ByTsvetana Paraskova– Mar 10, 2025, 8:30 AM CDT
Vietnam risk losing $13 billion in renewable energy investment if the government proceeds with plans to retroactively slash feed-in-tariffs for wind and solar projects, a group of investors have warned in a letter seen by Reuters.
Vietnam has seen a boom in solar PV and wind power installations in recent years, becoming a leader in Southeast Asia, also thanks to the generous feed-in-tariffs for renewable energy projects.
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However, the Communist-ruled country now considers to retroactively reduce these tariffs, which would affect even projects that are already producing electricity.
The generous feed-in-tariffs have dented the finances of state-owned power utility EVN, which is the only buyer of the electricity generated in Vietnam. This, in turn, has raised power prices in the country.
The retroactive review of the criteria for accessing the feed-in tariffs would damage Vietnam’s investment case for renewables, according to the letter signed by more than two dozen foreign and Vietnamese investors, including Adani Green Energy, private equity fund Dragon Capital, and investors from China, Singapore, Thailand, and the Netherlands.
“Such a move could result in equity write-offs of nearly 100% for the affected projects, jeopardizing approximately over US$13 billion in investment,” the investors wrote in the letter seen by Reuters.
Vietnam currently generates about 42% of its electricity from clean sources, above the global average of 39%, clean energy think tank Ember says.
The country leads Southeast Asia in share of low-carbon generation, which comes primarily from hydropower, with a 29% share.
Between 2015 and 2023, solar and wind jumped tenfold to 13% of electricity generation, on a par with the global average and exceeding peers like Thailand (4.7%) and the Philippines (3.2%), according to Ember.
Vietnam, however, is ramping up coal generation as electricity demand more than doubled over the past decade, Ember says.
In recent years, soaring industrial activity and economic growth well above the global average have made Vietnam a power-hungry, predominantly manufacturing economy. The country has become a solar power leader among the countries in Southeast Asia, but it continues to rely on thermal coal for industry and is one of the few countries worldwide building new coal-fired power capacity.
By Tsvetana Paraskova for Oilprice.com
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