Vietnam solar boom strains grid and tests project finance

<p>Rising curtailment pressure in central Vietnam, a long-running tariff dispute affecting 173 renewable energy projects, and a transmission investment gap that must grow fivefold to meet government targets are testing developer and lender confidence in one of Southeast Asia&#8217;s fastest-growing solar markets.</p>

<p>Vietnam&#8217;s solar sector has expanded rapidly under the revised Power Development Plan VIII, adopted in April 2025, which set a solar capacity target of 46 GW to 73 GW by 2030, up from an earlier government target of 12,836 MW. BloombergNEF forecasts the country reaching 39 GW to 43 GW of cumulative solar capacity by 2030, close to the government&#8217;s base-case target but well short of the high case.</p>

<p><strong>Grid constraints</strong></p>

<p>Grid infrastructure has not kept pace with generation. Capacity factors for solar in central Vietnam – the region where generation has most severely outrun evacuation capacity – deteriorated between the first quarters of 2025 and 2026, consistent with curtailment or grid constraint pressures. </p>

<p>&#8220;From Ember&#8217;s report on Vietnam, we calculated the project return to be 6.1% IRR for solar utility and 7.3% for solar with battery,&#8221; said Dinita Setyawati, senior energy analyst for Asia at Ember. &#8220;We are not sure (what) the reduced rate is going to be, but ultimately, the revenue expected from solar and wind project could be around 10% to 12% for projects considered bankable.&#8221; </p>

<p>Curtailment risk in Vietnam carries no explicit compensation mechanism in standard power purchase agreements (PPAs), leaving developers and lenders fully exposed to grid constraint losses.</p>

<p>National Power Transmission Corp. spent an average of $700 million annually on transmission over the past five years. The revised PDP VIII targets $3.6 billion annually between 2026 and 2030. </p>

<p>&#8220;Besides grid expansion, battery energy storage systems represent another easy solution to mitigate curtailment and ensure grid stability,&#8221; Hanh Phan, lead analyst for Vietnam and the Philippines at BloombergNEF, told <strong>pv magazine</strong>. </p>

<p>The revised Power Development Plan VIII includes a policy requirement in planning guidance that new utility-scale solar projects incorporate storage capacity equivalent to at least <a href="https://www.pv-magazine.com/2025/04/15/vietnam-publishes-feed-in-tariffs-for-large-scale-solar-plus-storage/" id="https://www.pv-magazine.com/2025/04/15/vietnam-publishes-feed-in-tariffs-for-large-scale-solar-plus-storage/">10% of installed capacity with two-hour discharge duration</a>, though implementation varies by province and tender design. It sets a target of 10 GW to 16.3 GW of battery energy storage by 2030. </p>

<p>&#8220;While local governments have begun tendering new utility-scale solar projects, not all tenders explicitly require battery pairing which could risk increasing curtailment for developers and affect grid stability in the longer term,&#8221; said Phan.</p>

<p>Financing conditions have been further complicated by a dispute over retroactive tariff revisions affecting 173 solar and wind projects with a combined capacity of approximately 12 GW. </p>

<p>&#8220;The entire incident began with a 2023 investigation into feed-in tariff projects, which found that many projects were ineligible for the FiT rate because they lacked Construction Completion Acceptance certificate prior to their commissioning,&#8221; Phan said. </p>

<p>EVN proposed in April to apply reduced tariffs only to the specific commissioning period during which certificates were absent, rather than across the full contract term. </p>

<p>&#8220;While this resolution was pending, power producers like Super Energy Corp. experienced a portion of their outstanding receivables reaching more than 12 months past due date,&#8221; Phan said. EVN has since begun making payments on the affected projects.</p>

<p><strong>Market outlook</strong></p>

<p>BNEF does not expect the disputes to derail the broader buildout. </p>

<p>&#8220;While project developers will undoubtedly factor these regulatory risks into future plans, we expect Vietnam&#8217;s renewables buildout to maintain its long-term momentum,&#8221; Phan said. &#8220;This resilience is driven by the government&#8217;s commitment to decarbonization targets, new tender mechanisms, and strong corporate demand from a large manufacturing base in the country. For example, provincial governments in Vietnam have already tendered over 400MW of new utility-scale solar projects in the first five months this year.&#8221;</p>

<p>The <a href="https://www.pv-magazine.com/2024/07/05/vietnam-opens-energy-market-to-bilateral-ppas/" id="https://www.pv-magazine.com/2024/07/05/vietnam-opens-energy-market-to-bilateral-ppas/">direct power purchase agreement framework</a> (DPPA), launched under Decree 57/2025 in March 2025, is emerging as a key driver of new project activity. </p>

<p>&#8220;The DPPA came into effect last year and has gained strong interest from investors with on-going projects already under construction,&#8221; Setyawati said. &#8220;It is because the latest policy allows: electricity prices under private-line DPPA can be negotiated between buyers and sellers and doesn&#8217;t have to be under the ceiling price so I would suspect in the coming years, this would be the main drivers for Vietnam&#8217;s solar.&#8221;</p>

<p>Vietnam&#8217;s installed PV base stood at more than <a href="https://www.pv-magazine.com/2026/04/16/vietnams-solar-capacity-surpasses-19-gw/" id="https://www.pv-magazine.com/2026/04/16/vietnams-solar-capacity-surpasses-19-gw/">19 GW of solar</a> at the end of 2025, according to government data, with capacity additions accelerating sharply into 2026. The country&#8217;s storage pipeline is also expanding: Fluence opened a <a href="https://www.pv-magazine.com/2025/08/22/fluence-launches-35-gwh-battery-factory-in-vietnam/" id="https://www.pv-magazine.com/2025/08/22/fluence-launches-35-gwh-battery-factory-in-vietnam/">35 GWh battery manufacturing facility in Vietnam</a> in August 2025, reflecting the scale of storage demand implied by the revised PDP VIII targets.</p>
<p>The post <a href="https://www.pv-magazine.com/2026/05/29/vietnam-solar-boom-strains-grid-and-tests-project-finance/">Vietnam solar boom strains grid and tests project finance</a> appeared first on <a href="https://www.pv-magazine.com">pv magazine Global</a>.</p>