Viet Nam RE Law/Policy

Table of Contents

Last updated Jul. 8, 2024.

Electricity Sector Overview

Although 100% of the population now has access to electricity, some communities in the less developed and sparsely populated mountainous areas of the northwest and isolated islands are not yet connected to the grid.

The following chart shows the organizational structure of Viet Nam’s energy sector:

Source: ADB: Viet Nam Energy Sector Assessment, Strategy, and Road Map

As of 2022, Viet Nam’s energy mix is composed of mainly hydropower and coal at 38.22% and 37.79% respectively. Gas follows at 10.58%. 9.98% of Viet Nam’s energy mix comes from solar, and 3.28% from wind. The following charts illustrate Viet Nam’s electricity mix:

Source: OurWorldinData.org. Click to access interactive graphs.

Summary of RE Laws/Policies

Viet Nam’s main laws and policies governing renewable energy are:

The Politburo’s Resolution 55 on the Orientation of the National Energy Development Strategy of Viet Nam to 2030 with a Vision to 2045 is a comprehensive policy guiding the energy sector, based on which relevant legal documents have been revised.1Nguyen Linh Dan, Vietnam’s Renewable Energy Policies and Opportunities for the Private Sector, The National Bureau of Asian Research (May 19, 2022), https://www.nbr.org/publication/vietnams-renewable-energy-policies-and-opportunities-for-the-private-sector/.

Resolution 55 sets the following goals: “(1) to maintain the national energy security as the firm foundation for socioeconomic development while rapidly and sustainably developing the energy sector; (2) based on the socialist-oriented market mechanism, to quickly develop a competitive and transparent energy market, diversify forms of ownership (especially the private sectors) and business models, and eliminate monopolies or unfair competition; (3) to develop and diversify energy forms; (4) to accelerate digital transformation and R&D in order to become more technology self-sufficient; and (5) to emphasize energy efficiency and environmental protection.”2Dan, supra.

Additionally, the National Power Development Plan (“PDP8”) and the National Energy Master Plan for the Period 2021-2030 were both approved in 2023. The following infographic illustrates the targets outlined in PDP8, which include a significant upscaling of wind and solar.

Graphic: Vietnam National Power Development Plan (PDP8) Summary

Source: Royal HaskoningDHV (swipe to see additional panels of the graphic; click for PDF)

Feed-in Tariffs

Vietnam has seen numerous iterations of feed-in tariff (FIT) rates.3Mark Barnes, Explained: Vietnam’s FiT Rates for Solar and Wind Power Projects, Vietnam Briefing (Jan. 16, 2023), https://www.vietnam-briefing.com/news/feed-in-tariffs-solar-wind-vietnam.html/. The first FIT scheme, introduced in 2017, ended in 2019 and was replaced with another scheme (FIT2) with lower pricing.4Dan, supra. Decision 21/QD-BCT introduced new feed-in tariff rates in 2023 for solar projects started after Dec. 31, 2020 and wind projects started after Nov. 1, 2021.5Barnes, supra. There have also been gaps when there was no official FIT.6Weatherby, Courtney, et al. “UNLOCKING RENEWABLE ENERGY IN VIETNAM.” DELIVERING ON VIETNAM’S COP26 COMMITMENTS: Regional Leadership on Renewable Energy and River Conservation, Stimson Center, 2022, pp. 4–6. JSTOR, http://www.jstor.org/stable/resrep43738.5. Accessed 23 Aug. 2023.

On December 19, 2023, new FiT rules came into force under Decree No. 19/2023/TT-BCT.7Vietnam to Set Annual Solar and Wind Prices Under New Rules, Vietnam Briefing (Dec. 19, 2023), https://www.vietnam-briefing.com/news/vietnam-to-set-annual-solar-and-wind-prices-under-new-rules.html/.

In 2024, the Ministry of Industry and Trade of Vietnam published the second draft of a circular that will abolish FiTs for all renewable power projects in Viet Nam. More information on the draft circular can be found here and here.

Direct Power Purchase Agreements (DPPAs)

The issuance of Decree 80/2024/ND-CP on Direct Power Purchase Agreements (DPPAs) on July 3, 2024 changed the regulatory framework governing the direct sale of rooftop solar and other renewable energy sources through private transmission lines and the national grid. The Decree introduces two primary forms of direct energy purchase: (1) direct power purchase through a dedicated private connection line, and (2) direct power purchase through the national power grid.8Melissa Cyrill, Vietnam Notifies Decree 80/2024/ND-CP on Direct Power Purchase Agreements: Key Details, Vietnam Briefing (July 4, 2024), https://www.vietnam-briefing.com/news/vietnam-notifies-decree-80-2024-nd-cp-on-direct-power-purchase-agreements-key-details.html/. The Decree sets out rules for direct energy trading through private connection lines. Direct electricity purchases through the national grid are done through the spot electricity market, the prices of which are regulated by the Ministry of Industry and Trade (MoIT).

