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to harness this renewable energy potential to meet both domestic and international
demand. Vietnam’s proximity to major markets in the Asian region enhances its

opportunity to become a regional power center. However, the capital-intensive nature
of building the facilities in green ammonia projects requires local and international
investment due to modest resources in Vietnam’s public sector.
Vietnam's pursuit of renewable energy sources and net zero emissions hinges on
its ability to attract international funding. To do so, the country must tackle several
regulatory challenges, including unfavorable power purchase agreement (PPA) terms,
price uncertainties, intricate permitting processes, and delays in implementing direct
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PPAs between private entities .
Vietnam introduced competitive feed-in tariffs (FITs) for solar projects in 2017.
However, the standard PPA from Electricity of Vietnam (EVN) allocates excessive risk
to developers and lacks a purchase guarantee, diverging from global norms and
discouraging many international investors. Local firms have mitigated these risks
through political connections. Price uncertainty presents another challenge, as the 2017
FIT guaranteed prices for projects completed within specific timeframes. This resulted

in two flowing problems. First, there are frequent FIT adjustments with insufficient time
for developers to qualify. Second, extended periods are permitted but do not include the
official FIT from Vietnamese authorities. Given the rapid expansion of Vietnam's solar
market, it may be rational to periodically revise the FITs; however, the uncertainty
surrounding applicable FITs at project completion poses significant risks. International
investors also face difficulties navigating complex permitting procedures due to a lack
of local connections. Furthermore, there is slow implementation between private sellers

and buyers regarding PPAs. Despite the government’s clarification of rooftop solar
policy, granting firms investment projects in solar energy for cost reduction and
emission targets, this measure alone is insufficient for obtaining carbon emissions
reduction goals. Numerous firms seek to buy renewable power from external producers,
but progress in realizing the announcement of a pilot direct PPA plan in 2019 from the
Ministry of Industry and Trade remains slow.

Vietnam has introduced various policies to increase FDI flows in developing local
renewable power capacity. However, the need for substantial upfront capital has
emerged as a major obstacle to attracting FDI in this field. Research by Mahbub et al.
(2022) noted that FDI flows in renewable energy are mainly determined by access to
local funds and land availability. Renewable energy projects typically involve high
initial fixed costs for equipment purchase and installation, as well as expenses related to
capital, land, and labor. Given these significant financial commitments, foreign
investors generally aim to reach the break-even point quickly or reduce risks. Yet,

current incentive policies fail to adequately persuade investors. Regarding land access
criteria, regulations on foreign enterprise land ownership remain quite restrictive, with

33 IUCN (2022). Unlocking international finance for Vietnam’s renewable energy transition. International Union
for Conservation of Nature and Natural Resources.
https://www.iucn.org/news/viet-nam/202205/unlocking-international-finance-vietnams-renewable-energy-transition
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