When it comes to electricity in Vietnam, whether a company is using it or producing it, there are a lot of nuances that foreign investors should be aware of. This cheat sheet runs through a brief overview of how the industry and the market operate.

Vietnam’s electricity supply organisational structure

The Ministry of Industry and Transport is the government body in charge of managing Vietnam’s electricity market and supply. It does this through the wholly state-owned power company Electricity Vietnam commonly known as EVN. EVN generates some power, but also buys power from wholesalers, and sells electricity to consumers.

That said, the actual technical aspects of managing the supply, as in ensuring a stable supply and managing load shedding when necessary, are managed by the National Power System Dispatch Centre commonly known as the NPSDC. This used to be a part of EVN but was spun off into its own entity reporting directly to the Ministry of Industry and Trade in response to power outages last year in Vietnam–it’s not clear how this change will prevent future blackouts.

Power shortages in Vietnam

In 2023, power shortages were estimated to have cost Vietnam’s economy an estimated US$1.4 billion. This was attributed to water shortages for hydropower and a lack of a sufficient supply of coal, however, underinvestment in power infrastructure also played a role.

This is in large part because EVN was selling electricity at a loss and therefore didn’t have the money to invest. This was partly because of a jump in input prices but mostly because retail electricity prices, which are regulated by the government, were not increased in line with these increased costs.

Electricity pricing in Vietnam

Retail electricity prices in Vietnam are regulated and, though permitted, price rises are not all that common. This has led to EVN selling electricity below cost price. As of January, it was losing about VND 142.5 per kilowatt-hour sold.

Changes were made to pricing regulations in 2024 that allow for electricity prices to be reviewed quarterly (as opposed to annually as was the case in the past) and adjusted by up to 3 percent by EVN before approval is needed from the MoIT. This was detailed in Decision 5 issued back in March, 2024.

That said, Decision 24 issued in 2017, the precursor to Decision 5, already had provisions for the electricity price to be adjusted annually, however, between 2019 and November 2023 no adjustment was made. It’s not clear why and in this context, the frequency at which power prices are reviewed does not appear to be a problem so much as a lack of will to increase prices seems to be–there is currently no plan to address this.

For reference, the average electricity price for the world is 15 US cents per kilowatt-hour with electricity in Vietnam running at about 7.3 US cents per kilowatt-hour.

Electricity price brackets in Vietnam

In Vietnam, for power projects, the MoIT typically sets a maximum and minimum price within which EVN then negotiates with individual power producers. It’s not clear what the purpose of these price brackets is and announcing the maximum price EVN can pay in advance seems counterintuitive to the negotiation process. Regardless this is the process through which most power project prices are determined.

Retail electricity prices

Vietnam’s Ministry of Industry and Trade issued a decision in October 2024 implementing new retail electricity prices for various consumer groups and electricity retailers. The average retail price of electricity has been set at VND 2,103.1159 per kWh, about US$0.0836, excluding value-added tax (VAT). This price structure, detailed in an appendix to the decision, applies to both users and retailers and does not include VAT.

Updated electricity prices for business in Vietnam, October 2024

	Electricity price (VND/kWh)
Manufacturing	Standard	Off-peak	Peak
Voltage level from 110 kV and above	1.728	1.094	3.116
Voltage level from 22 kV to below 110 kV	1.749	1.136	3.242
Voltage level from 6 kV to below 22 kV	1.812	1.178	3.348
Voltage level below 6 kV	1.896	1.241	3.474
Businesses
Voltage level from 22 kV and above	2.755	1.535	4.795
Voltage level from 6 kV to below 22 kV	2.965	1.746	4.963
Voltage level below 6 kV	3.007	1.83	5.174
Wholesale electricity for industrial parks and industrial clusters
Wholesale electricity price at 110 kV busbar of 110 kV/35-22-10-6 kV transformer station
– Installed capacity of transformer stations greater than 100 MVA	1.664	1.066	3.05
– Installed capacity of transformer station from 50 MVA to 100 MVA	1.657	1.035	3.037
– Installed capacity of transformer stations under 50 MVA	1.649	1.03	3.018
Wholesale price of medium voltage side of 110/35-22-10-6 kV transformer station
– Voltage level from 22 kV to below 110 kV	1.717	1.115	3.181
– Voltage level from 6 kV to below 22 kV	1.779	1.155	3.284

Source: Decision 2699/QD-BCT

Vietnam’s Power Development Plan 8

The Power Development Plan 8, commonly referred to as the PDP8, was approved in May of 2023 and essentially outlines goals and plans for Vietnam’s electricity sector–it’s not clear how the figures outlined in this plan have been reached.

