Vietnam’s updated Electricity Law, effective February 1, 2025, aims to revolutionize its energy sector by prioritizing renewable energy development and fostering a competitive market. The law is a pivotal step toward addressing longstanding challenges in energy production costs, regulatory frameworks, and market efficiency while aligning with the National Electricity Development Plan (PDP8).

Enhancing Market Competitiveness

The law incorporates multi-component pricing systems to gradually eliminate cross-subsidies, introduces advanced trading mechanisms such as term contracts and futures, and strengthens investor bidding processes.

The Ministry of Industry and Trade (MOIT) emphasized, “The law establishes a competitive electricity market, allowing stronger trading activities and transparent operations.”

Renewable Energy at the Forefront

Key provisions include incentives for small hydropower and offshore wind projects, simplified approvals for critical energy developments, and Direct Power Purchase Agreements (DPPAs) enabling renewable energy projects to bypass conventional bidding.

According to MOIT, “This framework ensures renewable energy growth while maintaining system safety and stable electricity prices.”

Transitional and Sectoral Enhancements

The law accommodates transitional provisions for projects approved under earlier regulations, requiring adjustments to align with competitive market provisions. Additional priorities include energy storage system investments, amending the 2008 Nuclear Power Law, and advancing liquefied natural gas (LNG) mechanisms to attract private investment.

National Sustainability Goals

Aligned with PDP8, the law targets over 60% renewable energy capacity by 2050, up from the current 30%, positioning Vietnam as a regional leader in sustainable energy.

“The new Electricity Law represents a milestone in addressing Vietnam’s energy challenges and lays the foundation for a sustainable energy mix,” MOIT stated.

The new law is set to transform Vietnam’s energy landscape, bolster financial sustainability, and drive environmental progress.