The provision includes a $8.3 million grant used to build private sector capacity to execute energy efficiency projects, the bank said in a statement.
It will also provide technical assistance to the Ministry of Industry and Trade and relevant authorities to strengthen policy frameworks on energy efficiency.
The remaining amount will be used to establish a risk sharing facility to provide credit guarantees to support local banks in providing loans for energy efficiency projects.
By reducing lending risks, the facility is expected to mobilize around $250 million of commercial financing to be provided to industrial enterprises and energy service companies at competitive terms and with low collateral requirements.
“Scaling up energy efficiency is the single best and lowest cost option to achieve multiple goals at once: meeting energy demand, preventing pollution and reducing greenhouses emission while also increasing industry competitiveness,” said World Bank country director for Vietnam, Carolyn Turk.
The World Bank estimates that Vietnam could save up to 11 gigawatt of new generation capacity by 2030 if comprehensive demand-side energy efficiency investments are carried out.
The energy efficiency investment need for key industries in Vietnam has been estimated at around $3.6 billion.