1. What is Renewable Energy?

Renewable energy (also known as sustainable energy) refers to energy derived from natural processes that are continuously replenished in the human environment. These are energy sources that may regenerate naturally over time and are virtually inexhaustible.

Unlike finite fossil fuels such as coal, oil, and natural gas, renewable energy is considered more sustainable and environmentally friendly. It contributes to reducing greenhouse gas emissions and addressing climate change. Thanks to its abundance and continuous regenerative capacity, renewable energy is playing an increasingly important role in the green economic development strategies and energy security of many countries worldwide.

2. Types of Renewable Energy

Renewable energy comes in various forms, all derived from natural resources available in the environment. Each type operates differently and has its own advantages and applications, but they all share a common goal: promoting sustainable development and reducing environmental impact.

a. Solar Energy

Solar energy is one of the most widely used renewable energy sources today. By using photovoltaic (PV) panels or solar thermal systems, sunlight is converted into electricity or heat for daily use and production. With its virtually unlimited potential, decreasing costs, and rapidly improving technology, solar power is becoming a key solution in energy transition strategies in many countries, including Vietnam.

b. Wind Energy

Wind energy is generated using wind turbines, which convert the kinetic energy of wind into electricity through generators. It is a clean energy source with no emissions during operation and can produce large amounts of electricity, especially in areas with stable wind conditions such as coastal and offshore regions.

c. Hydropower

Hydropower uses the force of flowing water to turn turbines and generate electricity. Hydropower plants and dams can produce significant amounts of energy and play an important role in the power supply of many countries.

d. Biomass Energy

Biomass energy is derived from organic materials such as agricultural by-products, wood, organic waste, and animal waste. Through processes like burning, gasification, or fermentation, biomass can generate heat, electricity, or biofuels. This not only provides energy but also helps manage waste, supports a circular economy, and adds value to the agricultural sector.

e. Geothermal Energy

Geothermal energy uses heat stored beneath the Earth’s surface to generate electricity or provide heating and hot water. Unlike weather-dependent energy sources, geothermal energy is stable and can operate continuously. In areas with strong geological activity, it is considered a strategic energy source with long-term potential and relatively low operating costs after initial infrastructure is in place.

Overall, each type of renewable energy has its own characteristics and applications. However, combining these sources in a flexible way will help build a more diverse, reliable, and sustainable energy system in the future.

3. Laws and Policies on Renewable Energy in Vietnam

Vietnam’s legal framework for renewable energy is gradually being improved to become more transparent, market-oriented, and aligned with international commitments on energy transition and greenhouse gas reduction. The current regulatory system includes key laws, strategic resolutions, and specialized implementing decrees, many of which introduce important updates that create a more favorable legal environment for investors.

a. Law on Electricity

The Law on Electricity No. 61/2024/QH15 is the core legal document governing electricity generation, transmission, distribution, and trading activities. It clearly sets out the policy direction of prioritizing the development of renewable and new energy sources.

Compared to previous versions, the 2024 Electricity Law introduces several notable changes:

• It marks a significant shift toward a market-based electricity pricing mechanism, subject to State regulation and aligned with different levels of a competitive electricity market. For renewable energy projects, the law allows electricity trading through market-based instruments such as forward contracts, options, and electricity futures between sellers and buyers. In addition, the winning bid price is defined as the ceiling price for negotiation with investors. This creates a more transparent and flexible legal foundation for wind, solar, and other renewable energy projects, gradually replacing the previous fixed tariff mechanism.
• It introduces mechanisms such as long-term minimum contracted output, principles for electricity pricing, and safeguards for project implementation in line with different stages of the competitive electricity market. These provisions help improve revenue stability and enhance financing capacity for large-scale renewable energy projects, especially offshore wind and utility-scale solar.
• It establishes tailored incentive and support mechanisms for different types of power sources, including small hydropower and offshore wind. The law emphasizes targeted incentives based on natural conditions, energy potential, and socio-economic development needs in each period, while encouraging renewable energy projects to participate in the competitive electricity market.
• It clarifies the conditions for enjoying investment incentives in renewable energy projects, including resource availability, technical infrastructure, grid connection capability, and consistency with power development planning. Incentives may also be applied to rural, mountainous, and island areas if the relevant criteria are met.
• It promotes the transition of fossil fuel power plants to lower-emission fuels and the adoption of carbon capture systems, thereby creating more space for clean and renewable energy development. The law also encourages participation from all economic sectors in investing in power generation and grid infrastructure, allowing non-state entities to operate grids they invest in. This helps expand both domestic and foreign investment opportunities and contributes to energy security and sustainable development.

