the energy transition in Vietnam, with the proportion of renewable capacity in Vietnam’s power system increasing rapidly.