As Vietnam’s renewable energy sector continues to grow, understanding the regulatory landscape for wind energy has become crucial for investors, developers, and industry stakeholders. This comprehensive guide will navigate you through the complex web of Vietnam’s wind energy regulations, providing valuable insights into the policies shaping this dynamic industry.
1. Introduction
Vietnam’s wind energy sector has experienced remarkable growth in recent years, driven by the country’s commitment to sustainable development and energy security. With its extensive coastline and favourable wind conditions, Vietnam presents immense potential for both onshore and offshore wind projects.
A thorough understanding of the regulatory framework is essential for investors and developers looking to tap into this burgeoning market. This article aims to provide a clear roadmap through Vietnam’s wind energy policies, highlighting key regulations, processes, and considerations for successful project implementation.
2. Current State of Wind Energy in Vietnam
Before delving into the regulatory aspects, it’s important to understand the current landscape of wind energy in Vietnam:
- As of 2024, Vietnam’s installed wind power capacity has reached 5 GW, with ambitious targets to increase to 6 GW by 2030.
- The government has set a goal for renewable energy to account for 65 – 70% of the country’s total power generation by 2045, with wind energy playing a significant role in achieving this target.
- Both onshore and offshore wind projects are being developed, with particular emphasis on the country’s southern and central coastal regions.
3. Key Regulatory Bodies and Their Roles
Several government agencies play crucial roles in regulating Vietnam’s wind energy sector:
Ministry of Industry and Trade (MOIT)
The MOIT is the primary agency responsible for energy policy and regulation in Vietnam. Its key responsibilities include:
- Developing and implementing national energy policies and strategies
- Approving power development plans
- Issuing licenses for power generation projects
Electricity of Vietnam (EVN)
EVN is a state-owned utility company and plays a significant role in the wind energy sector:
- Acts as the single buyer of electricity from wind power projects
- Responsible for power transmission and distribution infrastructure
Other Relevant Agencies
Additional government bodies involved in regulating wind energy projects include:
- Ministry of Natural Resources and Environment (MONRE): Oversees environmental impact assessments and land use approvals
- Provincial People’s Committees: Involved in local-level approvals and land allocation
4. Core Wind Energy Regulations in Vietnam
Several key policies and regulations govern the development of wind energy projects in Vietnam:
Renewable Energy Development Strategy
This overarching strategy outlines Vietnam’s long-term goals for renewable energy development, including specific targets for wind power capacity.
Power Development Plan (PDP8)
The latest Power Development Plan (PDP8) provides a roadmap for the country’s power sector development, including plans for expanding wind energy capacity.
Law on Environmental Protection
This law sets out requirements for environmental impact assessments and protection measures for energy projects, including wind farms.
5. Licensing and Approval Process
Obtaining the necessary permits and approvals is critical in developing wind energy projects in Vietnam. The process typically involves:
- Project proposal submission and approval
- Obtaining an investment registration certificate
- Securing a power generation license (Article 11 of Circular 21/2020/TT-BCT)
- Completing an environmental impact assessment (Articles 30 and 31 of the Law on Environmental Protection)
- Obtaining construction permits (Article 105 of Decree 15/2021/ND-CP, as amended and supplemented by Decree 35/2023/ND-CP, which regulates procedures for granting construction activity licenses)
Developers should be prepared for a multi-step process that may involve interactions with various government agencies at both the national and provincial levels.
6. Feed-in Tariffs and Power Purchase Agreements
Vietnam has implemented a Feed-in Tariff (FiT) system to incentivize wind energy development. These rates were outlined in the Prime Minister’s Decision No. 39/2018/QD-TTg
- Offshore wind power: 9.8 cents/kWh, equivalent to 2,223 VND/kWh.
- Onshore wind power: 8.5 cents/kWh, equivalent to 1,927 VND/kWh.
Power Purchase Agreements (PPAs) with EVN are standardized and non-negotiable. Key aspects of the PPA include:
- 20-year contract duration
- Take-or-pay provisions
- Payment in Vietnamese Dong, with provisions for exchange rate fluctuations
7. Land Use and Site Selection Regulations
Securing appropriate land for wind energy projects is a critical consideration:
- Land acquisition procedures typically involve working with local authorities and landowners
- Developers must comply with zoning regulations and land use plans
- Environmental considerations, including impact on local ecosystems and communities, must be addressed
8. Grid Connection and Transmission Regulations
Connecting wind projects to the national grid involves adherence to specific regulations:
- Compliance with Vietnam’s grid code requirements is mandatory
- Developers may be required to contribute to transmission infrastructure development
- Grid connection agreements must be negotiated with EVN
9. Investment Incentives and Support Mechanisms
Vietnam offers various incentives to attract investment in wind energy:
- Corporate income tax exemptions or reductions for qualifying projects (Clause 3 Article 12 Decision No. 37/2011/QD-Tg and Article 15 of Decree 218/2013/ND-CP and Decree 12/2015/ND-CP)
- According to Clause 2 Article 12 Decision No. 37/2011/QD-TTg, wind power projects are exempt from import tax on goods used to create fixed assets and on materials that are not domestically produced. Corporate Income Tax (CIT) rates and incentives for wind power projects are also applied for projects in specially encouraged investment sectors
- Land rent exemptions or reductions (Article 13 of Decision 37/2011/QD-Tg, Decree 46/2014/ND-CP and Decree 135/2016/ND-CCP and)
10. Challenges and Future Outlook
While Vietnam’s wind energy sector offers significant opportunities, developers should be aware of potential challenges:
- Grid capacity constraints in some regions
- Complexity and duration of approval processes
- Evolving regulatory landscape
Looking ahead, the Vietnamese government has signalled its commitment to further developing the wind energy sector. Anticipated policy changes include:
- Transition from feed-in tariffs to a competitive bidding system
- Improvements in grid infrastructure to accommodate increased renewable energy capacity
- Potential introduction of more flexible PPA structures
Conclusion
Navigating Vietnam’s wind energy regulations requires careful planning and a thorough understanding of the country’s legal and regulatory framework. While challenges exist, the potential rewards in this rapidly growing market are substantial. By staying informed about regulatory developments and working closely with local partners and authorities, investors and developers can position themselves for success in Vietnam’s promising wind energy sector.
As the regulatory landscape continues to evolve, stakeholders must stay updated on policy changes and new opportunities in this dynamic market. Whether you’re a seasoned player in the renewable energy space or considering your first investment in Vietnam, understanding the regulatory roadmap is your first step towards harnessing the power of wind in this vibrant Southeast Asian nation.
Address: 14th floor, HM Town Building, 412 Nguyen Thi Minh Khai, Ward 05, District 3, Ho Chi Minh City.
Phone: +84 937215585
Website: hmlf.vn
Email: miller@hmlf.vn
