How Vietnam's Electricity Market Works — A Primer for Foreign Investors

Vietnam’s electricity sector has undergone a significant transformation over the past decade. The country is moving from a vertically integrated state monopoly toward a competitive electricity market — a shift that creates both opportunities and complexity for foreign investors.

The Market Structure

Vietnam’s electricity market development follows a roadmap approved by the government, progressing through three main phases:

Competitive Generation Market (CGM) — Multiple generators compete to sell power
Competitive Wholesale Market (VWEM) — Large buyers can purchase directly from generators
Competitive Retail Market — Full liberalization at the retail level

As of 2025, Vietnam is in Phase 2, operating the Vietnam Competitive Wholesale Electricity Market (VCGM).

Key Players

EVN (Vietnam Electricity) — State-owned utility, transmission and distribution
NSMO (National System & Market Operator) — Grid dispatch and market operations
ERAV (Electricity Regulatory Authority of Vietnam) — Regulator
Independent Power Producers (IPPs) — Private generators (solar, wind, gas)

The DPPA Framework

The Direct Power Purchase Agreement (DPPA) mechanism allows large commercial and industrial (C&I) consumers to purchase renewable energy directly from producers — bypassing the traditional utility procurement process.

Decree 57/2025/ND-CP, which came into effect in 2025, provides the regulatory framework for DPPA, opening significant opportunities for renewable energy developers and large power consumers.

What This Means for Foreign Investors

For foreign companies looking to enter Vietnam’s energy market, understanding these dynamics is critical:

Renewable energy developers can now access C&I buyers directly via DPPA
Large manufacturers with sustainability targets can lock in long-term renewable contracts
Energy service companies can build on DPPA infrastructure to offer value-added services

The market is still maturing, and navigating the regulatory landscape requires local expertise. If you’re exploring opportunities in Vietnam’s power sector, reach out for a consulting call.