Nguyen Thi Nhung, Assoc. Prof. University of Economics Vietnam National University

As Vietnam accelerates its energy transition, securing capital for renewables has become imperative. While the country is recalibrating financial policies to engage investment, mobilising sufficient funding remains a formidable challenge.

Historically, banks have been the primary financiers of Vietnam’s energy sector, but renewable projects’ capital-intensive nature and long payback periods have strained credit availability. Regulatory constraints, including exposure limits under the Law on Credit Institutions, further restrict large-scale lending. Moreover, banks remain wary of market volatility and uncertainty, limiting appetites for renewable investments.

Amid these constraints, companies are diversifying their capital structures, turning to corporate bonds and equity financing. Vietnam’s corporate bond market has expanded significantly since 2018, with green bonds emerging as a promising tool. However, the absence of a clear regulatory framework continues to hinder their development, leaving investors navigating uncertainty.

Foreign investment remains an underutilised funding source. While major firms like Siemens Gamesa, Orsted, and JERA have injected capital into Vietnam’s renewables, foreign indirect investment lags due to the lack of sophisticated green financial instruments. Additionally, opaque electricity pricing and the absence of a clear framework for direct power purchase agreements deter institutional investors. A well-defined mechanism could unlock substantial international financing.

Public-private partnerships are often cited as a solution, yet policy inconsistencies such as the abrupt shift from feed-in tariffs to competitive bidding raise investor concerns. Without a stable regulatory environment and a clear risk-sharing framework, they will struggle to gain some traction.

Nguyen Tien Viet, Representative LSE Consulting

The energy transition is a complex issue requiring multi-stakeholder collaboration, interdisciplinary integration, and a broad perspective. There is no single core sector that can independently address all the challenges. It is not merely a legal issue but also involves economic and infrastructure-related aspects.

For instance, renewable energy development requires a much broader approach. Experts highlight that energy efficiency itself is a form of renewable energy, contributing to both conservation and sustainability.

Renewable energy is not just about wind and solar power; it also involves energy storage and the expansion of infrastructure to optimise the use of these resources while addressing technical challenges and mitigating potential risks. The question is whether renewable energy can be considered truly viable without factoring in investment in storage solutions, grid infrastructure, and the overall support system.

These are highly technical and critical aspects requiring input from experts across various fields. Furthermore, government involvement remains crucial in fostering partnerships and addressing Vietnam’s energy transition challenges.

However, the government’s role should extend beyond regulatory oversight. It should also be a driving force in setting clear objectives to guide private capital investment. The private sector is highly dynamic and prioritises short-term economic benefits, whereas the government must take a long-term strategic role in managing risks and addressing overarching societal issues. Energy policy involves challenges that require both feasibility studies and sound decision-making frameworks.

The development of sustainable and affordable energy sources is a delicate balance of three key factors: cost-effectiveness, supply stability, and environmental sustainability. These factors often conflict with one another, necessitating strategic policy direction aligned with Vietnam’s economic and social landscape. This requires leveraging international funding and advanced technology.