Challenge
At the time this project was approved in 2008, the Government of Vietnam planned to diversify the energy mix with a new emphasis on renewable sources. This was to keep up with the double-digit growth in electricity consumption from the previous decade a trend that was (correctly) forecasted to continue. Small hydropower plants emerged as a viable choice because of the abundance of economically viable sources and a shorter and simpler development process. In addition, unlike wind and solar, hydropower could contribute to peak capacity requirements.
The main regulatory barriers to renewable energy development were: (i) the absence of competitive power purchase agreement structures; (ii) an opaque and circuitous regulatory framework with lengthy approval process and no effective mechanism of allocating project sites to those most able to develop them; (iii) developer s lack of experience in building and operating renewable assets; and (iv) banks lack of interest and limited