Over $13 Billion in Renewable Energy Investments at Risk in Vietnam Due to Policy Changes
Solar and wind energy investments of over $13 billion in Vietnam are under threat from possible policy reversal, said a letter signed by over 28 investors. The investors which include big names like Adani Green Energy, Dragon Capital and ACEN were worried about Vietnam’s intention to retroactively modify the subsidised energy price rules, specifically the feed-in tariffs of renewable energy projects.
The feed-in tariffs, which had fueled a boom in investments in renewable energy in the nation, provided premiums for electricity produced by solar and wind schemes. However, The tariffs have resulted in heavy losses for the state owned power company, EVN as it has battled rising power prices for both residents and factories.
The investors cautioned that such retroactive adjustment of these tariffs could lead to huge losses including equity write-offs close to 100%. This action risks destabilizing the banking sector, as a number of projects, especially foreign financed solar projects are threatened by loan defaults owing to payment delays by EVN.
Vietnam intends to develop a large amount of renewable capacity with more than 56 gigawatts of solar and wind capacity by 2030. Such retroactive changes would destroy investor confidence and risk future growth in the renewable sector threatening the country’s financial stability.
