VIETNAM Trends and Developments Contributed by: Adam Moncrieff and Thuy Huynh, Orrick
energy projects remains an unresolved issue. Planned tendering for the large-scale Ca Na and Nghi Son LNG-to-power projects essentially foundered for a number of reasons including some mentioned above. Notwithstanding the new rules, uncertainty persists regarding compulsory tendering for large-scale energy projects in Vietnam. Electricity import and export Cross-border electricity trade is becoming a more important feature of Vietnam’s energy strategy. The Revised PDP8 and Resolution No 70 recognise the role of electricity imports, particularly from Laos and China, in supplementing domestic generation and improving energy security. Vietnam currently imports electricity from China through existing interconnec- tions, and from several hydropower and renewable energy sources in Laos, with further import capac- ity planned. The legal framework for electricity import and export was strengthened by the Law on Electricity 2024, which provides a clearer basis for cross-border electricity transactions, including provisions on licens- ing, grid connection, pricing, and the respective roles of EVN and other market participants. Cross-border electricity selling projects by their nature are more challenging, as they often involve two or more utilities and sets of regulatory requirements, as well as land allocation and other issues, including cross-border transmission. However, PPAs agreed by EVN for cross-border importation of electricity, at least from Laos hydro and wind power projects, have been considered as considerably more bankable compared with Vietnam’s template renewables and local IPP PPAs. More spe- cifically: • Cross-border PPAs have allowed for payment of tariffs in USD to offshore accounts. • Tariff components have been USD-referenced. • Although not as comprehensive as the previ- ous build–operate–transfer (BOT) power project schemes, the cross-border PPAs have featured risk allocations considered to be more bankable and more akin to international standards than Vietnam’s domestic prescribed-form PPAs.
• The PPAs can be governed by foreign law and have offshore dispute resolution in neutral regional forums. The relative success of cross-border projects selling electricity to EVN, particularly the recent Monsoon Wind Power Project, has spurred developer interest in new opportunities. The relatively bankable nature of PPAs used and the willingness of EVN to agree to key developer protections (particularly around foreign cur- rency denomination) should also make it less difficult (in theory) for EVN and the Government of Vietnam to agree to these features in other large-scale domestic power projects considered to be of national signifi- cance. The grid itself could be a real constraint Grid availability is one of the most important practi- cal constraints in Vietnam’s power sector. The earlier renewables energy boom showed what can happen when generation is built faster than transmission capacity. Curtailment, regional imbalance and delayed connection can turn a good resource into a weak pro- ject. The location of Vietnam’s renewable resources is not evenly matched with demand centres. High solar and wind potential is often located in provinces where local load is limited or transmission capacity is con- strained. North–south transmission has also been a concern, particularly when demand growth, hydrology and thermal delays place pressure on system opera- tions. The Revised PDP8 recognises the need for 220 kV and 500 kV transmission expansion, while the separa- tion of NSMO from EVN may improve transparency in dispatch, settlement and market operation over time. Time will tell, but grid capacity always needs to be carefully assessed. A word on bankability of power projects in Vietnam Vietnam’s regulatory framework is moving in the right direction, but projects may succeed only if bankability is addressed early. This applies across technologies. International investment in large-scale power gen- eration projects had historically centred on thermal power under Vietnam’s BOT power programme, a
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