Vietnam's Path to Green Growth

Solar capacity has grown twentyfold since 2018. Offshore wind projects in the pipeline exceed 100 GW. The net-zero commitment by 2050 is creating structural, long-term demand. But not every segment offers attractive risk-adjusted returns.

The Current State of Play

Vietnam's renewable energy sector has experienced one of the fastest growth trajectories in Southeast Asia. Total installed renewable capacity reached approximately 25 GW by the end of 2024, with solar photovoltaic accounting for roughly 60% of that total. The government's Power Development Plan VIII (PDP8) targets 50% renewable share in the power mix by 2030.

However, the sector's history has not been without turbulence. The feed-in-tariff (FIT) programme for solar, which drove much of the 2019-2020 capacity surge, was abruptly reduced in 2020 and subsequently closed to new projects. Developers who had committed capital based on the original tariff structure faced significant financial stress. This episode illustrates a recurring theme in Vietnamese energy policy: ambition is high, but implementation mechanisms can change with limited warning.

Solar: Maturing but Still Relevant

The utility-scale solar boom of 2019-2020 has given way to a more measured phase focused on rooftop distributed generation, industrial self-consumption, and hybrid solar-plus-storage projects. Ground-mounted utility solar is still viable in provinces with strong irradiation and available land, but the economics now require power purchase agreements (PPAs) with offtakers rather than reliance on government tariffs.

For industrial investors, on-site solar installation offers a compelling value proposition: reduced electricity costs, improved energy security, and progress toward corporate sustainability targets. The regulatory framework for self-consumption solar has stabilised, and installation costs have declined significantly. We are seeing increased interest from manufacturers with large facility footprints, particularly in textiles, food processing, and electronics assembly.

Offshore Wind: The Next Frontier

Offshore wind represents the most significant long-term opportunity in Vietnamese renewables. The technical potential along Vietnam's 3,200-kilometre coastline is estimated at over 600 GW. Projects currently in various stages of development exceed 100 GW, though only a small fraction has reached financial close.

The challenges are substantial. Vietnam lacks the port infrastructure, vessel capacity, and supply chain ecosystem that have enabled offshore wind deployment in Europe and China. Transmission grid capacity in coastal provinces is insufficient for the generation volumes being planned. And the regulatory framework for offshore wind — covering marine licensing, grid connection, and PPA structures — is still evolving.

Investors considering offshore wind should plan for extended development timelines and significant upfront capital commitment before revenue generation begins. The projects that succeed will likely be those backed by developers with deep offshore experience, strong balance sheets, and patience for a multi-year development cycle.

Grid Infrastructure: The Binding Constraint

The most underappreciated risk in Vietnamese renewable energy is grid capacity. The transmission network in both the north and south has struggled to keep pace with generation additions. Curtailment — the reduction of renewable output because the grid cannot absorb it — has affected solar farms in several provinces. Without parallel investment in transmission and grid modernisation, additional generation capacity will face increasing constraints.

This creates an indirect investment opportunity: grid infrastructure, substations, and energy storage systems are all undersupplied relative to demand. Investors with expertise in transmission infrastructure may find more attractive risk-adjusted returns than those competing in the increasingly crowded generation space.

Regulatory Outlook

The regulatory framework for renewables has improved in stability but remains complex. Key considerations include:

• The Direct Power Purchase Agreement (DPPA) pilot programme, which allows renewable generators to sell directly to large consumers rather than through the state utility EVN
• Carbon credit mechanisms and their interaction with Vietnam's net-zero commitment
• Land use rights for renewable projects, which are typically granted on 50-year terms
• Foreign ownership restrictions, which have been relaxed for power generation but still apply in certain supporting services

Conclusion

Vietnam's renewable energy sector offers genuine, structural opportunity driven by policy commitment, resource availability, and growing electricity demand. But the sector is no longer the easy-entry, high-return environment it appeared to be in 2019. Successful investment now requires careful segment selection, realistic timeline expectations, and regulatory navigation that accounts for implementation uncertainty.