Electricity generation targets by source, per the PDP8

	By 2030		By 2050
Description	MW	%	MW	%
Onshore wind power	21,880	14.5	60,050 – 77,050	12.2 – 13.4
Offshore wind power	6,000	4	70,000 – 91,500	14.3 – 16
Solar power	12,836	8.5	168,594 – 189,294	33.0 – 34.4
Biomass	2,270	1.5	6,015	1.0 – 1.2
Hydropower	29,346	19.5	36,016	6.3 – 7.3
Stored power	2,700	1.8	30,650 – 45,550	6.2 – 7.9
Cogeneration	2,700	1.8	4,500	0.8 – 0.9
Coal	30,127	20	0	0
Converted coal*	0	0	25,632 – 32,432	4.5 – 6.6
Gas	37,630	25	14,930	2.6 – 3
Hydrogen	0	0	20,900 – 29,900	4.1 – 5.4
Imports	5,000	3.4	11,042	1.9 – 2.3
Flexible power sources	0	0	30,900 – 46,200	6.3 – 8.1
Totals	250,489	100	490,529 – 573,129	N/A

Power Development Plan 8 implementation plan

This basically lists all of the power projects that need to be built in order to satisfy the goals set in the PDP8. Note that there are no specific wind power projects listed and the goal of six megawatts by 2030 is unlikely to be reached. In fact, many of these projects have not yet been started and given there are only about five years within which to meet these goals, many of them are looking increasingly unlikely.

Box 1: Power policy, El Nino see hydropower production dip in 2024

In the first half of 2024, REE Corporation, a major hydropower producer in Vietnam recorded an 11.5 percent year-on-year fall in revenue. This decline was primarily attributed to a downturn in power production, which accounts for approximately 48.1 percent of the firm’s total revenue.

This is partly due to the El Niño phenomenon which has seen drought-conditions in parts of Vietnam, reducing water in hydropower catchments. Additionally, a government policy prioritizing coal-fired thermal power plants to conserve water during the dry season has limited hydropower’s participation in the electricity market.

Renewables in Vietnam

Vietnam has said it intends to be net zero by 2050. To do this it is looking at wind, solar, and hydro as well as hydrogen. Wind and solar saw a lot of growth over the last decade with policy allowing for considerably generous feed-in tariffs. These policies came to an end at the end of 2021.

Vietnam’s Just Energy Transition Partnership agreement

The JETP was signed by the G7 and a handful of other nations and Vietnam in December 2022. The agreement is for US$15.5 billion in funding for Vietnam’s green transition from both public and private partners. It has, however, run into challenges with a Politico article back in December basically saying that there was no buy-in for the current JETP roadmap on the Vietnam side from key stakeholders.

Solar power in Vietnam

Vietnam’s solar power industry has experienced rapid growth in recent years, driven by favourable government policies and increasing demand for renewable energy. With abundant solar potential due to its geographical location, the country has become a significant player in the Southeast Asian renewable energy market. The introduction of attractive feed-in tariffs in 2017 spurred a surge in solar installations, leading to a dramatic increase in capacity and investment. As a result, Vietnam now boasts one of the highest installed solar capacities in the region, contributing to its goal of transitioning to a more sustainable energy mix.

Rooftop Solar in Vietnam

In 2017, to encourage renewable energy, the government implemented a mechanism to buy excess rooftop solar power at a preferential feed-in tariff price of 9.35 cents per kilowatt hour. This policy led to a significant increase in investments in rooftop solar power systems.

This policy, however, ended in late 2020 due to concerns about uncontrolled growth of rooftop solar power sources. This rapid expansion caused challenges in managing the national power grid and since the beginning of 2021, the signing of rooftop solar power purchase and sale contracts has been halted.

That said, rooftop solar power is currently back in the spotlight with a push for new regulations. Of note, the Ministry had been pushing for no feed-in tariffs on rooftop solar. The government, however, rejected this proposal. The MoIT then suggested feed-in tariffs of about 2.6 cents per kilowatt-hour but limited to ten percent of the installation’s capacity. It has since been suggested by the Deputy Prime Minister that this should be lifted to 20 percent. As of July, 2024, it’s not clear what might happen next.

