Financing the first cross-border wind project in Asia

Global Energy Report 2023
12 min read

The Monsoon Power Project has shown that it is possible to structure a bankable cross-border wind financing of significant scale and complexity. By Daniel Wiedmer, Robert Lockhart, Claire Alembik, Tristan Knowles and Nicholas Moller at the Asian Development Bank, and James Murray, Rosaline Yusman and Andrew Gibb at Milbank LLP.

The urgency of decarbonising the energy sector has never been more pressing. This is particularly acute in the Asia-Pacific region, which, driven by rapid economic growth and energy demand, accounts for more than 50% of the world’s total greenhouse gas emissions.

Despite having plentiful renewable energy resources, the Asia-Pacific region faces significant challenges in reducing greenhouse gas emissions. One such challenge is that those countries with abundant renewable energy resources are not always those with the highest energy demand. Connectivity will therefore be a key element to accelerate the speed of energy transition in Asia, by tapping into resources in one country to help power economic growth and investment in renewable energy across the region.

Infrastructure projects that are pioneering, complex, large-scale, and cross-border have long gestation periods. They require substantial time for feasibility and impact studies as well as the allowance for planning and approvals with multiple government entities on both sides of the border.

This article describes the project and the financing structure that led to the successful financial close of the Monsoon Wind Power Project, the first wind power project in the Lao People’s Democratic Republic, the first cross-border wind power project in Asia, and the largest wind power plant in South-East Asia.

ADB has been working closely with Impact Electrons Siam, the lead sponsor of the project, since 2015 by providing guidance on structuring an international bankable project. ADB was officially mandated in 2021 to lead the due diligence process and mobilise substantial commercial, developmental, and concessional funding for the project.

Country and sector context

* Lao People’s Democratic Republic (Lao PDR) – Cross-border power supply has been a pillar of the Lao PDR’s economic growth. Historically, it has relied on its significant hydropower resources and strategic location to become a net exporter of electricity. The Lao PDR also has substantial untapped resource potential for non-hydro renewables including solar, wind, biomass, and small or mini-hydro.

Through its Renewable Energy Development Strategy, 2011–2025, the country is seeking to promote non-large hydropower renewable resources to reach a 30% share of the country’s total energy consumption by 2025. Renewable energy such as wind, which remains largely untapped, can provide a sustainable new resource for both domestic and export consumption. The International Renewable Energy Agency (IRENA) estimates that Lao PDR has nearly 12GW of wind potential.1 Wind power can also contribute to energy diversification as the seasonality of the wind resource is counter-cyclical to the rainy season, thereby supporting the country’s hydropower generation capabilities.

* Socialist Republic of Vietnam – Vietnam was the fastest-growing economy in Asia in 2022.2 A corresponding increase in demand for electricity has unsurprisingly accompanied Vietnam's growth. Importing power is not a new strategy for Vietnam – it began importing power from China in 2004 and began importing from Lao PDR from 2013. However, amid challenges facing the country to construct and operate domestic thermal power plants, the government has a renewed mandate to transition to renewable energy sources.

Renewable energy imports are a key part of Vietnam’s overall strategy to meet its clean energy target and COP27 commitments. Based on the country’s latest draft Power Development Plan VIII, Vietnam is seeking to put a stop to new coal-fired power plants from 2030 and expects to import 4,000MW–5,000MW of renewable energy, primarily from Lao PDR. To support this goal, in 2019, Vietnam and Lao PDR signed an agreement on cooperation on power imports and exports, with a view to Vietnam importing 1,000MW by 2020, 3,000MW by 2025 and 5,000MW by 2030.3

Notwithstanding Vietnam’s promising growth profile and strong energy demand, bankability constraints have hampered the involvement of international lenders in the renewables sector. This was in part attributable to the template power purchase agreements (PPAs) used for wind and solar, which international financiers view as falling short of bankability requirements. This has been compounded by the risk of technical curtailment due to the limited capacity of the transmission network, particularly in certain parts of the country. As a result, lenders have to-date typically required some form of credit enhancement to finance projects in Vietnam.

The project

Diagram 1

The Monsoon Wind Power Project is located in Sekong and Attapeu province in the south of Lao PDR, close to the Lao-Vietnam border. The 600MW project will not only be Lao PDR’s first wind power project, but also the largest wind power plant in South-East Asia and the first cross-border wind power project in Asia.

The project consists of 133 Envision wind turbines and will connect to the Vietnam Electric (EVN) grid via a 22km 500kv transmission line to the border with Vietnam. EVN is responsible for building the transmission line on the Vietnam side of the border, where the project will connect to the 500kv backbone of the Vietnam grid at the Thanh My substation.

The project will supply substantial clean renewable energy to Vietnam to help meet the country’s growing demand for power and reduce energy sector emissions. Once operating, the project is expected to reduce annual greenhouse gas emissions by 750,000 tons of carbon dioxide equivalent. The project will also help unlock the Lao PDR’s significant untapped wind resource potential and provide social and economic benefits to the country in the form of employment, improved infrastructure, increased regional connectivity, and revenues through collection of royalties, lease payments, and taxes.

