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AFD in Vietnam and Vietnam Electricity (EVN) have signed an agreement for a 70 million euro loan to boost the capacity of the Hoa Binh hydropower plant. This financing is in line with Vietnam's climate commitments announced at COP26 and aims to support the country's energy transition.

At COP26 in Glasgow on 1 November, Vietnamese Prime Minister H.E. Phạm Minh Chính reiterated Vietnam's commitments to green growth. How to achieve this, with electricity demand expected to grow by 6-7% per year over the period 2021-2030? The Vietnamese government, he acknowledged, must promote the development and optimization of all renewable energies.

Replacing fossil fuels with renewable energy 

To help meet these challenges, AFD is financing a project to increase the capacity of the Hoa Binh hydropower plant to 2 400 megawatts by installing two additional turbines of 240 MW each thanks to a €70 million loan to EVN. EVN and local lending institutions will finance the rest of the project.

The project aims to optimize hydropower to increase electricity production, and to improve the supply and stability of the electricity system. It will also contribute to replacing fossil fuel production for an estimated 488 gigawatts per year, thus avoiding the release of some 225,000 tons of CO2 equivalent emissions into the atmosphere. In addition, AFD is providing technical assistance in the form of a €1.3 million grant to EVN to strengthen its environmental and social management and external technical expertise during the construction phase. The mission has been entrusted to Artelia France.

Long-term cooperation

EVN's first operation with AFD dates back to 2000, with a rural electrification project in the Mekong Delta. EVN's direct relationship with AFD started in 2008, with a first loan for the Huoi Quang hydropower project, which reduces CO2 emissions by 785t eq. per year. EVN then benefited in 2012 from financing for the Pleiku-Cau Bong high-voltage line between the center and the south of the country, which has increased the available electricity capacity while reducing transmission losses.
All these projects are part of Vietnam's renewable energy development and low-carbon transition strategy, in line with the Vietnamese government's commitment to meeting the Paris Agreement targets.

"Building on the successes of recent years in the renewable energy sector, AFD and EVN have decided to extend their collaboration to this key project for Vietnam's energy transition. This signature, which is in line with the strong announcements made by the Vietnamese Prime Minister at COP 26, demonstrates the importance of the long-term partnership between EVN and AFD. It also marks EVN's ambition to develop sustainable energy, in line with AFD's "100% Paris Agreement" positioning in Vietnam. I would like to sincerely thank EVN for its trust and to welcome our excellent cooperation", said Hervé Conan, AFD's Director in Vietnam. 

"EVN highly appreciates AFD's support over the past 20 years, notably through loans and numerous technical assistance projects. Today's signature opens a new chapter in this collaboration" said Nguyen Xuan Nam, Vice Chairman of EVN.


The content of this publication falls under the sole responsibility of the AFD and does not necessarily reflect the opinions of the European Union.

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