Enel's Unplanned Exit: Vietnam Faces Another Renewable Energy Setback

Enel, an Italian utility giant, plans to exit Vietnam's renewable energy sector, a move reflecting the country's ongoing struggles with its decarbonization plans. Despite having ambitious goals, regulatory hurdles and integration issues have stymied progress. Enel's departure follows similar moves by other Western firms.

Italy's Enel is gearing up to withdraw from Vietnam, according to three sources familiar with the matter, marking another setback for the Southeast Asian country's renewable energy aspirations.

Enel had previously announced in 2022 its intention to invest in up to 6 gigawatts (GW) of renewable energy in Vietnam, highlighting the nation's potential in wind and solar power. Sources indicate that this departure is part of Enel's broader global business restructuring.

It remains unclear when this exit will be formally disclosed. The company's yearly strategic plan is due in November, but Enel declined to comment. Vietnam's industry ministry also did not respond to inquiries. Since CEO Flavio Cattaneo's appointment last year, Enel has shifted its focus towards domestic grid infrastructure, reducing its international ventures.

Should Enel proceed with its withdrawal, it would be a significant blow to Vietnam's energy strategy, which emphasizes increased renewable and gas-generated power to mitigate coal dependency. The country already saw Equinor and Orsted withdraw from their wind energy plans in recent times.

Enel Green Power, managing over 1,300 plants and possessing 64 GW of global renewable capacity, had approximately 1 GW of its planned 6 GW capacity in Vietnam at an advanced stage as of mid-2022. However, the status of these projects remains undisclosed.

With current electricity capacity at around 80 GW, Vietnam aims to nearly double this by 2030, with wind energy predicted to constitute nearly 20% compared to a negligible share in 2020. Despite recent efforts to attract foreign investors, regulatory challenges have hindered the country's progress, leaving many projects unlinked to the grid.

An energy industry executive in Vietnam remarked, "Companies are growing weary of capital being tied up in a stagnant market." Last year, coal consumption surged to meet rising demand and avoid power shortages that deterred investors.

(With inputs from agencies.)