Overall, the 2024 Electricity Law is considered a major step forward in restructuring the electricity market and expanding opportunities for renewable energy development in the coming years.

b. Law on Energy Efficiency and Conservation

The Law on Energy Efficiency and Conservation (2010) serves as a key legal foundation for promoting efficient energy use, reducing energy intensity in the economy, and supporting the transition to cleaner energy sources. Key highlights include:

• Requiring major energy-consuming facilities to implement energy-saving measures;
• Encouraging businesses and households to adopt high-efficiency technologies and integrate renewable energy into production and daily use;
• Providing a legal basis for energy labeling programs, energy audits, and financial support mechanisms for energy-saving solutions.

In the context of Vietnam’s commitment to achieving net-zero emissions by 2050, this law plays an important role in reducing reliance on fossil fuel-based electricity, thereby indirectly promoting the share of renewable energy in the national energy mix.

c. Resolution No. 55-NQ/TW

Resolution No. 55-NQ/TW (2020) of the Politburo sets out the strategic direction for national energy development to 2030, with a vision to 2045. It is the highest-level policy document in the energy sector.

Key objectives include:

• Developing breakthrough mechanisms and policies to strongly promote renewable energy as a substitute for fossil fuels. Priority is given to wind and solar power, while encouraging investment in waste-to-energy, biomass, and solid waste power projects in line with environmental protection and circular economy development. The Resolution also calls for the development of renewable energy hubs in regions with strong potential, and further research into geothermal, wave, tidal, and ocean current energy, as well as pilot projects and hydrogen energy development in line with global trends.
• Increasing the share of renewable energy in total primary energy supply to approximately 15–20% by 2030 and 25–30% by 2045;
• Attracting private and foreign investment into clean energy projects;
• Building a competitive, transparent energy market aligned with international practices.

This Resolution serves as an important political foundation for the National Assembly and Government to develop detailed legal instruments supporting renewable energy development.

d. Implementing Decrees and Sector-Specific Mechanisms

(1) Decree No. 57/2025/ND-CP

This Decree marks a significant milestone by officially introducing the Direct Power Purchase Agreement (DPPA) mechanism between renewable energy generators and large electricity consumers.

Key highlights include:

• Allowing direct electricity trading between renewable energy producers and large consumers, expanding beyond the traditional model of purchasing electricity through EVN;
• Providing two forms of direct power trading:
  • Through a private grid connection: where the generator and the consumer directly connect and transact electricity;
  • Through the national grid: where renewable projects connect to the national grid and transact directly with large consumers or authorized retailers;
• Requiring both generators and large consumers to meet specific legal conditions before participating in DPPA arrangements.

(2) Decree No. 58/2025/ND-CP

This Decree provides detailed guidance on several provisions of the 2024 Electricity Law relating to renewable and new energy development.

Key provisions include:

• Allowing self-generators of renewable energy to sell excess electricity to the grid within certain limits, enabling small-scale producers to participate in the market while complying with technical and safety requirements;
• Establishing procedures for registration and certification of rooftop solar systems;
• Defining responsibilities of infrastructure managers and industrial zone authorities in supporting renewable energy development, including:
  • Not obstructing rooftop solar installation;
  • Coordinating with power authorities to ensure technical and operational safety;
  • Supporting and supervising entities during grid connection and operation;
• Providing incentives related to land use and the use of water and sea surface areas during the project development phase.

