Draft revision of the Vietnam Electricity Law mentions the development of offshore wind and nuclear energy.(Photo: iStock)
The Ministry of Industry and Trade (MoIT) of Vietnam recently proposed a draft revision of the Electricity Law, which is expected to attract investments ranging from $70 to $80 billion USD.
The revision aims to address the shortcomings of the current law and includes development frameworks for emerging sectors such as offshore wind power and nuclear energy. The draft has been submitted to the National Assembly for review and is expected to be passed this legislative session.
Vietnamese government accelerates energy transition
The Ministry of Industry and Trade argues that with a significant increase in national electricity generation capacity, and considering that the development and construction of power plants typically takes 3 to 5 years, it is necessary to quickly enact new laws to promote policies and organizational development. These laws will serve as a foundation for planning and integrating new energy sources into the national grid.
According to Vietnam's National Power Development Plan 8 (PDP8), the country’s peak electricity capacity is expected to grow significantly to 90,000 MW by 2030, up by 40,000 MW from 2024. The northern region will see an increase of 20,000 MW, the southern region 18,000 MW, and the central region 2,000 MW.
While the Ministry emphasizes that the legal changes related to renewable energy and new energy have been tested over several years and thoroughly assessed, the National Assembly’s Committee on Natural Resources, Science, and Environment still has concerns about certain aspects. It is possible that the law will require two legislative sessions for resolution.
The committee has raised concerns about the draft's stipulation of a minimum purchase commitment for buyers, arguing that this does not align with the principles of a competitive market. Generally, power plants can prioritize more efficient energy sources, such as hydropower, to maximize output. However, if long-term purchase agreements are mandated, buyers like the state-owned Electricity Vietnam (EVN) could face significant financial burdens.
However, the Ministry of Industry and Trade has clarified that the purchase commitment refers to a financial obligation rather than the actual purchase of electricity. The aim is to ensure sufficient funding for the energy transition, particularly as Vietnam prepares to shift from coal-fired power generation to natural gas, which has lower carbon emissions but higher operational costs.
Vietnam's National Assembly’s Committee has raised concerns over parts of the new Electricity Law, fearing it may increase EVN's financial burden. (Photo: EVN)
Draft includes nuclear, simplifies emergency project approvals
The draft also proposes the inclusion of nuclear energy, particularly small modular reactors (SMRs), as a large-scale, reliable low-carbon energy source that should be incorporated into the revised Electricity Law. SMRs, which can be constructed in 2 to 2.5 years, could help accelerate the achievement of sustainability goals.
In addition, the draft simplifies the approval process for urgent energy projects. For example, the Prime Minister would have the authority to decide on emergency energy plans and designate state-owned enterprises as investors, without the need for National Assembly approval or additional reviews for investment principles and land changes. This change is intended to reduce the time needed for businesses to invest and build projects.
Thai Doan Hoang Cau, Chief Consultant at Australian energy advisory firm Oakley Greenwood, which has long followed Vietnam’s electricity development, expressed support for the draft. He highlighted that the most significant improvement compared to the previous Electricity Law is the decentralization of decision-making powers, allowing relevant departments to issue decisions, procedures, and regulations related to electricity.
Additionally, he noted that the absence of specific targets for offshore wind power, nuclear energy, and electricity trading in the draft reflects the need for further research in these emerging sectors.
