Vietnam Power Sector Investment: Price Is the Bottleneck

IN JUNE 2023, THE NORTH FELL 4,350 MEGAWATTS SHORT AND FACTORIES WENT DARK. AN ECONOMY THAT WANTS TO RUN AT 10% CANNOT STAND ON A GRID THAT GASPS AT PEAK. THE BOTTLENECK ISN’T MEGAWATTS, IT’S PRICE.

Summer 2023: the lights went out in the north

In June 2023, industrial parks across northern Vietnam were rationed. This was no minor fault. According to the Ministry of Industry and Trade, on hot days the north ran short by about 4,350 MW: peak demand reached 23,500–24,000 MW against available capacity of just 17,500–17,900 MW. The main cause was hydropower running dry, reservoirs at dead-water level, generating only 23.7% of installed capacity. Foxconn had to cut load; production lines stopped.

That is the most vivid picture of a simple truth: double-digit growth needs electricity to grow faster than output. An economy that wants to run at 10% a year cannot operate on a grid that gasps at peak. Power is the physical condition beneath every growth number. And this is where the dream meets the ground.

The ambition is clear

Vietnam does not lack plans. The revised Power Development Plan VIII (Decision 768/QĐ-TTg of 15 April 2025) targets raising total generating capacity for domestic demand to 183,291–236,363 MW by 2030. Within that mix, renewables take 28–36%, coal is capped at 31,055 MW, and LNG at 22,524 MW. The chosen direction: less coal, more renewables and gas.

The target numbers look good. But a plan does not turn itself into a power plant. The question isn’t how many megawatts on paper; it’s whether the money flows in to build them. And that is the real bottleneck.

The bottleneck isn’t megawatts, it’s price

In 2023, Vietnam Electricity (EVN) lost VND 34,244.96 billion on its electricity business, about US$1.4 billion (Ministry of Industry and Trade cost inspection, published 10 October 2024). The reason sits in two figures: the average cost of supplying electricity was 2,088.90 dong per kWh, while the average retail price was just 1,953.57 dong. On every kWh it sells, EVN loses about 135 dong.

The retail price is set by the state, and held below cost. The chain of consequence is direct: the system’s single buyer of power loses money on every unit. A private investor looking at that asks one question: if I sell to a buyer that is losing money, on a long-term contract, what guarantees I get paid on time? That question, not a shortage of capital or technology, is what slows private money into power.

Nhơn Trạch 3 and 4: a lesson in contract structure

Vietnam’s first LNG-to-power project, PV Power’s Nhơn Trạch 3 and 4, at roughly US$1.4 billion, shows the cost of that bottleneck. It was stuck for years simply because it could not sign a power purchase agreement with EVN.

The core sticking point was the contracted-offtake level, Qc. Regulation allows Qc between 60% and 100%. PV Power asked for 80–90% over 15 years, because that was the condition for international banks to lend. EVN resisted, since a high offtake commitment means that when demand falls, EVN must still buy expensive power and absorb the loss. The two sides fought over exactly one number.

When the power purchase agreement was signed on 4 October 2024, everything opened up. The agreement, with its offtake commitment, was the precondition for the project to raise debt. And the money followed at once: facilities from Citi and ING, from SMBC, from Vietcombank. More telling still, this was the first power project in Vietnam to borrow foreign capital without a government guarantee. By the end of 2025 the two units were about 99% complete.

The lesson fits in one line: what unlocked the capital was not another land or tax incentive, but a contract structure solid enough for lenders to trust the cash flow. Solve that, and foreign money finds its way in, and it comes without asking the state to stand behind it.

Three signs the money is really coming

The megawatts in the plan are a target, not a result. What tells the truth is the money, and it leaves three traces.

First, how many private power projects sign a PPA with an offtake level high enough to finance. Each such contract is a real brick, quite unlike a groundbreaking ceremony.

Second, whether the retail electricity price moves gradually back towards cost. As long as EVN loses money on every kWh, private capital into generation stays pinned down.

Third, and this is the strongest signal, whether more projects borrow foreign capital without a government guarantee. When that repeats, it says the market trusts the structure, not just one exception.

Power is the first physical condition beneath the 10% target. But its door doesn’t open with megawatts. It opens with price, and with contracts.

The “Vietnam’s growth bet” series: Part 1 — The double-digit target · Part 2 — The grid · Part 3 — Capital · Part 4 — The HCMC supercity · Part 5 — The checklist.

Lotus Investment Group advises on cross-border M&A and FDI into Vietnam and Southeast Asia. If you are underwriting Vietnam exposure, get in touch.

Nguồn / Sources