Vietnamese energy expert Dao Nhat Dinh pointed out that no major power projects have broken ground in the country for the past three years. (Photo: iStock)
Vietnam’s energy transition is anchored in three core policy frameworks: the National Power Development Plan (PDP8), Direct Power Purchase Agreement (DPPA), and the Just Energy Transition Partnership (JETP). However, businesses continue to face major barriers in implementing power-related projects.
The Ministry of Industry and Trade (MOIT) has asked local governments to compile project data to support future regulatory process improvements.
Legal hurdles stall power investment
At a recent energy transition forum co-hosted by the Vietnam Petroleum Association and state-owned Petrovietnam, multiple experts pointed to persistent regulatory barriers. Four key challenges for power project development were highlighted:
1. Land laws misaligned with renewable development needs
Current land regulations are incompatible with the unique characteristics of renewable energy projects. For instance, under Vietnam’s Land Law, a 1:2000 scale zoning map must be approved before a project can enter the bidding process.
However, wind power developers typically do not have finalized turbine locations or transmission line routes in the early stages, making such detailed zoning impractical. Even with regulatory approval, the lack of investor interest could result in sunk costs.
2. Inconsistent regulations delay project approvals
Transitioning from old to new regulations has prolonged the approval process. Previously, investors were not required to provide detailed grid connection plans, leading some to move forward without this information.
Many developers reported that, despite their projects being included in PDP8 and implementation plans, Vietnam Electricity (EVN) and regional grid operators have refused to proceed, citing the absence of grid connection documentation.
3. Large-scale projects struggle to attract investors
For instance, the Nghi Son LNG development in Thanh Hoa province has yet to receive a single bid. Former Ministry of Finance official and economist Ngo Tri Long argued that Vietnam’s electricity pricing mechanism fails to reflect actual investment costs, risks, and returns, undermining the interest of strategic investors and international financiers.
4. Financial pressure and underwhelming returns
Energy expert Dao Nhat Dinh noted that unseasonably cool and wet conditions during this year’s dry season reduced power demand. As a result, some plants offered electricity at zero pricing but were still not dispatched, undermining returns and creating financial imbalance.
He warned that independent power producers could face worsening cash flow challenges, especially for capital-intensive projects like offshore wind, which may dampen future investment interest.
Several developers said that even though the projects have been included in PDP8, EVN and regional grid operators have refused to proceed, citing the absence of grid connection documentation. (Photo: EVN)
Dinh further warned that unless these barriers are promptly addressed, Vietnam will continue to see no major power projects break ground, extending a three-year dry spell and derailing PDP8 targets.
Nguyen Anh Tuan, Vice Chairman and Secretary General of the Vietnam Energy Association, cautioned that unless project development accelerates and pricing and bidding mechanisms are reformed, Vietnam could face another blackout crisis as early as 2026.
Source: The Investor, Vietnam+, Vietnam Net