Vietnam cuts renewable power subsidies
Retroactive cuts for some solar and wind projects alarm investors and raise default risk
Vietnam’s state power utility has cut the previously agreed subsidised prices it pays for electricity from some solar and wind farms, which now risk defaulting on their debts with banks, according to an investors’ petition seen by Reuters.
The document, dated May 16 and sent to Vietnam’s top authorities, follows a first letter in which most of the same signatories warned of billions of dollars of investment were at risk because of retroactive changes to subsidies announced by Vietnamese authorities even as they target a massive expansion of renewables capacity.
Starting with January invoices, a subsidiary of the state power utility EVN “unilaterally withheld a portion of its payments by applying a provisional tariff of its own proposal”, the document said.
“This has caused us to breach commitments to banks and both local and international lenders, face the risk of default under pressure of monthly debt repayments, and suffer cash shortages,” it added.
Among the 16 foreign signatories are the private equity fund Dragon Capital, the Vietnamese subsidiary of Philippines’ energy group ACEN, and investors from Thailand, Portugal, the Netherlands, South Korea, Singapore and China. Investors in dozens of other Vietnamese projects also signed the letter.
In recent years, the country has experienced a boom in renewable energy investments driven by generous feed-in tariffs (FiTs), under which the state committed to buying electricity for 20 years at above-market prices, effectively subsidising producers.
However, amid allegations of abuses in accessing the FiTs and increasing losses for EVN from the subsidy programme, authorities have proceeded to freeze or cut some subsidies.
EVN had no immediate comment on the second petition but it has told Reuters in recent weeks that preferential prices could not be continued for projects that violated regulations.
It did not specify whether rules were changed retroactively and which projects were in breach of regulations.
Reuters – May 22, 2025