Pacific Money | Economy | Southeast Asia

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.

The Bac Lieu Offshore Wind Farm in Bac Lieu, southern Vietnam.

In Southeast Asia, Vietnam has been the undisputed leader when it comes to building renewable energy. In 2017, the government enacted a regulation that offered solar power developers a generous rate if they could build power plants that were operational by 2019. This was followed by a similar incentive for wind. The government did not place a cap on eligible capacity, so there was a huge influx of investment activity as developers and investors raced to get their projects built before the deadline.

As a result, electricity generated from renewables like solar and wind has soared. In 2018, solar and wind accounted for around .4 percent of all electricity produced in Vietnam. Following the 2019 deadline, solar and wind rose sharply as a share of generation. According to the latest annual report from state-owned electric utility EVN, solar and wind accounted for around 13 percent of electricity generated in 2024. Vietnam has outpaced pretty much all of its regional peers when it comes to the production of clean energy and done it in a very short period of time.

But this achievement came at a considerable cost, one that has been borne mainly by EVN. As investors rushed into the market, it created billions of dollars in new liabilities and operating costs because the utility was now obligated to buy electricity from these power plants at a fairly high rate. In a well-regulated energy market, a utility might be expected to raise prices on consumers in order to recover such increased costs.

But in Vietnam, as in many emerging markets, electricity prices paid by consumers are tightly controlled by the state. And with the onset of the COVID-19 pandemic in 2020, the government was extremely reluctant to pass any cost increases onto Vietnamese consumers. This placed intense financial strain on EVN, with the utility recording a $790 million loss in 2022 and a $1 billion loss in 2023 (calculated using consolidated financial statements at current exchange rates). With cash reserves dwindling and mounting payments to new renewable suppliers, the government finally passed a series of price hikes onto consumers.

By 2025, EVN found itself on much sounder financial footing. Thanks to the price increases revenue rose 11 percent from 2024 to 2025, and the utility posted a net profit of nearly $2 billion. Cash from operations is way up, and the financial peril has faded. But investment in new renewable projects has also slowed way down. EVN has been able to preserve its financial stability not only by increasing revenue, but also because new renewable projects have slowed. Last year, the utility even tried to back-track on some existing projects claiming there were questions about regulatory........

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