Vietnam’s Solar Feed-in Tariffs in 2025: Incentivizing Energy Storage

On April 10, 2025, the Ministry of Industry and Trade (MOIT) issued Decision 988/QD-BCT (“Decision”), updating Vietnam’s feed-in tariff (FiT) rates for solar power projects. These tariffs, effective under the framework of Circular 09/2025/TT-BCT issued on February 1, 2025 (“Circular”), will apply throughout 2025. While FiTs have been part of Vietnam’s renewable energy policy toolkit for several years, the latest update introduces some notable changes to how tariffs are structured and calculated.

Most significantly, the Decision introduces separate tariffs for solar power projects that incorporate battery energy storage systems (BESS). This development reflects a growing policy emphasis on grid flexibility and energy reliability. The tariff rates also vary depending on the geographic location—North, Central, and South Vietnam—to reflect the differing solar radiation levels. Power purchase agreements (PPAs) under the new FiTs will be signed between project developers and the state utility, Vietnam Electricity Group (EVN), as per existing regulatory procedures.

Background

Vietnam’s FiT program has evolved significantly over the past decade. The country first introduced feed-in tariffs to stimulate investment in solar and wind energy, offering stable, long-term returns for private investors. As of December 2023, the introduction of Decree No. 19/2023/TT-BCT revised this mechanism, laying the foundation for the current approach.

Under this decree, FiTs now cover a wide array of renewable projects, including ground-mounted and floating solar, as well as onshore and offshore wind. The decree exempts legacy projects that began commercial operations before January 1, 2021 (for solar) and November 1, 2021 (for wind), from the new pricing framework.

FiTs are now calculated within a pricing corridor ranging from VND 0/kWh to a government-determined maximum, updated annually. EVN, in coordination with the Electricity Regulatory Authority of Vietnam (ERAV), is tasked with determining the yearly rates based on updated technical, economic, and participation data from developers.

The updated FiT system is a key legislative pillar for prospective investors, shaping the economics of solar and wind project development in Vietnam for years to come.

Vietnam’s solar feed-in tariff rates in 2025

The newly released FiT rates for 2025 distinguish between ground-mounted versus floating solar projects and whether or not they include battery energy storage. The inclusion of BESS in the tariff framework is a new development for this year and reflects a policy shift toward encouraging storage integration to support grid stability.

The maximum FiTs for different types of power plants in different regions are as follows:

To qualify for the BESS-specific rates, the storage system must meet certain technical requirements:

• A minimum capacity of 10 percent of the power plant’s capacity.
• A storage/discharge time of two hours.
• A charging power output ratio of 5 percent of the power plant’s output.

The price frame for each solar plant type is calculated based on solar radiation intensity for each region, and in the absence of an approved project, feasibility studies and expert consultations are used to estimate pricing inputs. For renewable energy power plants that integrate an energy storage system, if the storage system charges exclusively from the plant’s own electricity output, the total investment cost used to calculate the electricity generation price framework will include the associated investment costs of the storage system. 

Preferential policies for renewable energy development

Vietnam is actively encouraging the development of new energy power projects through a set of preferential policies designed to incentivize investment in cutting-edge clean energy technologies. These policies are detailed in Article 6 of Decree 58/2025/ND-CP, which outlines the conditions that projects must meet in order to benefit, as well as the specific incentives offered.

To be eligible for these incentives, a project must satisfy all of the following criteria:

• The power must be generated from either:
  • 100 percent green hydrogen;
  • 100 percent green ammonia; or
  • A 100 percent mixture of green hydrogen and green ammonia.
• The project must be connected to and supply electricity to the national grid.
• It must be the first of its kind for its respective category of new energy electricity.

Once qualified, projects are entitled to several forms of support aimed at reducing upfront costs and improving revenue predictability:

• Sea area usage fee exemption during the basic construction period, for up to three years from the commencement of construction. Following this, a 50 percent fee reduction applies for the next nine years.
• Land use and land rent exemption during the construction phase, also for up to three years. After this period, any continued exemption or reduction will follow the prevailing laws on investment and land.
• Guaranteed minimum contracted output of 70 percent over the loan principal repayment period (not exceeding 12 years), unless an alternative agreement is made with the electricity purchaser. This guarantee will not apply if:
  • The project fails to meet the committed output due to internal issues; or
  • Grid limitations or demand shortfalls prevent full absorption of the output.
• Once the above timelines expire, any further application of preferential policies will be governed by the legal framework in force at that time.

Impact and outlook for Vietnam’s solar energy sector

The introduction of differentiated FiTs for solar projects with battery storage marks a targeted policy move that acknowledges the importance of grid stability and peak load management. By incorporating battery storage into the tariff structure and providing higher maximums for facilities with BESS, the government is attempting to address the technical limitations that have accompanied Vietnam’s rapid solar expansion in recent years. It also reflects an awareness that future energy systems will require more flexibility, in addition to generation.

However, despite these adjustments, concerns remain within the industry about the overall sufficiency of the new tariffs. Given rising construction and financing costs, the 2025 rates, especially in the South, where solar potential is high but tariffs are lowest, may not provide enough financial margin to justify new investments. Projects that include battery storage, which require significant capital expenditure and involve more complex engineering, are especially sensitive to tariff ceilings that may not adequately reflect their full cost structures.

On the other hand, the higher rates in the North, where solar radiation is weaker, could incentivize more development in this region, thus better balancing the industry’s development across the country.

The government’s continued reliance on maximum pricing, rather than a more dynamic or auction-based system, may also limit its ability to fully align investor incentives with policy goals. While the regional differentiation of tariffs continues to reflect geographical realities, and the addition of BESS-specific rates is a positive step in theory, the practical impact on investment decisions will depend heavily on how these tariffs compare with project-level economics.

Vietnam still holds considerable potential for solar development, particularly given its favorable climate and growing electricity demand. Unlocking that potential will require not just regulatory clarity, but also pricing levels that reflect the full cost and value of renewable electricity.