Legal reforms powering Vietnam’s energy transformation

Vietnam is racing to establish a robust policy and regulatory framework to accelerate the implementation of Power Development Plan VIII (PDP8)- a critical roadmap for the nation’s energy sector.

Delays have raised concerns over potential electricity shortages that could hinder economic growth and social development. In response, the government has introduced sweeping legal reforms to remove policy bottlenecks and fast-track energy projects.

In a landmark shift, four key decrees were issued in March 2025 to implement the new Electricity Law, alongside significant amendments to PDP8. The proposed changes aim to expand solar and onshore wind capacity, ease planning constraints for the Direct Power Purchase Agreement (DPPA) regime, and integrate nuclear energy and energy storage into Vietnam’s power mix, creating a more dynamic and resilient energy landscape.

This article examines key legal and practical implications of decrees No.56/2025/ND-CP, No.57/2025/ND-CP, No.58/2025/ND-CP, and No.61/2025/ND-CP, as well as the proposed PDP8 amendments.

VILAF authors

Power development planning and investor selection

Decree 56 exempts certain power sources from national and provincial power development planning requirements. These include off-grid power projects except those for export, grid-connected power sources with minimal grid impact, such as self-consumption renewable and new energy projects connected at low-voltage, all power sources equipped with zero export devices, and project upgrades that do not increase capacity, voltage, or land use.

The decree also clarifies competitive bidding rules for investor selection under the new Electricity Law. Gas-fired, coal-fired, and renewable energy projects included in PDP8 or provincial plans must undergo bidding if multiple investors express interest. However, power sources exempt from planning requirements are not subject to this process.

By removing planning constraints, the reforms aim to accelerate self-sustaining and small-scale energy projects, which have historically faced delays.

Expanding DPPA mechanisms

Decree 57 broadens the DPPA framework by including biomass power, alongside solar and wind projects, in the scheme of sales through the national grid.

Larger rooftop solar developments can adopt DPPA models through private grids with zero-export devices, avoiding power development planning requirements.

Additionally, they may sell up to 20 per cent of their output to Vietnam Electricity (EVN). However, in this case, they must comply with power development planning rules.

To participate in the scheme of sales through the national grid, renewable energy producers must have at least 10MW of capacity and engage in the wholesale electricity market, though this threshold does not apply to private grid sales.

Consumers purchasing via private grids can include any large electricity users, while those using the national grid are limited to certain large manufacturers and EV charging providers purchasing from EVN or retail electricity distributors at voltage levels of 22kV or higher, and retail electricity suppliers within industrial zones, clusters, economic zones, or high-tech parks.

New energy and offshore wind power

Vietnam is prioritising new energy projects using green hydrogen or ammonia. Decree 58 provides incentives for the first project in each category, including a guaranteed minimum contracted output of 70 per cent for up to 12 years and exemptions or reductions in sea-area-usage and land-usage or land-lease fees.

For offshore wind, the decree imposes a 95 per cent foreign ownership cap. Foreign investors must obtain national security approvals from the Ministry of National Defense, Ministry of Public Security, and Ministry of Foreign Affairs. Offshore wind projects for export must be majority-owned by domestic investors.

Decree 58 requires national security approvals from the ministries of defence, public security, foreign affairs, and industry and trade to transfer project interests, shares, or equity in offshore wind power involving foreign or deemed foreign investors. Additionally, in the above case, if a wholly state-owned enterprise or its affiliate is an investor in the project, it holds the right of first refusal to purchase part or all of the interests proposed for transfer.

Self-consumption rooftop solar power

Decree 58 updates regulations for self-consumption rooftop solar power (SRTS), replacing Decree 135/2024/ND-CP. Grid-connected SRTS systems must register with local authorities if their capacity exceeds 1,000kW or if they sell excess electricity to EVN. Smaller SRTS systems that do not sell power are only required to notify authorities.

Transitional SRTS systems developed after January 1, 2021, must comply with the new requirements. Systems included in power development plans may sell up to 20 per cent of output to EVN, calculated based on irradiation intensity.

Electricity operation licences

Decree 61 extends electricity operation licences for power plants from 10 to 20 years. It also shifts licensing authority from the Ministry of Industry and Trade to provincial governments for solar and onshore or nearshore wind plants under 50MW, as well as biomass and waste-to-energy plants under 15MW.

Exemptions from licensing requirements apply to off-grid self-consumption power generation with no capacity limit, grid-connected self-consumption facilities under 30MW, and power generation facilities under 1MW selling electricity to third parties. These measures provide greater flexibility for industrial and commercial users while maintaining regulatory oversight for large-scale projects.

Proposed PDP8 amendments

The government is reviewing amendments to PDP8 to align with Vietnam’s evolving energy strategy. Key proposed changes include expanding solar power targets from 12,836MW to between 46,459MW and 73,416MW by 2030, adding between 4,000MW and 6,400MW of nuclear power between 2030 and 2035, and incorporating between 10,000MW and 16,300MW of energy storage by 2030.

Vietnam’s energy sector is undergoing a significant transformation. Recent legal reforms and PDP8 amendments aim to create a more sustainable, secure, and competitive power market.

The government’s efforts to streamline regulations, expand the DPPA framework, and introduce planning and licensing exemptions are unlocking new investment opportunities while ensuring long-term energy stability. With Vietnam preparing to launch a domestic carbon exchange, these reforms set the foundation for a greener, more resilient future.

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