The National Assembly of Vietnam has enacted a new Electricity Law, for modernizing the energy sectors of the country and establishing a detailed framework for renewable energy sources. The new law addresses various challenges related to production costs and regulatory frameworks in the energy market. 

The new Electricity Law of Vietnam has the potential to create new opportunities for private market firms and asset managers and impact investors by attracting increased investment in renewable energy projects and clean technologies. 

Let’s discuss the new Electricity law in detail. 

About the new Vietnam Electricity Law

The Electricity Law of Vietnam is a set of rules or a regulation that applies to all individuals and entities, including power producers, distributors, and consumers. The new law is set to take effect on February 1, 2025, by replacing the outdated legislation that had been in place for more than two decades. The law was updated four times after its inception in 2012, 2018, 2022, and 2023, and despite the changes, it wasn’t up to date with new requirements. That’s why the new law introduces significant changes to modernize the law according to current market conditions and increase market competitiveness in the energy sector. 

Key aspects of the new Vietnam Electricity Law

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  The amended law addresses six main issues: Power planning and development; renewable and new energy sources; conditions for electricity operations, including licensing and revocation; electricity trading activities; system management and operation; and Safety standards for electricity use and hydropower dams.

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  The law implements a multi-component retail power pricing structure with the goal of eliminating cross-subsidies that have resulted in unfair pricing for various consumer groups. This change is expected to provide price flexibility and match tariffs to the changing electrical infrastructure and market conditions.

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  The law establishes procedures to support the development of emerging technologies like green hydrogen and green ammonia, as well as renewable energy sources like nuclear, wind, and solar. The aim is by 2050, more than 60% of installed capacity will originate from renewable sources.

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  Projects and contracts approved before February 1, 2025, will continue under previous regulations but with some adjustments. One is those approved under the 2004 Electricity Law will follow transitional bidding rules and electricity purchase and the other is sale contracts signed before the effective date must adhere to competitive market provisions.

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  The new law also highlights:
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    Private investment in energy storage systems.
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    Improvement of the framework for nuclear energy by updating the 2008 Nuclear Power Law.
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    Development of mechanisms to promote liquefied natural gas (LNG) development, to attract more investment. 

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