4. Investment Conditions for Renewable Energy Projects in Vietnam

a. General conditions applicable to all investors

To develop a renewable energy project in Vietnam, investors (whether domestic or foreign) must meet the basic requirements under the Law on Investment, the Law on Electricity, and relevant implementing regulations. Specifically:

(i) Legal status of the investor

The investor must have valid legal status in accordance with the law:

• For individuals: full legal capacity and civil act capacity are required;
• For organizations: they must be legally established and operating in compliance with Vietnamese law or the laws of their home country.

In the case of organizations, investors are required to provide documents proving their legal status, such as an Enterprise Registration Certificate (or equivalent), establishment decision, and other relevant documents as required by competent authorities.

(ii) Financial capacity and funding ability

Under the Law on Investment, investors must demonstrate financial capacity appropriate to the scale of the project through one of the following:

• Financial statements for the two most recent years;
• Financial support commitments from a parent company or financial institution;
• Financial guarantees;
• Bank account balance confirmations;
• Or other equivalent documents.

For renewable energy projects (especially large-scale wind and solar projects), authorities often require a minimum equity ratio to ensure the project’s feasibility and financial stability.

(iii) Compliance with power development planning and relevant plans

This is a key condition that significantly affects whether a project will be approved. In practice, authorities will assess the project against multiple planning frameworks, including:

• National Power Development Plan: The project must align with the approved power development strategy and implementation plans at national and local levels;
• Provincial land use planning: The project location must be consistent with local land use plans and ensure lawful land allocation for energy development;
• Construction and sectoral planning (if any): Including regional planning, urban planning, and technical infrastructure planning to ensure coordinated development;
• Grid planning and connection capacity: The project must meet requirements for connecting to the national grid, including transmission capacity, compatibility with grid planning, and connection infrastructure solutions.

(iv) Land, environmental, and technical conditions

Investors must have legal rights to use the project site through land allocation, land lease, or lawful transfer/lease of land use rights in accordance with the 2024 Land Law and its guiding regulations. The project site must comply with land use planning and power planning, must not be located in restricted areas, and should have a feasible site clearance plan.

For projects using water or sea areas (such as offshore wind or floating solar), investors must obtain approval from competent authorities for the use of such areas.

Regarding environmental requirements, under the 2020 Law on Environmental Protection, large-scale renewable energy projects must conduct an Environmental Impact Assessment (EIA) and obtain approval before implementation. The EIA must assess environmental and social impacts and propose mitigation, control, and waste management measures throughout the project lifecycle.

From a technical perspective, projects must comply with applicable standards and regulations in the electricity and construction sectors, including requirements on technology, operational safety, fire prevention, and grid protection. In particular, a feasible grid connection plan and approval of transmission capacity are critical factors determining the project’s viability and efficiency.

b. Specific conditions for foreign investors

In addition to the general conditions above, foreign investors must pay special attention to the procedures for obtaining an Investment Registration Certificate (IRC):

For foreign investors, obtaining an IRC is a mandatory legal step before establishing a company and implementing a project in Vietnam. The IRC officially records key project information, including objectives, scale, location, investment capital, implementation schedule, and applicable conditions.

In the renewable energy sector, especially for large-scale projects or those with significant socio-economic and environmental impacts, the IRC process is often associated with multiple approval and appraisal steps, including:

• Investment policy approval: Depending on the project’s scale, nature, and location, investors must obtain approval from the National Assembly, the Prime Minister, or the Provincial People’s Committee. This is a crucial pre-approval step determining whether the project can proceed before the IRC is issued.
• Inter-agency appraisal: The project dossier will be reviewed and evaluated by multiple relevant authorities, depending on the project’s characteristics.
• Assessment of implementation conditions: In addition to legal requirements, authorities will assess the investor’s financial capacity, experience with similar projects, technical feasibility, implementation schedule, and ability to meet land, grid connection, and infrastructure requirements.