Hydrogen

Vietnam’s government sees hydrogen as necessary and important for achieving Vietnam’s goal of meeting net zero carbon emissions by 2050.9Announcing the Hydrogen Energy Development Strategy of Vietnam, Vietnam Energy Online (Feb. 27, 2024), https://vietnamenergy.vn/announcing-the-hydrogen-energy-development-strategy-of-vietnam-32233.html. In 2024, the Ministry of Industry and Trade (MOIT) deployed Viet Nam’s hydrogen energy development strategy until 2030 with a vision to 2050 (Decision No. 165/QD-TTg dated February 7, 2024). The strategy aims to produce up to 20 million tonnes of hydrogen a year by 2050 and meet around 10% of the country’s energy needs with hydrogen.10Vietnam sets out 20-million-tonne-a-year hydrogen strategy, Global Construction Review (Feb. 28, 2024), www.globalconstructionreview.com/vietnam-sets-out-20-million-tonne-a-year-hydrogen-strategy/.

Initial Critique of RE Laws/Policies

Challenges

Policy analysts have identified the following legal and policy-related challenges to Viet Nam’s renewable energy development11Weatherby et al., supra.:

  • Bankability issues with Power Purchase Agreements (PPAs) for utility-scale power plants (see Weatherby et al. for details)
  • Uncertainty surrounding feed-in tariffs due to frequent revisions and gap periods
  • Cumbersome permitting procedures involving numerous departments
  • Slow development of direct PPAs between private sellers and buyers

Recommendations

Dr. Nguyen Linh Dan, a Clean EDGE Asia Fellow at the National Bureau of Asian Research, recommends the following policy options to encourage participation of the private sector in renewable energy12Dan, supra.:

  • The government should make sure that mechanisms and policies of Resolution 55 and related decisions about FIT are consistently implemented
  • The Ministry of Industry and Trade should enable more transparent approval procedures
  • The process for decisions on curtailing renewable energy should be more transparent
  • If the FIT program cannot be extended, an alternative mechanism should be put in place
  • Policies and circulars should encourage investment in energy storage

Renewable Energy Targets

Renewable Energy Laws/Policies

General

  • Viet Nam’s NDCs
  • National Power Development Plan (PDP) VIII (May 15, 2023)
  • National Energy Master Plan for the Period 2021-2030, Vision 2050 (2023)
  • Law on Economical and Efficient Use of Energy No: 50/2010/QH12 (as regulated by Decree 21/2011/ND-CP on the Law on Economical and Efficient Use of Energy and Measures for its Implementation)
  • Law on Environmental Protection
  • Decision 428/QD-TTg Approving the Revised National Power Development Master Plan for the 2011-2020 Period with the Vision to 2030
  • Decision No. 896/QD-TTg on Approving the National Strategy for Climate Change Until 2050
  • Decision No. 1855/QD/TTg: Approving the National Energy Development Strategy of Vietnam for the Period up to 2020 with Outlook to 2050
  • Resolution of the Politburo No. 55NQ/TW of 2020 on the Orientation of the National Energy Development Strategy of Viet Nam to 2030, with a Vision to 2045

Feed-in Tariffs

  • Decree No. 19/2023/TT-BCT
    • Info / PDF / Backup PDF
    • New rules for determining FiTs for new wind and solar projects.
  • Decision No. 21/QD-BCT
  • Prime Minister Decision No. 31/2014/QD-TTg
  • Decision No. 24/2014/QD-TTg
    • Under the two above decisions, WTE and biomass power projects in Vietnam have fixed FiTs.

Note: In 2024, the Ministry of Industry and Trade of Vietnam published the second draft of a circular that will abolish FiTs for all renewable power projects in Viet Nam.

Direct Power Purchase Agreements (DPPAs)

Specific Types of RE

  • Decision 165/QD-TTg 2024 approving Vietnam’s Hydrogen Energy Development Strategy through 2030
    • PDF (for premium subscribers only) / Info
  • Circular 19/2023/TT-BCT
    • HTML Text
    • On methods for determination of solar power and wind power generation pricing framework

Contextual Laws/Policies

  • Socio-Economic Development Plan for 2021-2025 (Decisions No. 16/2021/QH15 and No. 32/NQ-CP)
  • PM Decision 811/2016 Introducing the Climate Change Action Plan for Construction 2016-2020
  • The National Climate Change Strategy Approved by Decision No. 2139/QD-TTg
  • National Action Plan for the Implementation of the 2030 Sustainable Development Agenda
  • National Green Growth Strategy for 2021-2030, Vision Toward 2050
  • Resolution 24/NQ-TW: Active in Response to Climate Change, Improvement of Natural Resource Management and Environmental Protection
  • Electricity Law No. 28/2004/QH11 of 2004

References