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Renewable energy in Vietnam: Will ambitious policy changes
Over the past decade, Vietnam has emerged as the renewable energy leader in Southeast Asia. Generous feed-in tariffs (FiT) introduced in 2017 precipitated an investment boom that catapulted Vietnam’s renewable energy portfolio to more than double the combined capacity of its ASEAN neighbours.
However, growth abruptly stagnated at the end of 2020, when the government’s FiT scheme expired with no clear future policy plans. The financial challenges faced by State-owned Vietnam Electricity (EVN) and an overburdened power grid compounded uncertainty, leaving investors and developers in the dark and facing significant financial losses.
Do new government incentives, coupled with rising demand for electricity, suggest that there is light at the end of the tunnel?
Ambitious policy changes seek to recharge the sector…
Since 2023, the Vietnamese government has brought in a slew of regulatory changes aimed at bolstering investment and confidence in the sector by setting clear targets and minimising bureaucratic hurdles.
Adopted in May 2023, the Power Development Plan 8 (PDP8) set official targets for Vietnam’s total electricity capacity goals, with the renewable energy sector earmarked as a significant contributor. The Electricity Law, introduced in November 2024, allowed foreign investor participation in offshore wind projects and introduced the Direct Power Purchase Agreement (DPPA), enabling large electricity consumers to bypass EVN and buy renewable energy directly from producers. More recently, in April 2025, PDP8 targets were raised even further, with renewable sources expected to contribute around a third of the country’s energy by 2030, increasing to approximately 75 percent by 2050.
…but logistical and political factors continue to pose a challenge
Universal subsidies like the FiT programme are giving way to a market-oriented approach that prioritises competitive bidding and minimises bureaucracy. Vietnam’s new policies represent a positive attitude to growth in the renewable energy space, but challenges clearly remain.
Vietnam’s electricity grid continues to be old and strained, while EVN’s financial health is still a concern. The State company continues to feel the aftershocks of the tariffs it set as part of its ambitious FiT programme: in 2023, EVN reported more than USD 1 billion in losses. Facing financial difficulties, EVN recently decided to retroactively reduce purchase prices for 173 solar and wind projects, threatening significantly lower projected revenues. This move has further undermined investors’ confidence: in March 2025, the Vietnam Chamber of Commerce and Industry warned Parliament that the decision, if enforced, risks triggering a wave of bankruptcies amongst wind and solar power producers.
Overall, EVN’s financial difficulties and an overburdened power grid threaten to undermine the promise of recent government policies. A lack of guidance around how these new policies will be implemented, along with possible delays and a risk of policy U-turn, also continue to dampen investor confidence.
Investors are cautiously optimistic
Investors and developers remain wary, but seem to be warming to the latest regulatory policies; Vietnam’s renewable energy sector is again seeing an uptick in investments and planned projects, with interest from both foreign and domestic investors.
Overall, Vietnam recorded approximately USD 20 billion in foreign direct investment in 2024, making it a top 20 global destination for FDI in 2024, according to data collected by the UN Conference on Trade and Development.
Several high-profile plans for investment in renewable energy have made headlines in the Vietnamese press and international energy publications. In late 2024 it was reported that German developer PNE is seeking approval for a USD 4.6 billion investment in an offshore wind project in the Binh Danh province. In March 2025, Vietnamese conglomerate Vingroup announced ambitious plans to develop several renewable energy and liquified natural gas (LNG) power plants, requiring an estimated investment of between USD 25 to 30 billion, according to state-run newspaper VietnamNet. A few months later, the Vietnamese government entered into a joint development agreement seeking to export renewable energy to Singapore and Malaysia via a new subsea cable.
On balance, the renewable energy sector outlook in Vietnam remains predominantly positive. There are clear market incentives to invest: with a tropical climate and large coastline, Vietnam benefits from significant untapped solar and wind power sources. A growing demand for electricity and significant government investment in the sector are also poised to drive growth. Powerful market forces and abundant natural resources, coupled with strong government backing, look set to turn the tide and drive renewable energy growth in Vietnam.
Risk Advisory works extensively in the energy sector in Vietnam, helping our clients navigate the political, regulatory and operational risks in the market. Ranging from market entry studies, stakeholder mapping and supply chain analysis, we provide intelligence, evidence and analysis to guide legal and commercial decision-making across the Asia-Pacific region.