LNG: a pivotal force in Vietnam’s energy transition

Despite its strategic importance, LNG’s integration into Vietnam’s energy framework faces economic and regulatory challenges. The government’s recent decision to impose a price cap on LNG-fuelled electricity has created uncertainty for investors, with concerns that the cap may not reflect the volatility of global LNG markets. Additionally, Vietnam must navigate the complexities of developing an extensive LNG import infrastructure, including storage and regasification facilities, to ensure a reliable and cost-effective supply.

While LNG plays a crucial transitional role, PDP-8 also places significant emphasis on renewable energy, aligning with Vietnam’s long-term decarbonisation goals. The plan targets a renewable energy share of up to 39.2% by 2030, with an ambition to increase this to over 70% by 2050. Wind power, particularly offshore wind, is expected to see a substantial expansion, with offshore wind capacity projected to reach 6 GW by 2030 and potentially scale up to 91.5 GW by mid-century. Similarly, solar power is set to grow significantly, with a focus on self-consumption and distributed generation.

Vietnam’s hydropower sector remains a key pillar of its energy mix, contributing nearly 30 GW of installed capacity. PDP-8 aims to maximise existing hydropower resources while integrating pumped storage facilities to support grid flexibility. Meanwhile, coal-fired power, which currently dominates Vietnam’s energy supply, is set for a phased reduction. No new coal plants will be built after 2030.

PDP-8 includes provisions for battery energy storage systems and pumped storage hydroelectricity, with an initial target of 300 MW of battery storage by 2030. This capacity is expected to expand to between 30 GW and 45 GW by 2050, ensuring a stable supply of renewable energy.