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Vietnam is emerging as an attractive destination for renewable energy investors, thanks to its abundant natural resources and strong commitments to energy transition. However, behind the rapid growth potential lie significant legal barriers, policy uncertainties, and long-term risks that investors must evaluate carefully.
A Rapidly Growing Market with High Investment Demand
Vietnam’s natural conditions are favorable for solar and wind energy development, with thousands of sunshine hours annually and a long coastline. Notably, commitments made at COP26 and the approval of Power Development Plan VIII (PDP8) have opened up vast opportunities for clean energy expansion, aligning with the country’s goal of achieving carbon neutrality by 2050.
The government has promoted oversea investment in the sector through various incentives, including tax breaks, infrastructure support, and international cooperation. The market is also seeing robust participation from the private sector and foreign investors, creating golden opportunities for large-scale projects, particularly in Central and Southwestern Vietnam.
Risks from Policy Instability and Pricing Mechanism Changes
One of the major concerns is the instability of policy frameworks — especially regarding the feed-in tariff (FIT) scheme and auction mechanisms. The delay in issuing new policies after the FIT expired has left many projects on hold, causing significant financial losses for investors.
Furthermore, abrupt policy changes without clear transition guidelines can undermine legal certainty and long-term financial planning. Without safeguards such as contract guarantees, price adjustment mechanisms, or transparent power purchase agreement (PPA) negotiations, investors may face unilateral policy risks from the State.
Land and Planning Legal Bottlenecks
Land-related legal issues — including land use conversion, construction permits, and land allocation for renewable energy projects — remain problematic, especially in areas lacking clear energy zoning. Lengthy procedures and poor coordination among local authorities continue to hinder project implementation.
Additionally, national power planning is not always aligned with provincial land-use or industrial zone plans, making it difficult for developers to secure stable land rights. The absence of a legal framework for rooftop solar models with leased space or energy storage also limits the market’s potential.
Legal Strategies to Mitigate Investment Risks
Enterprises should conduct thorough legal assessments from the project planning stage, including feasibility, permitting timelines, grid connection conditions, and PPA terms with EVN. The more detailed the legal roadmap, the greater the ability to manage risks and negotiate favorable terms.
In parallel, companies should develop policy change mitigation strategies by incorporating “regulatory force majeure” clauses or choosing international arbitration as the dispute resolution mechanism in PPAs. For foreign investors, leveraging oversea investment protection mechanisms under FTAs or BITs can serve as an important shield against adverse policy adjustments.
Strategic Considerations During the Transition Period
Despite ongoing challenges, renewable energy remains a highly promising sector in Vietnam. Businesses should stay updated on new policies — especially implementation guidance for PDP8, draft electricity pricing mechanisms, and regulations on energy storage and rooftop solar.
Thorough legal preparation, combined with strategic partnerships with local stakeholders and deep knowledge of Vietnam’s legal system, will be key to seizing opportunities while managing risks in this still-evolving investment landscape.
ASL Law is a leading full-service and independent Vietnamese law firm made up of experienced and talented lawyers. ASL Law is ranked as the top tier Law Firm in Vietnam by Legal500, Asia Law, WTR, and Asia Business Law Journal. Based in both Hanoi and Ho Chi Minh City in Vietnam, the firm’s main purpose is to provide the most practical, efficient and lawful advice to its domestic and international clients. If we can be of assistance, please email to [email protected].
ASL LAW is the top-tier Vietnam law firm for project and energy consultancy. If you need any advice, please contact us for further information or collaboration.
