Japan-headed power utility and retailer eREX Co. Ltd has announced that it has decided to invest in Hau Giang Bio Energy JSC, a Vietnamese business company established by Power Engineering Consulting JSC under the umbrella of the State-owned Vietnam Electricity Group (EVN), Son My Renewable Energy JSC and local fuel supply companies to construct and operate biomass power plants in the Socialist Republic of Vietnam.
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According to a statement, this will be the first overseas investment for eREX in the biomass power generation business.
The value of the investment in Hau Giang Bio Energy which is planning a 20 MW biomass power plant has not been disclosed.
However, eREX will have a majority share of 51 percent, followed by Son My Renewable Energy (29 percent), Power Engineering Consulting (10 percent), and local companies (10 percent).
To be built in Hau Giang Province, the 20MWe plant will use approximately 120 000 tonnes per annum of locally sourced rice husk as fuel. The electricity will be sold to the grid in accordance with Vietnam’s Feed in Tariff (FIT) scheme currently US$0.0847 per kWh.
Construction start is anticipated to begin in mid-2022 and start of commercial operations in Q3-2024.
Vietnam a growth market
The investment is in line with its 2030 vision “to Become a Pioneer in the New Era of Electric Power with Renewable Energy at its Core,” eREX is promoting the growth of its business with renewable energy in Japan as its foundation.
Currently, eREX owns five biomass power plants in Japan and is one of the largest biomass power generation entities with a total power capacity of approximately 650 MW in operation and under construction planning.
In Vietnam, electric power demand is increasing at a rate of 10 percent per year due to economic growth and urbanization, and there are concerns about electric power shortages.
Therefore, the import of electric power from China and Laos is being increased, while the development of renewable energy is being promoted.
As of September 2021, the Ministry of Industry and Trade of the Socialist Republic of Vietnam plans to increase the share of renewable energy to approximately 40 percent or more by 2045 in the “National Power Development Plan for the period 2021-2030, with a vision to 2045 (Power Plan VIII)”.
In Vietnam, eREX is promoting large-scale development and cultivation of biomass fuel (new sorghum) with the support of the government of Vietnam and will be participating in the Vietnamese market by starting a biomass power generation business in addition to a fuel business.
The Company believes that this business will increase the share of renewable energy in Vietnam and will also contribute to the creation of employment.
In addition, the Company is considering plans to construct more biomass power plants in Vietnam, where growth is expected in the future, with the aim of expanding its power generation business.