Buyers' Toolkit

In Vietnam, renewable energy can be obtained through purchasing unbundled renewable energy certificates (RECs) and self-consumption. Currently, I-RECs are the most widely used type of RECs in Vietnam, as there are no national RECs available. For those wishing to set up their own solar power generation facilities, it is necessary to equip with anti-backflow devices to prevent excess electricity from feeding back into the national grid. However, Vietnam has stopped accepting any new renewable energy projects, as the country's high feed-in tariff implemented in 2018 resulted in a rapid surge in solar capacity, jumping by over 16 GW in three years. Despite the significant number of renewable energy facilities, many renewable energy sites have been forced to shut down due to inadequate grid capacity.

Despite the increasing level of renewable energy market liberalization in Vietnam, the transmission, distribution, and sale of electricity are monopolized by the state-owned Vietnam Electricity (EVN). As a result, the country relies heavily on government policies to promote renewable energy in the absence of a free market mechanism. However, Vietnam has not shown initiative in developing such a mechanism for renewable energy.

In 2021, Vietnam's Directorate General of Energy and the United States Agency for International Development (USAID) jointly launched a Direct Power Purchase Agreement (DPPA) scheme, which, despite being scheduled for a pilot phase in 2022, has yet to be implemented as of July 2023.

In addition, there are no regulations on renewable energy procurement in Vietnam, which, coupled with the elimination of the feed-in tariff (FIT) system, has made it difficult to finance renewable energy facilities. In the face of these challenges, the risk of investing in renewable energy in Vietnam has greatly increased.

In 2020 and 2021, Vietnam published the National Energy Development Strategy of Vietnam to 2030 and the Power Development Plan 8 (PDP8). These initiatives aimed to achieve a renewable energy installation target of 15% to 20% by 2030, while also proposing an increase in installed fossil fuel capacity to 50%, setting back the carbon reduction efforts. Despite the interest of many international partners to collaborate with the Vietnamese government in investing in new energy sources such as offshore wind power, the grid connection of new projects is facing significant challenges as the existing grid is unable to accommodate the highly intermittent renewable energy, pending an infrastructure upgrade.