AFD Backs a Reinforced Power Grid in Southern Vietnam

Over the past 3 years, Vietnam has increased its renewable energy capacity by 20 GW, totaling nearly 25% of its energy mix. Nevertheless, the country lacks the transmission infrastructure to integrate these renewable energies, in a context where the country is still facing the risk of electricity shortages.

Better integration of renewable energies

Faced with these challenges, AFD granted EVN an €80 million non-sovereign loan in 2018 to strengthen the electricity distribution network managed by its subsidiary EVN Southern Power Corporation (EVNSPC) in the southern region of Vietnam.

Work will be carried out on nearly 540 km of distribution lines and electrical substations (approximately 900 MVA). The project will contribute to the connection and transmission of electricity generated by renewable energy plants, thus relieving pressure on the existing grid. In addition, it will improve the quality of electricity supply for end users and reduce technical losses.

A total of 630 MW of renewable energy is expected to be connected to the distribution network, replacing part of the fossil generation (estimated at 1 TWh). Adding the reduction of technical losses, the reduction of CO2 emissions is estimated at 68ktCO2eq per year. 

For Hervé Conan, Director of AFD Vietnam, this project will contribute to the energy transition actually happening in the country : "With this project, AFD wishes to support EVN and Vietnam in the just and low carbon transition, but also in the implementation of the Paris Agreement. Today's signature will also pave the way for future collaboration between AFD and EVN, not only through non-sovereign financing but also at the level of EVN's subsidiaries dedicated to power transmission and distribution activities. AFD is committed to supporting EVN in upgrading the power grid and making infrastructure more efficient."

Long-term cooperation between AFD and EVN

Cooperation between EVN and AFD dates back to 2008, with an initial loan to the Huoi Quang hydropower plant project that reduced CO2 emissions by 785 tons per year. EVN then received financing in 2012 for the Pleiku-Cau Bong high voltage line between the center and the south of the country, which has increased electricity capacity while reducing transmission losses.

These projects are part of Vietnam's renewable energy development and low-carbon transition strategy, in line with the Vietnamese government's commitment to achieving the objectives of the Paris Agreement.

Nguyen Xuan Nam, vice-president of EVN, underlined the strategic nature of the partnership with the afd : "On behalf of EVN, we thank AFD for its unwavering and continuous support to EVN over the past 20 years of cooperation. AFD is also a pioneer in providing non-sovereign financing to Vietnam.  

"Our partnership with AFD is considered one of the most productive and successful, and it goes without saying that it is a testament to the quality of the relationship between a development bank and a public utility. This project to strengthen EVN's power grid will contribute to the implementation of Vietnam's Net Zero Emissions commitments in 2050."