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January 23, 2025

Potential Challenges and Solutions for Vietnam’s Renewable Energy Projects

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In 2023, compliance inspections by Vietnam’s Government Inspectorate identified several violations of policies and laws in the management and implementation of planning and investment in renewable energy projects. Since then, many renewable energy enterprises and projects have encountered significant operational challenges.

In December 2024, the Ministry of Industry and Trade (MOIT) issued two reports, Report 321/BC-BCT and Report 345/BC-BCT, to implement the 2023 Inspection Conclusion of the Government Inspectorate and address obstacles faced by renewable energy enterprises, Investors in renewable energy projects in Vietnam should carefully consider the potential impacts of proposed solutions in these reports.

The reports re-emphasize the types of violations related to renewable energy projects identified in the Inspection Conclusion, with a significant expansion in the number of affected projects. Key violations include: (i) misapplication of FIT (feed-in tariff) incentives; (ii) recognition of COD (commercial operation date) and receipt of FIT prices without written approval of construction acceptance; (iii) overlap with mineral planning, irrigation planning, national defense land use, or other restricted land uses; (iv) incomplete land procedures and documentation; and (v) installation of rooftop solar on agricultural and forestry land used for farming and aquaculture models.

Further, these reports mention the government’s solutions to resolve difficulties for renewable energy projects, which include:

  1. Allowing additional planning where projects do not violate national security.
  2. Allowing rectification of projects’ violations in land and construction process as per law.
  3. For projects violating planning on minerals, irrigation, or defense, socio-economic efficiency will be assessed for adjustments or integration.
  4. Adjusting electricity prices and recovering incorrect FIT prices for projects not meeting conditions.
  5. Requiring rooftop solar projects on non-farming land to comply with regulations or, if land violations occur, FIT prices will be revoked, and electricity prices must be redetermined and recovered.
  6. For items (iv) and (v), the authority will issue regulations on electricity prices after FIT revocation for offsetting the electricity payment purpose.

According to the reports, for projects with a COD date before the date of the notice on results of inspection of checking for acceptance of the construction works (CCA) issued by the relevant authority, Vietnam Electricity (EVN) will assess FIT eligibility in collaboration with developers. Based on EVN’s findings, regulations will be issued to govern electricity selling prices for ineligible projects, ensuring compliance and fair practices.

Investors should review the status of their projects to determine if they are impacted. It is essential to stay updated on the official decisions of the MOIT and the government on the detected violations.

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