France finances US$80 million for Vietnam's 2nd largest hydropower project

France will supply a concessional loan worth EUR70 million (US$80.3 million) to help Vietnam extend Hoa Binh Hydropower Plant, its 2nd largest hydroelectricity project that significantly contributes to the country's energy security. 

An overview of the signing ceremony. Photo: Embassy of France in Hanoi

The financing, which will be provided through the Agence Française de Développement (AFD), is aimed to help Vietnam Electricity (EVN), the project's investor, to increase the plant's capacity by 25% to 2,400 MW.

AFD and EVN reached a credit facility agreement in Hanoi on November 10 in the attendance of AFD Vietnam's Director Hervé Conan and EVN's Vice Chairman Nguyen Xuan Nam.

The extension project aims to take advantage of water overflows to increase electricity production and more than that to improve the supply and stability of the electricity system. 

Building on the successes of the renewable energy sector over the past years, AFD and EVN have decided to extend their collaboration to this key project for Vietnam's energy transition, Hervé Conan said. 

“This signature, which is in line with the strong announcements made by the Vietnamese Prime Minister at COP 26, testifies to the confidence EVN has in AFD. It also marks EVN's ambition to develop sustainable energy in line with AFD's “100% Paris Agreement” strategy in Vietnam,” he added.

Nguyen Xuan Nam said the Hoa Binh Hydropower Plant Expansion Project is in line with EVN's strategy for the development of green and sustainable energy, increasing not only its hydropower capacity but also the performance of the power system. 

“Today’s signature opens a new chapter in this collaboration,” he underlined.

Cécile Vigneau, Economic Affairs Officer of the French Embassy in Vietnam, said: “I am delighted with the signing of this financing agreement, which is a very concrete illustration of France's support for Vietnam's energy transition.”

“This extension project is emblematic of Franco-Vietnamese cooperation, as we approach the 50th anniversary of the establishment of diplomatic relations between France and Vietnam in 2023,” she said.

Through Artelia France, AFD is providing technical assistance in the form of a EUR1.3-million ($1.5 million) grant to EVN to strengthen its environmental and social management.

Vietnam has been committed to pursuing the energy transition. In the speech delivered at the 2021 United Nations Climate Change Conference (COP26) in Glasgow, UK in early November, PM Pham Minh Chinh reiterated Vietnam's commitments to green and sustainable growth. 

With an estimated electricity demand growth of 6-7% per year over the 2021-2030 period, the Vietnamese government is fully aware of the need to increase installed capacity, while promoting the development and optimization of renewable energy.

Hydropower is one of three major energy sources in Vietnam together with coal power and gas-fueled power. In 2019, hydropower accounted for 37% of the total installed capacity, according to EVN.  

Hoa Binh Hydropower Plant, which was built in 1979, came operational in 1988 and was put into completion in 1994, the plant produced 250 billion kWh as of May 2021, largely contributing to the country's energy security.