Other BriefingsThe Future of Power in Vietnam: Strategy, Security, and Sustainability
Vietnam is embarking on one of Southeast Asia’s most ambitious energy transitions. With rapid industrial growth and rising electricity demand, the country has unveiled Power Development Plan VIII (PDP8)—a sweeping national energy strategy backed by US$136 billion in investment through 2030. This plan outlines how Vietnam intends to expand capacity, diversify energy sources, modernize infrastructure, and align its energy development with long-term climate and economic goals.
Mapping the current energy landscape
Vietnam’s power generation mix as of 2024 includes a diverse range of energy sources. Coal-fired power plants remain dominant, accounting for approximately 43 percent of total installed capacity. Hydropower is the next largest contributor, supported by large plants like Hoa Binh and Tri An.
The share of non-hydro renewables — including solar and wind — has risen to 21 percent, signaling momentum in the clean energy transition. Natural gas contributes a smaller but essential portion, with large-scale plants like LNG Quang Trach II under development.
Vietnam also imports electricity to bridge demand gaps. Total power generation—including imports — reached 308.73 billion kWh in 2024, underlining the scale of demand the grid must serve.
Key goals of PDP8
PDP8 targets a national installed power generation capacity of 183 GW to 236 GW by 2030, nearly tripling current levels. This expansion supports Vietnam’s projection that total electricity consumption will reach 560.4 to 624.6 billion kWh by the end of the decade.
The plan is aligned with a broader national objective: sustaining an average GDP growth rate of 10 percent per year from 2026 to 2030. Investment will be split between US$119.8 billion for generation and US$16.3 billion for transmission infrastructure.
PDP8 also places significant emphasis on energy security, emissions reduction, and regional integration, foundational to Vietnam’s transition to a modern, low-carbon energy economy.
Rising coal imports from Indonesia
Coal continues to fuel Vietnam’s baseload power needs, but the country’s growing reliance on imports raises concerns. In the first eleven months of 2024, Vietnam imported 24.5 million tons of coal from Indonesia, marking a 42 percent increase year-on-year. Indonesia remains Vietnam’s largest coal supplier, with its exports to Vietnam rising 24.9 percent in the first eight months of the year.
While coal remains part of the transition strategy, PDP8 aims to reduce this dependency by scaling domestic alternatives and introducing cleaner baseload options, including gas and nuclear.
Nuclear power re-enters the energy equation
Vietnam’s earlier nuclear ambitions were shelved in 2016, but PDP8 reintroduces nuclear energy as a strategic long-term option. While commercial development is not planned before 2035, the government is beginning preparatory work on policy, infrastructure, and international cooperation, especially with countries like Japan, South Korea, and Russia.
Nuclear power is envisioned as a clean, stable energy source that can meet base load demand while supporting emissions reduction targets. Its future role will depend on regulatory readiness and public-private partnerships.
Scaling up renewable energy
Vietnam is continuing its leadership in Southeast Asian renewables. Offshore wind is central to this strategy, with a short-term target of 6 GW by 2030 and a long-term vision exceeding 70 GW by 2050. Solar capacity is also being expanded with tighter grid coordination to avoid curtailment issues seen in recent years.
Hydropower remains a strong contributor, while biomass and waste-to-energy are being positioned to support rural and industrial zones.
PDP8 makes it clear: renewable energy will be a cornerstone of Vietnam’s power future, but grid compatibility and storage capacity must grow in tandem.
Strengthening the grid and reducing losses
Grid bottlenecks have delayed or limited renewable deployment in several regions. Vietnam’s transmission and distribution loss rate is approximately 6.5 percent, higher than many emerging economies.
PDP8 allocates substantial investment toward expanding and digitizing grid infrastructure. This includes smart grid technologies, energy storage systems, and better regional connectivity.
LNG as a bridge fuel
Liquefied Natural Gas (LNG) will serve as a transitional fuel in the years ahead. Projects such as Long An, Bac Lieu, and Quang Ninh are designed to replace aging coal plants while providing cleaner, flexible power.
Vietnam aims to install around 37 GW of LNG-based capacity by 2030. However, reliance on imported LNG brings exposure to global pricing volatility and infrastructure development risks. Still, LNG remains necessary in the interim as Vietnam transitions toward more sustainable energy sources.
Cross-border trade and regional integration
Vietnam is positioning itself as a regional energy hub through cross-border electricity trade. It has signed 18 Power Purchase Agreements (PPAs) to import power from 23 projects in Laos, spanning hydropower, wind, and coal-fired plants. The Ministry of Industry and Trade (MOIT) has formalized pricing structures under Decision No. 1007/QD-BCT, aiming to import up to 8,000 MW from Laos by 2030.
Exports are also a growing focus. PDP8 outlines plans to export 400 MW of electricity to Cambodia by 2030, with discussions underway to expand exports to Thailand, Singapore, and Malaysia. By 2035, Vietnam’s total export capacity could reach 5,000 to 10,000 MW.
Participation in the ASEAN Power Grid initiative enhances Vietnam’s ability to balance supply and demand across borders while strengthening its geopolitical energy role.
A shift away from coal and toward net zero
Vietnam’s net-zero commitment by 2050 is reflected in PDP8’s plan to cut coal’s share of generation to below 20 percent by 2030. No new conventional coal plants will be approved beyond those already under construction, and existing facilities will be gradually retired.
This transition is supported by the Just Energy Transition Partnership (JETP), through which Vietnam secured US$15.5 billion in blended climate finance from G7 nations and development partners. The initiative supports emissions reductions, labor reskilling, and equitable growth.
Investment outlook for foreign stakeholders
Vietnam’s energy transition offers diverse opportunities for foreign investors. Priority areas include:
- Offshore wind development and EPC contracts
- Battery storage and smart grid systems
- LNG terminals and gas-to-power integration
- Solar projects for industrial parks
- Clean-tech finance and carbon market participation
Vietnam is increasingly open to public-private partnerships (PPPs), and reforms in pricing schemes and permitting are improving investment conditions. That said, challenges remain in land acquisition, regulatory complexity, and market readiness — making local expertise essential for market entry.
Vietnam’s energy shift is underway
Vietnam is moving decisively to scale capacity, reduce emissions, and reshape its role in regional energy trade.
With strong political backing, deepening international partnerships, and clear investment signals, Vietnam is well on its way to becoming a regional energy leader. For investors and developers, the opportunities are significant, but the time to act is now.
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