This marks the first facility among six loans, with a combined value of nearly €480 million ($565.2 million), provided by a consortium of six lenders for the project.

Located in Khanh Hoa province, the venture will have a capacity of 1,200MW with four turbines of 300 MW each. With a total investment of VND21 trillion ($798.8 million), it has received in-principle investment approval from the prime minister. EVN has appointed the Power Project Management Board No. 3 (EVNPMB3) as the investor's representative.

The Bac Ai Pumped Storage Hydropower Plant holds significant importance for the national power system amid a growing number of renewable energy plants being connected to the grid. The project aims to generate peak power capacity to cover the load of the power system, contributing to reducing the difference (flattening the load chart) by mobilising pumping capacity during off-peak hours and generating power capacity during peak hours.

Julien Seillan, AFD country director in Vietnam, said, “Bac Ai Pumped Storage Hydropower Plant is one of the key energy ventures in Vietnam's energy transition. As one of the world's most dynamic economies, Vietnam faces enormous challenges for doubling power generation capacity by 2030 while fulfilling its climate pledges, especially the net-zero goal by 2050.”

"Vietnam has made great strides in implementing renewable energy ventures, despite the intermittency of these sources. It is vital to have a stable and storable energy reserve. The Bac Ai Pumped Storage Hydropower Plant is the solution to the problem. With a capacity of 1,200 MW, the plant will ensure that every kilowatt of green electricity is available exactly when demand is at its highest.

He further highlighted this as a symbolic venture for international support to Vietnam, involving the European Union, AFD, Germany's KfW Development Bank, the European Investment Bank, Japan's International Cooperation Agency, Italy's Cassa Depositi e Prestiti, and Proparco. It highlights that close cooperation forms a solid foundation for delivering a large-scale and important project.

Nguyen Xuan Nam, deputy general director of EVN, said, “EVN is a key player in modernising the power facility system and promoting clean technology. The credit worth €76 million ($89.5 million) from AFD and the EU through the Energy Transition Programme between European donors and EVN serves as a powerful testament to the Just Energy Transition Partnership that Vietnam is implementing with the international community.”

“We highly appreciate AFD's support in technical, safety, environmental, social, and legal aspects during the implementation of the project. Hopefully, the signing opens up a new phase of comprehensive cooperation between EVN and AFD amid Vietnam's growing climate commitments and electricity infrastructure demand,” Nam added.

Bac Ai Pumped Storage Hydropower Plant – the first of its kind in Vietnam – will play a pivotal role in ensuring electricity security, enhancing system flexibility, and facilitating the integration of increasing renewable energy sources under the revised Power Development Plan VIII. Upon completion, the plant will serve as a strategic facility for system dispatch, energy storage, grid balancing, and national power system management. Beyond its technical value, the project will directly contribute to emission reduction targets in the power sector, in line with Vietnam's commitment to achieving carbon neutrality by 2050.