In practice, for renewable energy projects, the IRC process is often more time-consuming and complex than in other sectors due to multiple layers of appraisal, inter-agency consultation, and strong dependence on planning factors. Therefore, preparing a complete and well-structured dossier, along with a clear strategy for working with authorities from the outset, is essential to shorten timelines and minimize legal risks.

5. Investment Incentives and Support Policies

Renewable energy is classified as an investment incentive sector under Article 15 of the 2025 Law on Investment. Accordingly, investors are entitled to a comprehensive system of incentives and support measures as provided under Article 14 of the same law and relevant sector-specific regulations. This is a key legal advantage that enhances the attractiveness of Vietnam’s energy market during the current energy transition period.

a. Tax incentives

Under the 2025 Law on Corporate Income Tax and its implementing regulations, renewable energy projects are eligible for corporate income tax (CIT) incentives:

• A preferential CIT rate of 10% for 15 years, which may be extended up to 30 years for large-scale projects or those of significant socio-economic importance;
• A tax exemption for the first 4 years, followed by a 50% reduction of payable tax for the subsequent 9 years, starting from the time taxable income is generated;
• Application of accelerated depreciation, allowing higher deductible expenses when calculating taxable income, thereby optimizing cash flow during the initial operation phase.

In addition, under the Law on Export and Import Duties (2016), investors may also benefit from:

• Import duty exemptions for machinery, equipment, and technological lines not yet available domestically, used to create fixed assets;
• Exemptions on materials and components necessary for project construction and operation, within the scope permitted by law.

b. Land incentives

Pursuant to Point a, Clause 1, Article 157 of the 2024 Land Law, projects using land for production or business purposes in sectors or locations eligible for investment incentives may be considered for exemptions or reductions in land use fees and land rental.

Furthermore, under Article 15 of the 2025 Law on Investment, projects implemented in areas with difficult socio-economic conditions, such as rural, mountainous, and island regions - are entitled to higher levels of incentives.

In practice, under power development planning, renewable energy projects (especially offshore wind and large-scale solar projects) are often given priority in land allocation, as well as access to water surface and sea areas, in line with national energy development needs.

c. Incentive policies supporting renewable energy development

Under Article 5 of Decree No. 58/2025/ND-CP, policies are in place to support research and technological development in wind and solar energy:

(i) Promotion of research and technological development: Research and development in wind and solar energy technologies are encouraged and supported under Article 8 of the 2024 Electricity Law, including:

• Promoting the application of advanced science and technology in electricity generation and consumption to improve energy efficiency, protect the environment, ensure electrical safety, and safeguard power infrastructure;
• Encouraging domestic production and supply of key equipment, components, and consulting services necessary to maintain a stable power supply and ensure national energy security. The State promotes the development of domestic industries in design, manufacturing, installation, and services in the power sector, aiming to meet domestic demand and expand exports. Priority is given to developing electrical equipment manufacturing and services, ensuring localization requirements, and fostering large-scale domestic enterprises with advanced technology capable of executing complex, high-tech projects that meet international standards;
• Encouraging ministries, central agencies, and provincial People’s Committees, within their respective functions and authority, to establish innovation centers in the power sector at research and training institutions. These centers are tasked with implementing national key science and technology programs focusing on energy technology development, particularly in renewable energy, new energy, smart energy, energy efficiency, digital transformation, and data/system management in the electricity sector.

(ii) Priority for technology development and manufacturing: The State prioritizes programs for research, development, and application of science and technology, particularly in the production of solar panels, wind turbines, and power conversion equipment.

(iii) Other support policies: Additional incentives and support measures may be applied in accordance with relevant laws and regulations.