Vietnam has a relatively mature infrastructure in power generation & distribution. Currently, more than 95% of rural households have access to electricity, and almost all xã (smallest administrative area) have access to the grid. The government has also launched the rural electrification program to boost the electricity access to 99.9% of population until 2030.

Electricity Price

The Vietnamese government tightly controls retail electricity prices, with rates set based on recommendations from the Ministry of Industry and Trade (MOIT) and approval by the Prime Minister. A unified tariff applies nationwide, which is relatively low compared to other regional countries. The system is designed so that higher charges for industrial, commercial, and foreign consumers cross-subsidize the rates for urban and rural residential users. To encourage private sector investment in independent power producer (IPP) projects, MOIT and Vietnam Electricity (EVN) are planning for gradual price increases and the phasing out of government controls and subsidies. Under current regulations, EVN is allowed to adjust energy prices every six months without government approval. Price adjustments of up to 10% are permitted if input costs (such as fuel prices, foreign exchange rates, generation mix, and market prices in the competitive power generation market) increase by 3%. For price increases beyond 10%, government approval is necessary. Presently, energy prices range from VND1,533 to VND2,580 (approximately USD 6.3 cents to USD 10.75 cents) per kWh, varying with consumption levels.

Power Generation Outlook

In terms of the outlook, Vietnam’s PDP8 requires an estimated US$135 billion to implement its energy transition and infrastructure goals. This investment will be directed towards diversifying and expanding the country’s energy mix, significantly reducing reliance on coal, and increasing the share of renewables (excluding hydropower) to about 30% of the energy mix by 2030, up from 5% in 2020. Additionally, the plan outlines a substantial increase in gas usage as a transition fuel, with its capacity expected to rise to 38GW by 2030, representing 25% of total installed capacity. The plan also targets installing at least 6GW of offshore wind capacity by 2030 and contemplates the future use of hydrogen and ammonia in energy production by 2050. The US$15.5 billion from the Just Energy Transition Partnership (JTEP) with G7 countries is part of the financing but represents only a modest portion of the total required funds, indicating a significant need for additional investment and financial mechanisms to meet these ambitious goals.

However, rapid increase in electricity consumption as well as the disruption in the environment as El niño affect the whether conditions have caused power shortage. Just last year, Vietnam’s rolling power cuts have hit industrial parks in the country’s northern provinces where top global manufacturers such as Foxconn and Samsung have factories.