'Deep alarm' over Vietnam plan to retroactively cut wind and solar subsidies
Vietnam has been tipped as one of Asia’s hottest new wind power markets but has seen several recent setbacks amid recent political upheaval
International renewables developers including Adani Green Energy have reportedly expressed “deep alarm” at plans for the Vietnamese government to retroactively cut wind and solar subsidies, warning it could imperil $13bn in investment.
Vietnam has had success kick-starting its renewables rollout by offering feed-in tariffs under which the state has committed to buying electricity for 20 years at prices above market rates.
This has however reportedly led to losses at EVN, Vietnam's state-owned power utility, translating into higher power prices for households and factories.
Vietnam’s government has accordingly sought to reduce the tariffs, including now by considering a retroactive review of the criteria for accessing them, even after projects are online, according to the investors’ letter.
"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 letter said. It is not clear if that money has been spent yet.
Vietnam, a one-party Communist state of 100 million people, is also facing broader political upheaval.
Its government has in recent years engaged in a wide-ranging anti-corruption crackdown known as “blazing furnace”. This has led to high-level arrests – including of several government ministers – and resignations.
Vietnam’s burgeoning renewables sector has not been spared, with officials leading the country’s decarbonisation drive having reportedly been blamed for licensing and certification violations.
The government recently launched a probe into 32 wind and solar projects over allegations of abuse of power.