SK Group’s ambitions in Vietnam renewable energy

The deal between SK ecophant and BCGE was attended by Kim Jung-hoon, CEO of SK ecoplant's Solutions BU, and Pham Minh Tuan, President of BCGE.

>> VN's renewables need long-term strategy and faster localisation

SK ecophant’s deal with BCGE

SK ecoplant stated today that it has inked a commercial deal with BCGE to collaborate and develop renewable energy projects in Vietnam at its headquarters in Susang-dong, Jongno-gu, Seoul. The signing event was attended by Kim Jung-hoon, CEO of SK ecoplant's Solutions BU, and Pham Minh Tuan, President of BCGE.

BCGE is a leading renewable energy firm in Vietnam, presently constructing and running over 600 MW of solar power facilities. It also has around 800 MW of wind power under development.

Under this deal, the two firms will collaborate to create 700 MW of renewable energy projects, comprising 300 MW of onshore wind, 300 MW of rooftop solar, and 100 MW of ground-mounted solar. This includes the Gia Lai wind farm in Vietnam's windy Central Highlands. They will also investigate other promising renewable energy initiatives.

SK ecoplant will participate in the projects at the business development stage and acquire carbon credits. SK ecoplant has already completed registration for the UNFCCC's Clean Development Mechanism (CDM) project in Vietnam for 2021. CDM is a project that seeks carbon credits from the United Nations (UN) based on the performance of greenhouse gas reduction projects as one of several greenhouse gas reduction initiatives. Carbon credits can be used to reduce greenhouse gas emissions or sold to other firms.

Vietnam is a rising market with significant growth and energy consumption increasing by more than 10% per year. In recent years, the country has been spending more in renewable energy rather than fossil fuels. In May of last year, the country's National Electricity Development Plan revealed plans to accelerate the shift to renewable energy sources including solar and wind. It is intended to focus mostly on wind power by 2030, with significant development anticipated.

According to Kotra, Vietnam's renewable energy capacity has more than quadrupled, from 5.2 GW in 2019 to around 21.6 GW last year. The country's low latitude location gives enough of sunshine, making solar power generating more efficient. It also boasts a lengthy coastline with an average yearly wind speed of more than 5 m/s, as well as a huge number of offshore islands that are thought to have high wind power generating potential.

SK ecoplant contributes to global carbon reduction through its value chain, which includes renewable energy business development, such as solar and wind power, equipment manufacture, and engineering, procurement, and construction (EPC). In August of last year, the firm was recognized a significant stakeholder in the Concho solar project in Texas, USA, and in February of this year, it inked a power purchase agreement (PPA) with SK hynix to directly provide electricity generated by a 100MW renewable energy plant.

>> More investments from RoK coming to Vietnam

SK Group's new strategies

Vietnam has been regarded as the entrance to SK Group's expansion in Southeast Asia for three decades, dating back to the 1990s, when former President Chey Jong-hyun launched an oil development project. Currently, the SK Group is recognized as one of the major Korean firms investing in Vietnam, mostly through acquisitions and mergers.

Initially, SK Group concentrated on several of Vietnam's flourishing areas, including retail distribution, logistics, and fintech, with shares bought by major merchants like as Masan Group and VinCommerce.

However, since 2020, SK Group has seen significant adjustments in its business approach. It began selling underutilized assets to hasten its transition from traditional business to new sectors such as EV batteries, hydrogen fuel, biology, and semiconductors.

SK Group has moved its attention to ESG-related business sectors, including EV batteries and components, as well as hydrogen fuel cells. It is also looking for new ways to enhance economic collaboration with Vietnam's partners, with a focus on emissions reduction, renewable energy (such as the usage of hydrogen and carbon), and information and communication technology.

SK E&S, SK Group's LNG power producer, is spearheading renewable energy initiatives in Vietnam. Since 2020, the firm has managed a 131-megawatt (MW) solar farm in Ninh Thu, South Vietnam. The firm also generates energy for commercial reasons in Tien Giang province, with a capacity of 100MW by 2023.

In early 2023, SK E&C formed a joint venture called Solwind Energy with Gia Lai Electricity JSC, a subsidiary of the TTC group. This joint venture is working on a solar project in Tay Ninh, Southeast Vietnam, to install roof battery panels.

As you can see, after years of focusing on trade and services in Vietnam, the SK Group has taken additional measures to target new and emerging areas in Vietnam. Group Chairman Chey Tae-won confirmed during a meeting with Vietnamese Prime Minister Fang Minh Chính on October 28, 2023, that SK Group will strengthen its partnership with Vietnam to promote environmentally friendly business in areas such as carbon recovery, waste recycling, and solar and wind farms.