TTC, IFC and Armstrong join hands to develop Vietnam’s renewable energy

The foreign investment in a local hydropower developer aim to promote renewable energy in Vietnam.

Following this, IFC and Armstrong’s first-time investment within Vietnam’s energy sector will mean a 16 and 20 per cent equity stake in GEC, respectively. As shareholders, they will help the company expand its hydropower portfolio and invest in other renewable energy segments such as wind and solar power. GEC is one of the largest private sector hydropower players in Vietnam with 84.4 megawatts of installed capacity across 15 run-of-the-river small-scale hydropower plants.

“Support by IFC and Armstrong as shareholders will not only enable us to expand our core business in hydropower but also help us become a leading renewable energy company and provide sustainable alternatives to fossil fuel-based power generation in Vietnam,” said Le An Khang, CEO of GEC. “Their investment is a vote of confidence in Vietnam’s hydropower sector potential and should help attract more international investors.”

Vietnam’s electricity consumption has outpaced the country’s economic growth rate, doubling Vietnam’s gross domestic product growth rate over the past few years. GEC’s renewable energy developments will help the government reach its target of increasing power capacity by 14 per cent annually between 2015 and 2030.

“We believe GEC is well positioned to capture the strong growth potential in Vietnam’s renewable energy sector,” said Andrew Affleck, managing partner of Armstrong. “Armstrong’s aim is to share the knowledge and experience we have gained from developing and constructing multiple renewable projects in neighboring Southeast Asian markets to help GEC to continue building a leading position in Vietnam.”

By developing sustainable hydropower and other renewable energy sources, GEC will help the country to meet its estimated 10 per cent annual increase in the power demand, diversify its energy mix and reduce its reliance on imported fossil fuels.

“We believe IFC’s investment is an important step to encourage other investors to tap into the rich potential of Vietnam’s green energy sector, where participation by foreign investors is still modest,” said Hyun-Chan Cho, IFC’s head for Infrastructure and Natural Resources for Asia Pacific. “IFC’s global industry knowledge will help transform GEC into a role model for other emerging renewable energy players in Vietnam by showcasing industry best practices, while at the same time expanding supply of reliable and clean energy.”

Hydroelectricity is the world’s largest source of renewable energy and accounts for one-fifth of the world’s electricity supply from all sources. Over the last decade, IFC has invested more than $1 billion in 75 hydropower projects in 25 countries across the world to promote hydropower’s responsible and sustainable development in developing countries.

IFC is the largest global development institution focused on the private sector in emerging markets. Working with more than 2,000 businesses worldwide, IFC uses our capital, expertise, and influence, to create opportunity where it’s needed most.

Armstrong is a private equity fund based in Singapore, dedicated to the clean energy sector in Southeast Asia’s emerging markets. Armstrong is managed by a multidisciplinary management team benefiting from a combined experience of developing and investing in over 50 renewable energy projects globally. Armstrong now has 92MW of operating assets in addition to over 300MW of projects under development.

GEC is a developer/operator of run-of-river small and medium hydropower plants based in Pleiku in the Central Highlands of Vietnam. GEC was originally established as a state-owned enterprise under the province of Gia Lai in 1989, and was equitised in 2010. In 2013, GEC joined TTC Group, which is a 37-year multi-industry private corporation managing 21 member companies in real estate, energy, agriculture, education and hospitality. GEC’s charter capital in 2015 was three times as much as that in 2011, reached VND715 billion ($34 million). GEC’s current hydro portfolio comprises 15 plants in central Vietnam with a combined capacity of 84.4MW. Until 2020, GEC expects its target to become one of the leading companies in clean and renewable energy in Vietnam, towards sustainable development.