The project sponsors are ACEN Renewables International Private Ltd, BCPG Public Company Ltd, Impact Electrons Siam Company Ltd, Mitsubishi Corporation, and SMP Consultation Sole Company Ltd. Impact Electrons Siam commenced development of the site over 10 years ago, when the company undertook a wind resource assessment in Lao PDR to identify potentially suitable sites for a wind project. The sponsors have been very focused on ensuring community support, through development programmes designed to ensure that benefits flow to the local communities.4 The project will also meet the enhanced environmental, social, and gender requirements of development finance institutions, thereby helping to encourage best-practice approaches to wind power in Lao PDR.

The agreements

* Power purchase agreement (PPA) – Monsoon Wind Power Company will sell all electricity generated exclusively to EVN under a 25-year PPA. Unlike the local renewable PPAs, the Monsoon PPA contains bespoke terms reflecting the scale and complexity of the project. The Monsoon PPA is governed by English law, has Singapore arbitration as the dispute resolution forum and provides for payments to be made by EVN offshore in US dollars. These terms of the PPA provided lenders with a strong foundation to consider a limited recourse financing structure.

Despite this, the PPA still allows for curtailment for technical reasons. To address this challenge, ADB was able to mobilise a highly tailored US$60m concessional finance package to reduce the risk of default if the project’s cashflow is impacted by curtailment events. The loans and grant will provide a debt service buffer during the operational life of the project and an additional cash reserve account that can be drawn in the event of any extreme curtailment event. This enhances the project’s ability to withstand curtailment and, combined with other technical and financial due diligence on curtailment risk, enabled lenders to get comfortable with a non-recourse financing structure.

* The concession agreement – The project will be implemented under a build–own–operate concession agreement with the government of the Lao People’s Democratic Republic (Lao PDR), which grants Monsoon Wind Power Company the rights to design, build, finance, operate, and maintain the project; utilise the land and natural wind resources at the project site; and export electricity to Vietnam. The term of the concession agreement is 25 years from commercial operations date. The terms and conditions of the concession agreement generally follow recent precedents for hydropower projects in the Lao PDR. The concession agreement is governed by the laws of the Lao PDR

Non-recourse financing package

As sole mandated lead arranger and bookrunner, ADB arranged, structured, and syndicated the entire US$692.55m non-recourse financing package.

Over a multi-stage syndication process, ADB, working with the sponsors, identified a lender group consisting of development finance institutions and commercial banks. The final lending group consisted of seven lenders alongside ADB as well as four sources of concessional finance under an ADB lender-of-record structure. This project is the largest syndicated renewable project financing transaction among ASEAN countries to-date.

The financing consisted of a US$100m ADB A loan with a 19-year tenor, and a further US$382.55m in parallel loans with the same tenor from the Asian Infrastructure Investment Bank, Export-Import Bank of Thailand, Hong Kong Mortgage Corporation, Japan International Cooperation Agency, and Kasikornbank. In addition, ADB acted as a lender of record for a further US$150m in B Loans with a 17-year tenor, as well as a US$60m concessional financing package with a tenor of up to 21 years.

ADB structured its lending as an A/B Loan to further encourage commercial banks to co-finance the Monsoon Project. Under this structure, ADB acts as the lender-of-record under its direct A Loan and the B Loan, the latter of which is funded by the participating commercial banks – Sumitomo Mitsui Banking Corporation, Singapore Branch and Siam Commercial Bank Public Company Ltd. This structure ensures that, although the commercial banks still accept the credit risk of the project, they indirectly benefit from the same protections available to ADB under the financing arrangements. A/B loan structures have a long and successful history of use among multilaterals and are attractive to commercial banks in offering additional comfort with respect to political and currency risks. Kasikornbank Public Company Ltd, the other commercial lender in the deal, provided financing as a parallel lender.

Table 1

Cross-border intermittent exports

The development and financial close of this complex and pioneering project is a major renewable energy success story for ASEAN, demonstrating that intermittent wind can be exported. The Monsoon Project has shown that it is possible to structure a bankable cross-border wind financing of significant scale and complexity. The structure and documentation put in place to support the financing creates a compelling blueprint for future deals of its kind. With ASEAN countries increasing their renewable energy ambitions, there are plenty of reasons to believe that there will be many projects to follow in its footsteps. The Monsoon Project is a hopeful signal that energy transition in Asia is gathering pace.


1 - IRENA. 2022. Renewable Energy Outlook for ASEAN: Towards a Regional Energy Transition (2nd Edition)

2 - Vietnam GDP Grew Faster Than Expected in Economic Recovery - Bloomberg

3 - Import of electricity: Solution to ensure national energy security (

4 - ADB Signs Loan for First Cross-Border Wind Power Project in Asia, First Plant in Lao PDR and Largest in Southeast Asia | Asian Development Bank

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