Banks boost retail lending for solar energy

Banks in Vietnam rush to help households build their own solar energy systems

As solar energy gains popularity in Vietnam, lenders are looking to finance consumers who want to install solar panels in their own homes.

Interest rates for these loans tend to be lower than usual, standing between 10 and 13 per cent a year. Banks also partner up with local manufacturers to offer discounts for the borrowers.

The latest lender to introduce this programme is HSBC Vietnam, in collaboration with GIC Investment JSC. The scheme is available to HSBC Vietnam's existing customers in Danang and Ho Chi Minh City, who can take out an unsecured loan from the bank at the annual interest rates of 12 or 13 per cent for their solar panels at home.

According to HSBC Vietnam, the repayment term is up to 60 months. Customers also enjoy preferential discounts on GIC's products, which come with a 12-year product warranty and 25-year performance warranty.

"Over the last six months, in order to devise this programme we have been working closely with GIC, who shares our passion for promoting clean energy and green solutions in Vietnam, ” said Phuong Tien Minh, head of Retail Banking and Wealth Management at HSBC Vietnam.

Another example is BIDV, which partnered with SolarBK to fund at most 75 per cent of costs related to household solar energy projects. The bank's insurance arm, BIC, also offered five-year warranties, a move that is intended to boost the credibility of SolarBK's products.

The repayment period of this programme ranges between 12 and 36 months, with interest rates at 10 per cent per year. Interest rates are waived for the first year.

At the launching ceremony, Le Manh Hung, CEO of BIDV Vung Tau-Con Dao, said that financial institutions are still hesitant to enter this new sector, which requires time and effort to understand.

According to experts, solar panels in residential areas would help Vietnam ease the strain on the national power grid, as well as positively impact the environment and boost climate resilience.

Power demand in Vietnam is projected to increase by 8 per cent annually during 2021-2031. Surveys show that Vietnam needs 60,000MW of electricity by 2020; 96,500MW by 2025, and 129,500MW by 2030.

While demand is rising, traditional supply sources like coal and thermal energy are struggling to keep up. Renewable energy sources, such as solar power, are steadily gaining attention as the best solution for both households and major corporations.

Other banks in the market, including HDBank and Oriental Commercial Bank, have also run programmes for the corporate segment, encouraging Vietnam-based companies to use solar energy in their daily operations.

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