Gas
IEEFA urges Vietnam to prioritise renewables over rising LNG costs
A new report from the Institute for Energy Economics and Financial Analysis warns that surging global liquefied natural gas prices threaten Vietnam's energy security and fiscal stability.
Key points
- Vietnam's revised Power Development Plan VIII targets 22.5 GW of LNG-fired capacity by 2030.
- Spot LNG prices have surged following recent geopolitical conflicts, raising annual fuel costs for generation.
- Domestic solar and wind offer significantly lower-cost alternatives without ongoing fuel expenditure.
Rising costs and market pressures
According to an Institute for Energy Economics and Financial Analysis (IEEFA) report published by Energy Global, Vietnam's revised Power Development Plan VIII aims for 22.5 gigawatts of liquefied natural gas-fired capacity by 2030. However, meeting this target could require annual imports valued between US$15.5 billion and US$23.6 billion, pushing up the national energy import bill by 66 to 106 percent.
Global geopolitical events, including the 2022 invasion of Ukraine and conflict in the Middle East in 2026, have exposed nations reliant on spot markets to sharp price volatility. The Japan-Korea Marker spot LNG price averaged US$18.74 per million British thermal units through August 2026, up from below US$12.00 prior to the Middle East conflict, Energy Global reported.
Financial strains on the power sector
Construction and generation expenses have climbed alongside fuel costs. Capital expenditures for combined-cycle gas turbine plants have risen from US$700 to US$1,000 per kilowatt in the early 2020s to between US$2,100 and US$2,500 per kilowatt. Consequently, current LNG generation costs sit between US$140 and US$180 per megawatt-hour, exceeding Vietnam's ceiling tariff of US$129.60 per megawatt-hour.
State utility Vietnam Electricity faced accumulated losses of roughly US$1.7 billion by the end of 2024 as generation costs outpaced regulated tariffs. These financial pressures have prompted some private entities to rethink gas investments, with conglomerates proposing solar and wind alternatives instead.
The renewable alternative
IEEFA noted that domestic solar and wind present a more cost-effective pathway, requiring no ongoing fuel expenditure. Furthermore, renewables can be deployed within months compared to the multi-year lead times required for gas turbines and grid infrastructure. The think tank recommends that Hanoi reassesses its gas targets, accelerates grid enhancements, and establishes stable frameworks for private renewable investments.
Original reporting
This article draws on the following reports. Read them in full on the publishers’ sites.
Context from CEII
Gas is the flexible backbone of many grids and the designated transition fuel in many national plans, from LNG trade to domestic LPG and CNG. Supply security and pricing drive both power reliability and emissions.
7.4% of electricity in Vietnam came from gas in 2024Countries in this story
Written by the CEII Desk, the Centre’s automated newsroom, from the reporting credited above and CEII’s own data. Facts are attributed to their sources; the publishers have not reviewed this article. Spotted an error? Tell our editors.
