Solar Investment Project Legal Procedures in Vietnam

Faced with the increasing demand for clean energy, solar power is becoming an optimal solution to reduce pressure on the national power grid and protect the environment. As fossil fuel sources are gradually depleted and cause pollution, the transition to renewable energy, particularly solar power, is not only a trend but also an urgent necessity to ensure energy security and sustainable development. However, to implement a solar power project, investors must comply with strict legal and technical procedures, from site surveys, investment license applications, environmental impact assessments, to grid connection and commercial operation. In the article below, Viet An Law will provide detailed guidance on each step in the solar investment project legal procedures in Vietnam, helping investors understand the necessary procedures, optimize economic efficiency, and avoid legal risks.

Overview of solar investment projects

Definition of solar power

Solar power is a renewable energy source that converts solar radiation into electrical energy through photovoltaic panels. This technology is increasingly being applied extensively due to its significant exploitation potential, low operating costs, and lower environmental impact compared to fossil fuels.

Solar investment projects can be divided into two main categories:

• Rooftop solar power: Designed for households and enterprises on a small scale, utilizing rooftops for the installation of solar panels.
• Solar farm projects: Large-scale projects are typically invested in areas with extensive land coverage and high solar radiation.

Regardless of the type, investors must comply with the project development process by regulations issued by the Ministry of Industry and Trade, the Ministry of Finance, as well as local authorities.

Significance of solar investment projects

Solar investment projects not only bring benefits to investors but also play an important role in the economy and the environment. Below are some significant benefits of solar investment projects:

Contributing to environmental protection

• Solar power is a renewable energy source that does not emit CO₂ or environmental pollutants like coal or oil and gas power.
• Reduces dependence on fossil fuels, helping to protect natural resources and mitigate climate change.

Reducing pressure on the national power grid

• Vietnam is facing the risk of a power shortage due to increasing electricity consumption demand. Solar power helps supplement the electricity supply, especially during peak hours.
• Reduces dependence on hydroelectric and thermal power, helping the power system operate more stably.

Significant exploitation potential in Vietnam

• Vietnam has high solar radiation intensity, averaging 4-5 kWh/m²/day, creating favorable conditions for solar power development.
• Many areas have extensive land coverage, suitable for implementing large-scale solar power projects.

Economic efficiency and attractive profitability

• After initial investment, the operating and maintenance costs of solar power systems are low.
• The government’s solar power pricing policy helps investors achieve stable profits for many years.
• Enterprises using rooftop solar power can reduce electricity costs and increase competitiveness.

Job creation and technology development

• Investment in solar power creates employment opportunities in the fields of manufacturing, installation, and system operation.
• Promotes research and development of renewable energy technology in Vietnam.

Challenges when investing in solar projects

Alongside the benefits, investors must also face certain challenges when implementing solar investment projects:

• High initial investment costs: Although solar panel prices are continuously decreasing, initial investment costs remain a barrier for many enterprises and households.
• Power grid infrastructure not keeping pace: Some areas with high solar power potential have not yet upgraded their power grids to absorb electricity from new projects.
• Policies and legal procedures: The licensing process and grid connection procedures remain complex and time-consuming.
• Solar panel efficiency decreases over time: After 20-25 years, panel efficiency may decrease significantly, requiring system replacement or upgrades.

Solar investment project legal procedures in Vietnam

Solar investment project legal procedures in Vietnam require comprehensive legal compliance, including investment policy approval and environmental impact assessments, specifically:

Step 1: Site survey and solar radiation potential assessment

Before proceeding with investment procedures, the investor must conduct a project site survey to determine:

• Solar radiation intensity in the area (typically based on data from the energy institute or national solar radiation maps).
• Available land area for solar power system installation.
• Electrical connection infrastructure: Determining distance to transformer stations and transmission lines.
• Land legal status: Checking land use status to avoid planning conflicts.

Step 2: Preparation of investment policy approval application

The investor must prepare an investment policy proposal dossier to submit to the provincial people’s committee or the Ministry of Industry and Trade (for projects exceeding 50MW). The dossier includes:

• Written request for investment policy approval.
• Investment project feasibility study.
• Investor’s legal documentation.
• Connection plan with the national power system.

After obtaining policy approval, the investor may proceed to the next step.

Step 3: Preparation of environmental impact assessment (EIA) report

For solar power projects with a capacity of 1 MW or more, preparation of an EIA report is mandatory by the environmental protection law. The report content includes:

• Assessment of project impacts on the water, air, and soil environment.
• Environmental impact mitigation measures.
• Solutions for solar panel disposal after the end of service life.

This report must be approved by competent authorities before continuing project implementation.

Step 4: Construction permit application

Solar power projects exceeding 1 MW require construction permits issued by the Department of Construction or the Ministry of Construction (depending on scale). The permit application dossier includes:

• Technical design drawings of the facility.
• Land use right certificate.
• Approved EIA report.
• Fire prevention and firefighting appraisal.

Consulting services for solar power investment project legal procedures in Vietnam

Site survey and pre-feasibility report preparation consulting

Before investing in a solar power project, conducting surveys and preparing initial assessment reports is necessary to determine project feasibility. Consulting services in this phase include:

• Site survey: Assessing solar radiation intensity, topographical conditions, climate, and grid connection capability.
• Project potential analysis: Determining optimal capacity, required area, and electricity production forecasting.
• Technology selection consulting: Recommending suitable types of panels, inverters, and auxiliary equipment.
• Pre-feasibility report preparation: Assessing investment costs, capital recovery capability, and projected profits.

Legal and investment procedure consulting

Compliance with legal regulations is a crucial factor determining project legitimacy. Legal consulting services include:

• Assistance with investment policy approval applications from provincial people’s committees or the Ministry of Industry and Trade.
• Consulting on land use permits and land use purpose conversion if required.
• Preparation of environmental impact assessment (EIA) dossiers in accordance with the environmental protection law.
• Assistance with construction permit applications and related approvals.
• Consulting on power purchase agreements (PPA) with EVN and electricity distribution units.

Design and technical consulting

After completing legal procedures, the design and construction of solar investment projects must comply with technical standards to ensure efficiency and safety. Consulting services in this phase include:

• Solar power system design: Optimizing the layout of panels, inverters, monitoring systems, and connections.
• Technical standard assessment by regulations of the Ministry of Industry and Trade and the Vietnam Electricity Group (EVN).
• Preparation of design appraisal dossiers for construction permit applications.
• Consulting on the selection of reputable EPC contractors (Engineering, procurement, construction).

Grid connection and commercial operation consulting

For solar power systems to operate and sell electricity to the national grid, grid connection procedures and electricity operation licenses must be obtained. Consulting services include:

• Preparation of grid connection registration dossiers with grid management units.
• Testing and commissioning of solar power systems before grid integration.
• Assistance with power purchase agreement (PPA) execution.
• Consulting on system maintenance and servicing to maintain long-term operational efficiency.

Financial consulting and investment capital mobilization

One of the critical factors in implementing solar power projects is capital mobilization. Financial consulting services include:

• Detailed financial planning: Estimating investment costs, cash flow, profits, and payback period.
• Consulting on financial support policies from banks and renewable energy investment funds.
• Investment capital mobilization assistance, seeking domestic and international cooperation partners.
• Financial risk analysis and risk mitigation solution recommendations.

The above constitutes advice from Viet An Law regarding the investment project legal procedures in Vietnam. With our team of skilled, experienced attorneys working with dedication, Viet An Law commits to providing 24/7 support for all matters concerning investment project development procedures. Sincerely thanks!