Vietnam's Renewable Energy Subsidy Dispute Threatens Manufacturers

A dispute between the government of Vietnam and renewable energy developers over subsidies has raised concerns about the country's power supply, potentially disrupting manufacturers, including Apple, Samsung, and Intel, that have relocated from China as part of a "China plus one" strategy. Vietnam's electricity supply has struggled to keep pace with a boom in demand, leading to blackouts and shortages. The government's decision to roll back subsidies for renewable energy has hit power producers, cutting payments from Vietnam's state utility EVN for electricity supplied to the grid.

Key Takeaways:

The dispute involves 173 solar and wind projects, built at a cost of $13 billion, with 75 backed by foreign investors from south-east Asia.
The cancellation of subsidies "may lead to force majeure," meaning power plants may have to stop supplying electricity to the national grid, affecting the security of power supply in 2025 and following years.
EVN warned that the withdrawal of subsidies could harm Vietnam's appeal as a destination for foreign investment, clouding its economic outlook.
The dispute has underscored the challenges to Vietnam as it seeks to rapidly build infrastructure to serve an expanding and power-hungry manufacturing sector.
Energy developers, including 40 foreign and Vietnamese companies, have petitioned the government to review the decision, citing concerns about investor confidence, financial stability, and Vietnam's long-term energy and climate objectives.

Statistics:

173 solar and wind projects would be affected by the policy change, built at a cost of $13 billion.
75 of those projects were backed by foreign investors from south-east Asia.
40 foreign and Vietnamese companies have petitioned the government to review the decision.
The current dispute stems from a 2017 policy that was critical to the rapid expansion of renewables in Vietnam, which now leads south-east Asia in clean energy adoption.