However, realizing this potential hinges on robust policy reforms, consistent regulatory frameworks, and stronger collaboration with international investors. By addressing these challenges, Vietnam could not only meet its energy and climate goals but also establish itself as a model for green development in the Global South.
A Surge in Renewable Energy Demand
Between 2019 and 2021, Vietnam underwent a remarkable transformation in its renewable energy sector, driven largely by the introduction of a fixed feed-in tariff (FiT) policy. This incentive sparked a wave of investment in solar and wind power, catapulting Vietnam from a marginal player in renewables to one of Southeast Asia’s leading solar energy markets. By 2022, renewable sources accounted for 28.4% of the country’s total installed electricity capacity—a striking achievement for a nation previously reliant on fossil fuels.
Vietnam’s natural advantages underpin this rapid growth. The country boasts diverse and commercially viable renewable energy resources, including utility-scale solar, rooftop solar, onshore wind, and offshore wind. According to Power Development Plan VIII (PDP8), renewables are projected to constitute 28–36% of Vietnam’s energy mix by 2030, with an ambitious target of 75% by 2050. With a potential capacity of 963 gigawatts (GW) from solar and over 800 GW from wind, Vietnam possesses a robust foundation to achieve its net-zero emissions goal.
The strategic importance of renewable energy extends beyond environmental considerations. Reducing reliance on imported fossil fuels enhances Vietnam’s energy security, a critical factor given the volatility of global energy markets. Furthermore, renewable energy opens export opportunities, with plans to supply 400 megawatts (MW) of electricity to Cambodia by 2030 and 5,000–10,000 MW to Singapore and Malaysia by 2035, maintaining these levels through 2050. These ambitions underscore Vietnam’s potential to become a regional energy hub.
However, the transition to a competitive bidding system following the FiT’s termination has slowed investment momentum. PDP8 estimates that Vietnam will require USD 266.3 billion over the next decade to develop its power generation and transmission infrastructure, with USD 136 billion needed between 2026 and 2030 alone. As a developing economy with competing infrastructure priorities, Vietnam cannot rely solely on public funds. The private sector, particularly domestic enterprises bolstered by technological advancements and global supply chains, must play a central role in bridging this financial gap.
Investors Seek Stability
Foreign direct investment has been instrumental in scaling up Vietnam’s renewable energy sector, particularly in large-scale solar and offshore wind projects. By the end of 2024, Vietnam hosted 45 solar power projects, 13 onshore wind projects, and 12 offshore wind projects with foreign investment, contributing approximately 5,200 MW of operational capacity. FDI not only fills critical funding gaps but also alleviates pressure on the national budget, which is often stretched across multiple development priorities.
Large-scale renewable projects, especially offshore wind, demand substantial capital, extended payback periods, and exposure to policy, technical, and market risks. International investors bring not only financial resources but also cutting-edge technology and expertise, which are vital for projects of this scale. Yet, the abolition of the FiT mechanism and its replacement with competitive bidding has shaken investor confidence. Many transitional projects have stalled due to unresolved price negotiations with Vietnam Electricity (EVN), prompting major players like Orsted, Equinor, and Enel to withdraw from the market in favor of countries with more predictable investment climates.
This exodus highlights a critical challenge: policy consistency and transparency. While Vietnam’s political stability, clear energy policy direction, and rising electricity demand make it an attractive destination for FDI, the lack of a clear legal framework post-FiT has created uncertainty. The revised Electricity Law and Decree 58/2025/ND-CP have introduced a more defined regulatory framework for renewables, but the absence of comprehensive sub-law documents continues to delay progress. Investors are left in limbo, awaiting clarity on critical issues such as pricing and project approvals.
To regain momentum, Vietnam must prioritize a stable and transparent investment environment. The government’s slogan of “harmonized benefits, shared risks” resonates with investors but requires translation into actionable policies. These could include power purchase commitments, support for infrastructure development, and incentives for technology transfer, particularly for offshore wind projects. By addressing these gaps, Vietnam can rebuild trust and attract high-quality FDI to fuel its renewable energy ambitions.
Strengthening the Investment Ecosystem
To fully capitalize on its renewable energy potential, Vietnam must overhaul its investment incentive mechanisms. A predictable legal framework is the cornerstone of investor confidence. While the revised Electricity Law and Decree 58/2025/ND-CP mark progress, the government must expedite the issuance of supporting regulations to provide clarity on pricing, permitting, and project implementation. Streamlining bureaucratic processes and reducing delays in project approvals will further enhance Vietnam’s appeal.
Collaboration with capable foreign firms is equally critical. These partnerships can address emerging challenges, such as grid integration and technological barriers, while fostering knowledge transfer to domestic enterprises. Incentives tailored to renewable energy projects—particularly offshore wind—could include tax breaks, land-use concessions, and guaranteed power purchase agreements. Such measures would signal Vietnam’s commitment to creating a competitive and sustainable energy market.
Moreover, Vietnam must align its policies with global trends in green investment. The country’s commitment to net-zero emissions by 2050 aligns with international climate goals, but achieving this target requires significant capital and expertise. By positioning itself as a reliable partner for green FDI, Vietnam can tap into the growing pool of global capital dedicated to sustainable development. Multilateral institutions and private investors are increasingly prioritizing markets with clear, investor-friendly policies, and Vietnam must compete to secure its share.
The economic benefits of a robust renewable energy sector extend beyond energy security and emissions reduction. Large-scale projects can stimulate job creation, drive technological innovation, and position Vietnam as a leader in the global green economy. For instance, offshore wind projects could catalyze growth in related industries, such as manufacturing and logistics, while boosting Vietnam’s reputation as a hub for sustainable investment.
