HANOI - Italy's Enel is preparing to exit Vietnam, three people briefed on the matter told Reuters, in what would be the latest move by a western firm to scrap renewable power projects in a country struggling to implement its decarbonisation plans.

The Italian utility had said in 2022 it wanted to invest in plants to generate up to 6 gigawatts (GW) of renewable energy in Vietnam, without specifying in which type but noting the country's potential in wind and solar energy.

Two of the people said the move was part of a broader reorganisation of Enel's global business.

It is unclear if or when the exit from the Southeast Asian nation will be announced. The company is scheduled to make its annual strategic planning presentation in November.

Enel declined to comment. The sources did not want to be identified because the information was not public.

Vietnam's industry ministry did not reply to a request for comment.

State-controlled Enel is one of the world's largest investors in renewable energy but since CEO Flavio Cattaneo took the helm last year it has shifted its focus towards grid infrastructure and pledged to devote a significant share of its investments domestically and reduce international exposure.

Enel's exit from Vietnam would be the latest blow for the Southeast Asian country's energy strategy, which hinges on ramped-up investment in power generated from renewables and gas to reduce reliance on coal.

Last month, Reuters reported that Norway's Equinor cancelled plans to invest in Vietnam's offshore wind sector, while Denmark's Orsted said last year it would pause plans to invest in large offshore wind farms in the country.

Enel's renewables arm, Enel Green Power, manages more than 1,300 plants and has about 64 GW of installed renewable capacity worldwide, according to its website.

Of the 6 GW in capacity Enel planned to install in Vietnam, approximately 1 GW was "already at an advanced stage" in mid-2022, with the first unspecified power plant expected to come online this year, according to the company's web pages about Vietnam (https://www.enelgreenpower.com/countries/asia/vietnam).

Enel did not comment about the state of its projects in Vietnam.

RENEWABLES WOES

Vietnam's current installed electricity capacity is about 80 GW, which the government plans to nearly double by 2030, with wind alone forecast to account by then for nearly 20% of the total compared with a very low share in 2020.

The export-driven country, which hosts large manufacturing operations of several multinationals, has ramped up its renewables efforts in recent years, attracting multiple foreign investors.

However, Vietnam has struggled to integrate some of the new capacity, with many solar and onshore wind projects not connected to the grid.

Recently, progress has been hampered by regulatory hurdles including a lack of regulations to develop offshore wind, and protracted negotiations over the price the state would pay to power producers.

"I think companies are getting tired of having capital tied up in a market that is frozen," one Vietnam-based energy industry executive told Reuters, declining to be named because of the impact the remark could have on their business.

To address growing demand and avoid power shortages that scared investors last year, the country has vastly increased its consumption of coal.

(Reporting by Francesco Guarascio in Hanoi; additional reporting by Francesca Landini in Milan and Phuong Nguyen in Hanoi; Editing by Tony Munroe and Muralikumar Anantharaman)