Vietnam’s energy challenges: Towards a sustainable and diversified transition

Vietnam faces major energy challenges, with soaring demand and delays in key projects. The government plans to revive nuclear power and increase solar capacity to diversify its energy sources.

Share:

Vietnam is at an energy crossroads, facing increasing challenges in expanding its power generation capacity.
As the country strives to meet fast-growing energy demand, estimated at over 7% a year, it also faces obstacles in developing its traditional energy infrastructures, including coal, gas, wind and hydro.
Against this backdrop, the Vietnamese government is considering reviving the development of nuclear power and increasing solar capacity, solutions that could play a crucial role in the country’s energy transition.
The Ministry of Industry and Trade (MoIT) was recently tasked with reviewing the Electricity Development Plan (PDP VIII) for the period 2021-2030, with a vision to 2050.
This reassessment follows delays in the implementation of key projects, notably those related to liquefied natural gas (LNG) and offshore wind power.
The MoIT’s mission is to accelerate the legal framework required for these projects, in collaboration with other ministries and state-owned enterprises.

Challenges in energy development

Delays in energy projects could have repercussions on the electricity supply needed to support Vietnam’s economic growth.
The government has stressed that a 12% to 15% increase in electricity production is essential to support this growth.
In response, a working group has been set up to finalize a draft electricity law, which is expected to be submitted to the National Assembly for approval.
This bill will include regulations for the development of renewable energies, including new energy sources.
The MoIT has also been tasked with studying countries that have successfully developed nuclear power to improve baseload capacity and reduce emissions.
By 2016, Vietnam had abandoned an ambitious project to build nuclear power plants, due to competing energy prices, lower-than-expected electricity demand and high construction costs.
However, the need to diversify energy sources is prompting the country to reconsider this option.

Status of energy projects

Commercial electricity sales in Vietnam rose by 13.7% in the first seven months of 2024, exceeding expectations for annual growth of 9.1% for the period 2021-2025.
However, the development of power generation capacity from coal, gas, offshore wind and hydropower has fallen short of expectations.
PDP VIII limits coal-fired power generation capacity to 30.13 GW by 2030, while allowing the development of projects already under construction.
The MoIT noted that new coal projects are not viable due to local opposition and lack of financial support.
At the same time, the plan aims to increase hydropower capacity to 29.346 GW, but this involves risks associated with natural disasters and climate change.
Achieving the target of 21.880 GW of wind power by 2030 also looks difficult, with only 3.061 GW currently in operation.

Outlook for solar and nuclear energy

For LNG, Vietnam plans to develop 13 gas-fired power plants with a combined capacity of 22.4 GW by 2030, but none are currently operational.
The first gas power plant project, Nhon Trach 3, is due to start trials in October, followed by Nhon Trach 4.
However, the realization of other projects between now and 2030 seems compromised, raising concerns about the country’s energy security.
A short-term solution could be the expansion of solar power, which can be installed quickly.
However, PDP VIII does not make solar power a priority, with only 1.5 GW of new capacity planned by 2030.
The MoIT plans to further promote solar energy, which could play a key role in meeting the country’s growing energy needs.

Considerations on nuclear energy

The development of nuclear power is also seen as a viable option.
Currently, 32 countries use nuclear power, which accounted for 9.1% of global electricity production in 2023.
Although Vietnam has not included nuclear power in PDP VIII, it could consider small modular reactors (SMRs), including floating reactors, with a capacity of 300 MW each, which could be built in 24 to 36 months.
This approach could enable Vietnam to diversify its energy sources while meeting its growing needs.
MoIT is aware of the challenges associated with implementing these projects, but the need for an efficient and sustainable energy transition is more pressing than ever.
The decisions taken in the coming months will have a significant impact on the country’s energy future and its ability to sustain economic growth.

Nearly USD92bn will be invested by major American and international groups in new data centres and energy infrastructure, responding to the surge in electricity demand linked to the rise of artificial intelligence.
Nouakchott has endured lengthy power interruptions for several weeks, highlighting the financial and technical limits of the Mauritanian Electricity Company as Mauritania aims to widen access and green its mix by 2030.
Between 2015 and 2024, four multilateral climate funds committed nearly eight bn USD to clean energy, attracting private capital through concessional terms while Africa and Asia absorbed more than half of the volume.
The Global Energy Policies Hub shows that strategic reserves, gas obligations, cybersecurity and critical-mineral policies are expanding rapidly, lifting oil coverage to 98 % of world imports.
According to a report by Ember, the Chinese government’s appliance trade-in campaign could double residential air-conditioner efficiency gains in 2025 and trim up to USD943mn from household electricity spending this year.
Washington is examining sectoral taxes on polysilicon and drones, two supply chains dominated by China, after triggering Section 232 to measure industrial dependency risks.
The 2025-2034 development plan presented by Terna includes strengthening Sicily’s grid, new interconnections, and major projects to support the region’s growing renewable energy capacity.
Terna and NPC Ukrenergo have concluded a three-year partnership in Rome aimed at strengthening the integration of the Ukrainian grid into the pan-European system, with an in-depth exchange of technological and regulatory expertise.
GE Vernova has secured a major contract to modernise the Kühmoos substation in Germany, enhancing grid reliability and integration capacity for power flows between Germany, France and Switzerland.
The National Energy System Operator forecasts electricity demand to rise to 785 TWh by 2050, underlining the need to modernise grids and integrate more clean energy to support the UK’s energy transition.
Terna has signed a guarantee agreement with SACE and the European Investment Bank to finance the Adriatic Link project, totalling approximately €1bn ($1.08bn) and validated as a major transaction under Italian regulations.
India unveils a series of reforms on oil and gas contracts, introducing a fiscal stability clause to enhance the sector’s attractiveness for foreign companies and boost its growth ambitions in upstream energy.
The European Commission is launching a special fund of EUR2.3bn ($2.5bn) to boost Ukraine’s reconstruction and attract private capital to the energy and infrastructure sectors.
Asia dominated global new renewable energy capacity in 2024 with 71% of installations, while Africa recorded limited growth of only 7.2%, according to the latest annual report from IRENA.
US President Donald Trump's One Big Beautiful Bill Act dramatically changes energy investment rules, imposing restrictions on renewables while favouring hydrocarbons, according to a recent report by consultancy firm Wood Mackenzie.
On July 8, 2025, the Senate validated the Gremillet bill, aimed at structuring France's energy transition with clear objectives for nuclear power, renewable energies, and energy renovation.
Brazil, Mexico, Argentina, Colombia, Chile, and Peru significantly increase renewable electricity production, reaching nearly 70% of the regional electricity mix, according to a recent Wood Mackenzie study on Latin America's energy sector.
The Canadian government announces an investment of more than $40mn to fund 13 energy projects led by Indigenous communities across the country, aiming to improve energy efficiency and increase local renewable energy use.
The German Ministry of Economy plans to significantly expand aid aimed at reducing industrial electricity costs, increasing eligible companies from 350 to 2,200, at an estimated cost of €4bn ($4.7bn).
A major electricity blackout paralyzed large parts of the Czech Republic, interrupting transport and essential networks, raising immediate economic concerns, and highlighting the vulnerability of energy infrastructures to unforeseen technical incidents.