Vietnam risks losing $13 billion in renewable energy investments if the government moves forward with plans to retroactively cut feed-in tariffs for wind and solar projects, investors have warned in a letter obtained by Reuters.
The country has seen rapid growth in solar and wind power in recent years, emerging as a leader in renewable energy in Southeast Asia. This success has been driven in part by generous feed-in tariffs that encourage investment in renewable energy.
However, the government is now considering reducing these tariffs retroactively, a move that could impact projects already generating electricity.
The high feed-in tariffs have put financial strain on Vietnam’s state-owned power utility, EVN, which is the sole buyer of the country’s electricity. This has led to higher power prices for consumers.
A letter signed by over two dozen foreign and Vietnamese investors, including Adani Green Energy, Dragon Capital, and investors from China, Singapore, Thailand, and the Netherlands, argues that such a decision could damage Vietnam’s reputation as a destination for renewable energy investments. The investors warn that it could result in near-total losses for affected projects, putting over $13 billion in investments at risk.
Vietnam currently generates 42% of its electricity from clean sources, surpassing the global average of 39%, according to clean energy think tank Ember. The country leads Southeast Asia in the share of low-carbon generation, with hydropower accounting for 29% of its electricity.
Between 2015 and 2023, solar and wind power saw a tenfold increase, reaching 13% of the country’s electricity generation. This puts Vietnam on par with the global average and ahead of regional peers like Thailand (4.7%) and the Philippines (3.2%), Ember says.
Despite this progress, Vietnam is increasing its coal generation due to rapidly growing electricity demand, which has more than doubled in the past decade. The country’s industrial boom and strong economic growth have made it a major energy consumer. While Vietnam has become a leader in solar energy in Southeast Asia, it still relies on coal for industrial needs and remains one of the few nations expanding its coal-fired power capacity.
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