Bankability remains hurdle for Vietnam s JETP projects
Vietnam has built a sizeable pipeline of projects aligned with its Just Energy Transition Partnership but converting that into actual financing remains limited
Vietnam's Just Energy Transition Partnership (JETP) projects face a key hurdle: securing financing. At a workshop in Hanoi, Pham Van Tan, a senior policy adviser at the UNDP, noted that 48 projects have been identified as aligning with JETP principles, but only three have secured financing totaling about $722 million - less than 6.6% of the estimated capital requirement.
Hoang Thi Thuy Nguyet, a UNDP financial adviser, emphasizes that alignment with JETP principles alone does not guarantee funding. The ability to mobilize capital depends on each project's preparation, revenue model, risk allocation, and financial structure. Initiatives proposed for JETP support are expected to contribute to renewable energy development, energy efficiency, greenhouse gas emissions reductions, and national energy security.
However, screening has expanded over the past two years, with selection being only the beginning of the financing process. A persistent obstacle is the cost and risk of preparing large, technically complex energy schemes before financing can be considered. Under Vietnam's current regulatory framework, developers may have to finance surveys and pre-feasibility studies before approval or revenue generation, creating an upfront financial burden and increasing risk for private investors.
Vietnam's experience with the Team Europe Energy Transition Facility (ETEF) shows how technical assistance can bridge existing gaps. ETEF combines preparation, implementation support, capacity building, and investment, providing technical assistance before and alongside financing. The facility's technical assistance has generated a leverage effect, with one euro of technical assistance supporting a larger volume of potential investment.
The Bac Ai pumped storage hydropower complex, supported by ETEF, is now one of Vietnam's flagship energy-transition investments. The key lesson is that technical assistance should begin early, with environmental and social work treated as an integral part of preparation from the feasibility-study stage. This approach, along with addressing different lenders' requirements through a common project package, can shorten appraisal time, improve investor confidence, and make co-financing easier.
Vietnam is also planning to develop offshore wind as part of the broader implementation of the JETP, with the EU offering a $500 million package to facilitate Vietnam's Just Energy Transition.
Written by urgent.news from Vietnam Investment Review's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
