The Asian Development Bank (ADB) and GreenYellow Smart Solutions Vietnam have signed a loan agreement of up to US$13.8 million for rooftop photovoltaic (PV) solar systems to help increase the supply of clean and affordable energy for commercial and industrial consumers in Vietnam.

The loan will support the development and operation of solar PV systems located on the rooftops of commercial and industrial businesses across the country. The financing package comprises a US$3 million A loan from the ADB’s ordinary capital resources and US$10.8 million parallel loans from FMO, a climate fund managed by responsAbility Investments, and Société Générale, with the ADB as mandated lead arranger.

A US$3 million grant from the Climate Innovation and Development Fund, administered by the ADB, will also be provided. The grant will help crowd in an international commercial bank by addressing two critical hurdles in financing solar assets with a long economic life in Vietnam: the lack of long-term dong-denominated funding at a fixed interest rate and the potential volatility of the dong-US dollar exchange rate.

This is ADB’s first financing of a solar PV rooftop portfolio for the commercial and industrial segment in Vietnam. Rooftop solar, the ADB notes, is an emerging form of renewable energy supply in Vietnam and its adoption in this sector has been hindered by high upfront costs and limited financing channels.

With a planned total installed capacity of up to 32.3 megawatts at its peak, this project is set to increase clean energy supply to the sector by at least 31.5 gigawatt-hours annually, reducing 15,530 tons of carbon-dioxide emissions by 2025.

“ADB is increasingly focused on mobilizing private capital to finance renewable energy projects that the region urgently needs,” says Suzanne Gaboury, the development bank’s director-general for private sector operations. “Solar PV rooftop offers an efficient way for Vietnam to deploy substantial amounts of additional renewable energy capacity while providing reliable, low-cost energy to consumers, which helps to attract and retain business and enhance Vietnam’s global competitiveness.”