Is Vietnam’s Energy Transition Entering a New Phase?
The country has so far outpaced most of its regional peers when it comes to the production of renewable energy.
Vietnam has been a global leader in renewable energy development, rapidly expanding its solar and wind power capacity in recent years. The government's incentive programs for these clean energy sources led to a surge in investment, with renewables accounting for over 13% of Vietnam's electricity generation by 2024. However, this rapid expansion came at a cost, with the state-owned electric utility EVN facing significant financial strain due to high purchase obligations for renewable energy.
Despite passing on cost increases to consumers, EVN still struggled with losses in 2022 and 2023. By 2025, the utility had improved its financial situation through price hikes, posting a nearly $2 billion profit. While investment in new renewable projects has slowed, the government has introduced reforms like Direct Power Purchase Agreements to encourage greater flexibility in energy production and consumption.
These changes could lead to a more decentralized energy system, moving away from the traditional centralized model under EVN. The government also plans to launch a retail electricity market, further diversifying the energy sector. The success of these reforms remains to be seen, but they indicate a shift towards a more flexible and efficient energy system in Vietnam.
Written by urgent.news from The Diplomat's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