Wind power in Vietnam

Vietnam’s wind power industry has emerged as a key component of the country’s renewable energy strategy, driven by favourable natural conditions and government incentives. With over 3,000 kilometres of coastline and high wind speeds, Vietnam has significant potential for both onshore and offshore wind energy development. In recent years, the government has introduced policies such as attractive feed-in tariffs and streamlined licensing procedures to encourage investment in wind power projects. As a result, the industry has seen rapid growth, with several large-scale wind farms coming online and many more in the pipeline, positioning Vietnam as one of the leading wind power markets in Southeast Asia.

Offshore wind power in Vietnam

The Power Development Plan 8 approved last year, was embedded with a target of six gigawatts of offshore wind power by 2030. The implementation plan for the PDP8 released earlier this year, however, did not list a single offshore wind power project with Vietnam’s six gigawatt goal looking increasingly unattainable.

Key challenges facing the sector include a lack of a marine spatial plan and a dearth of essential legislation as well as a lack of a clear pricing framework.

Non-renewables in Vietnam

Although Vietnam has said it intends to be net zero by 2050, at present it is still heavily dependent on fossil fuels, particularly coal.

Coal power in Vietnam

Vietnam’s coal power industry remains a dominant source of energy, accounting for nearly half of the country’s electricity generation. The rapid economic growth and industrialisation over the past two decades have led to a significant increase in energy demand, making coal a reliable and affordable option to meet these needs.

The country has invested heavily in expanding its coal-fired power capacity, with numerous plants built in recent years and several more under construction. The reliance on coal is largely driven by its domestic availability and established infrastructure, making it a critical component of Vietnam’s energy security and economic development.

Gas power in Vietnam

Vietnam’s gas power industry is poised for significant growth as the country seeks to diversify its energy mix and reduce its reliance on coal. With increasing energy demand driven by rapid economic development and industrialisation, natural gas is seen as a cleaner and more flexible alternative to traditional fossil fuels.

Despite its potential, however, the gas power industry faces several challenges, including high costs and complex infrastructure requirements. The development of gas-fired power plants and LNG facilities involves significant capital investment and technological expertise. Additionally, regulatory uncertainties and delays in approving key projects have hindered the timely implementation of planned expansions. The lack of a clear pricing mechanism for gas and electricity tariffs can also complicate project financing and investment decisions.

Nuclear power in Vietnam

In 2006, the Government of Vietnam announced plans to have a nuclear power plant online by 2020. This was followed a few years later by official plans for nuclear power plants in southern Vietnam in Ninh Thuan and Khanh Hoa provinces. These were, however, shelved in 2016 in favour of gas and coal on the back of lower demand projections.

That said, the issue has come up again this year. A visit from President of Russia, Vladimir Putin, saw Vietnam’s former communist ally pledge its support developing a local nuclear industry. Vietnam, however, though suggesting it was open to considering the possibility of developing nuclear power, was fairly non-committal.

Policy outlook

Direct Purchase Power Agreements–DPPAs

Vietnam issued a decree on Direct Power Purchase Agreements on July 3, 2024, clearing the way for businesses to buy power directly from power generators. The decree was a long time coming and has been touted as a critical component to developing Vietnam’s electricity network.

Per the decree, high volume power users will negotiate directly with power generators on supply and price. They will then be able to transfer power either through private lines or through the public grid. On the latter, agreements will need to include a payment for using public infrastructure to the state power provider EVN.

At the time of writing this legislation was only days old and therefore there will still be some time until it is clear how the decree will function in practice.

Electricity pricing

The state power provider EVN has floated the idea of charging a subscription fee on top of metered electricity prices to cover the additional infrastructure costs for some customers–for example, a factory using huge amounts of power might require its own substation and high-voltage power lines, and the subscription fee would be used to cover these expenses.

What’s next?

The electricity market and the industry more broadly, in Vietnam are complex with many moving parts. Whereas this article covers the broad strokes, businesses looking to invest in Vietnam’s electricity sector, or start a business in Vietnam, should go much deeper.

Firms should also keep in mind that Vietnam’s economy is dynamic and prone to change quickly. In this respect, Vietnam’s electricity industry watchers can best make sure they are abreast of all of the latest developments by subscribing to the-shiv.

First published May 16, 2024. Last updated January 16, 2025.

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