A letter from the industry says that over $13 billion worth of solar and wind investments are at risk in Vietnam.
Adani Green Energy, as well as more than two dozen other foreign and Vietnamese investors have warned that Vietnam's plans for retroactively changing rules on subsidised wind and solar prices could impact over $13 billion in investments.
Investors expressed "deep concern" in a letter dated 5 March and reviewed by that the end of the favourable energy tariffs could threaten financial stability. They also noted the policy change would undermine confidence and undermine the country's plans to expand its renewables.
The 28 signatories include the private equity fund Dragon Capital and the Vietnamese subsidiary ACEN energy group of the Philippines, as well as investors from Thailand and the Netherlands.
The Southeast Asian nation has seen a boom of renewable energy investments in recent years. This was largely due to generous feed-in rates, where the state agreed to buy electricity at inflated prices for 20 years.
The high tariffs led to increased power prices in factories and households.
Authorities have tried to lower the high tariffs repeatedly. According to the letter from the investors, they are now considering a retrospective review of the criteria for accessing feed-in tariffs even after projects have started producing electricity.
The letter stated that "such a move would result in equity write offs of almost 100% for the projects affected, putting at risk approximately US$13 billion worth of investment."
In the letter, it was unclear if all funds had yet been spent and how Vietnam planned to review current rules. Vietnam's Industry Ministry and EVN didn't immediately respond to comments.
Risks for Creditors
Investors stated in the letter that EVN had already delayed payments or paid only partially for electricity generated by renewable project "without any clear reason".
The letter warned that the permanent revision of tariffs or their termination "risks undermining stability in Vietnam's banking system and eroding public confidence."
Vietnam plans to significantly increase its solar and wind power generation capacity under a revised draft of the decade-long power plan, which was seen by.
According to the base scenario of the plan, the installed capacity of wind and solar farms will exceed 56 gigawatts in 2030. This is nearly one third the total planned capacity installed from all sources including fossil fuels.
According to the letter, the projects funded by foreign investors are almost exclusively solar energy and have an aggregate value exceeding $4 billion. (Reporting and editing by Jamie Freed; Additional reporting by Khanh Vu)
(source: Reuters)
