In the context where shifting toward clean energy sources is becoming ever more urgent, Vietnam has increasingly become an attractive destination for investors in the renewable energy sector. One of the key factors determining the success of an investment project is the power purchase agreement, commonly known as PPA. It is not only a commitment between the investor and the electricity off‑taker, but also an important legal foundation to protect rights and ensure the project’s cash flow.

Understanding PPA Agreements in Vietnam’s Legal Context

PPA agreements are typically signed between the energy project investor and the Vietnam Electricity Corporation (EVN) or its member units. For solar power and wind power projects, the PPA reflects the commitment to purchase the entire amount of electricity fed into the grid over a certain period (usually 20 years).

However, unlike in many other countries, PPAs in Vietnam are not contracts that are flexibly negotiated. Investors are mainly required to follow standard forms issued by the Ministry of Industry and Trade, which makes adjusting terms to protect investor interests more difficult. This is a concern often felt by foreign investors when entering the Vietnamese market.

Another point to note is that the electricity purchase price in the agreement is often determined in advance (FIT – Feed‑in Tariff) or through auction mechanisms, and it may change according to policy. Therefore, assessing stability and the ability to recover capital over the long term is mandatory before proceeding with investment.

Potential Legal Risks in PPA Agreements

PPA agreements in Vietnam often carry potential risks such as delayed payments from EVN, changes in electricity pricing policy, or instability in the legal framework governing renewable energy types. Many projects, after becoming operational, have not signed official PPA agreements due to policy changes, which seriously affects financial feasibility.

Furthermore, dispute resolution arising from PPAs is currently handled mostly via domestic arbitration or courts, whereas many investors prefer the option of international adjudication. This raises significant requirements for investors in terms of evaluating legal risk and preparing protective measures from the outset.

Important Legal Considerations When Investing in Renewable Energy in Vietnam

Investing in the renewable energy sector holds great potential but also comes with considerable legal risks. To ensure smooth and effective project implementation, investors should pay special attention to legal factors at every stage — from survey, investment preparation to operation and project transfer.

1. Land law and Project Permit Legalities

One of the biggest hurdles foreign investors face when investing in renewable energy in Vietnam is land law. Because Vietnamese law does not allow foreigners to hold land use rights in their name, it is necessary to adopt legal arrangements such as capital contribution, joint ventures with domestic partners.

Moreover, to deploy a project, investors need to apply for all necessary permits: Investment Certificates, Investment Policy Approvals, Construction Permits, Environmental Registration, Grid Connection Approval, etc. Each permit requires different dossiers, and processing time can be long if there is no thorough preparation or understanding of procedure.

Permit applications must follow the project implementation schedule; otherwise, one easily ends up in a situation of “permit waiting for land” or “land waiting for permit,” affecting commercial operation date and the right to sign PPA with EVN.

2. Electricity Pricing Mechanisms, Tenders and Policy Changes

Vietnam’s renewable energy market once experienced a boom when the State applied favorable FIT mechanisms. However, from after 2020, this mechanism has gradually been replaced by competitive bidding, significantly changing the investment landscape.

Therefore, investors need to carefully study tendering procedures, conditions for participation, and continuously update guiding documents from the Ministry of Industry and Trade and EVN. Especially, flexible strategies are needed to cope with policy changes, such as reduction in electricity price, adjustment of PPA duration, or changes in technical criteria.

Simultaneously, some rooftop solar projects failing to meet technical standards are at risk of having their signed PPA reviewed, or not being paid as initially committed. This is an important warning for investors about the need to conduct comprehensive legal due diligence from the very beginning of the project.

To invest sustainably in renewable energy in Vietnam, investors need the companionship of a legal team specialized in investment, construction, bidding and contracts.

Are you planning to invest in renewable energy in Vietnam?
Let DEDICA accompany you in every legal step to ensure solid legality and long‑term investment efficiency.
Contact DEDICA Law Firm for in‑depth legal advice!
📞 Hotline: (+84) 39 969 0012 (Support via WhatsApp, WeChat and Zalo)
🏢 Head Office: 144 Võ Văn Tần Street, Xuân Hòa Ward, Ho Chi Minh City
🕒 Working hours: Monday – Friday (8:30 – 18:00)
Reach out now to receive initial free consultation from our professional legal team!