Gas
Vietnam urged to back renewables over costly LNG imports
A new report argues that scaling up domestic solar and wind offers Vietnam a faster, cheaper path to energy security than liquefied natural gas.
Key points
- IEEFA reports that LNG-fired generation costs exceed Vietnam's ceiling tariff.
- Global spot market exposure leaves the country vulnerable to price fluctuations.
- Private investors are already shifting planned gas projects toward renewables.
What happened
A recent study published by the Institute for Energy Economics and Financial Analysis indicates that domestic wind and solar power could satisfy Vietnam's electricity demand more affordably than liquefied natural gas. According to the analysis, Vietnam's revised Power Development Plan VIII targets 22.5 gigawatts of gas capacity by the end of the decade. Fulfilling this target could raise annual import bills significantly.
Geopolitical events, including ongoing conflicts, have driven up spot market prices, leaving nations dependent on imports exposed to volatility. Research co-author Paige Nguyen noted in the report that the country can manage its power system exposure even if global disruptions remain outside its control.
Why it matters
Rising fuel costs, alongside higher construction expenses and equipment lead times, have altered the economics of gas-fired power. Spot prices for liquefied natural gas have risen markedly compared to previous years, increasing projected annual fuel costs for typical plants by roughly half.
Consequently, estimated generation costs for gas-fired facilities now surpass Vietnam's ceiling tariff, as well as the national average retail electricity price. State utility Vietnam Electricity previously accumulated substantial financial losses by the end of 2024 due to unrecovered fuel expenses. These market pressures have already prompted local conglomerates to reconsider proposed gas projects in favor of renewable portfolios.
What comes next
In contrast to gas infrastructure, which faces lengthy equipment lead times and construction delays stretching toward the 2030s, renewable projects can be deployed within months. Solar and wind installations also eliminate ongoing fuel expenditures, providing long-term cost predictability. Analysts emphasize that leveraging these domestic resources will be crucial for future investment decisions in the region.
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.
