Coal-fired power still accounts for around half of Vietnam’s electricity generation, while the country’s current power development plan envisages ending the use of coal for power generation by 2050. Bridging the gap between these two milestones requires a strategy to replace coal’s various functions in the power system, with alternatives in place before coal-fired plants are shut down.
According to state utility Vietnam Electricity (EVN), the country’s total electricity generation and imports reached approximately 322.81 billion kWh in 2025. Coal-fired power plants generated 144.78 billion kWh, accounting for 44.85% of the total, followed by hydropower at 33.25%, renewables at around 12.5%, gas-fired power and electricity imports.
In the first eight months of 2026, coal-fired power generation reached 119.24 billion kWh, representing 50.6% of total electricity generation and imports, up 1.3 percentage points from the same period in 2025.
These figures highlight Vietnam’s current dependence on coal, as electricity demand continues to rise and progress on projects using other energy sources remains slow. This raises a key question: is it time for Vietnam to consider a new baseload power strategy that can replace coal’s role while maintaining its net-zero commitment?
Power planning cannot simply be a matter of adding up capacity
The revised Power Development Plan VIII, approved under the prime minister’s Decision No. 768/QD-TTg in April 2025, envisages around 31,055 MW of coal-fired power capacity by 2030, accounting for 13.1-16.9% of the capacity required to meet domestic electricity demand, depending on the scenario. The plan allows only coal projects already included in the previous plan and under construction to proceed.
The long-term direction is to end the use of coal for power generation by 2050. Plants may be considered for conversion to biomass or ammonia when technology and cost conditions permit. Plants more than 40 years old will cease operations if they cannot switch fuels.
Son La hydropower plant in Son La province, northern Vietnam. Photo courtesy of Nang luong Vietnam (Vietnam Energy) magazine.
According to EVN, Vietnam had around 28,100 MW of operational coal-fired power capacity at the end of 2025, equivalent to 32.1% of total installed power capacity. Compared with coal’s share of total electricity generation, at 45-50%, this shows that coal remains important not only for the volume of electricity it produces but also as a stable and reliable source that can help balance the system.
Assoc. Prof. Dang Tran Tho, director of the Institute of Energy Technology at Hanoi University of Science and Technology, stressed the need for power investment to stay ahead of economic growth and for planners to distinguish between installed capacity and actual electricity generation.
He also noted that synchronous generators at thermal and hydropower plants provide mechanical inertia, helping the power system respond to frequency fluctuations. This is one technical reason to exercise caution when rapidly reducing conventional generation capacity.
Even the target of 31,055 MW of coal-fired capacity needs to be viewed in the context of changing policy. At a meeting on July 7, 2026, the Ministry of Industry and Trade proposed a further revision of Power Development Plan VIII to include viable baseload power sources and consider maintaining coal-fired generation at an appropriate scale, alongside a roadmap for emissions recovery and treatment.
The proposal came as the ministry warned that liquefied natural gas (LNG)-fired power would account for a significant share of the generation mix, while conflict in the Middle East was increasing risks to LNG supplies.
LNG prices are highly volatile amid geopolitical risks, making the fuel vulnerable to external shocks. Market movements following the launch of U.S. and Israeli military strikes against Iran on February 28, 2026, illustrated the differing levels of risk associated with two imported fuels.
A comparison of price movements shows that spot LNG prices in Northeast Asia rose from around $10 per million British thermal units (MMBtu) before the conflict to $25.3/MMBtu at the end of March and approximately $26-30/MMBtu in September.
Mong Duong 1 Thermal Power Plant in Quang Ninh province, northern Vietnam. Photo courtesy of Nang luong Vietnam (Vietnam Energy) magazine.
Meanwhile, Newcastle thermal coal prices climbed from $115.96 per ton to a peak of $150.25 in mid-June, standing at $146.25 per ton on September 30. LNG prices therefore rose by around 150-190% at certain points, compared with an increase of approximately 26-30% for coal, indicating a substantially larger price shock for LNG.
After the Middle East conflict disrupted supply chains and sent LNG prices sharply higher, a major company proposed that the government consider replacing an LNG-fired power plant project in northern Vietnam with a renewable energy complex combined with battery energy storage systems (BESS).
Five pillars of next-generation baseload power
In a power system with a high share of wind and solar generation, running a plant continuously throughout the day is no longer the only way to meet minimum electricity demand. The system must have enough energy over the course of a year, sufficient capacity when wind or sunlight is scarce or demand peaks, the ability to ramp generation up and down, and the means to maintain stable frequency and voltage.
For specialized loads such as data centers, power supply reliability and quality may need to approach near-absolute levels. The key point is that no single generation technology can meet all these requirements on its own.
In the short term, hydropower and the existing fleet of thermal power plants remain sources that can be dispatched when needed. But hydropower depends on seasonal water availability, while gas supplies, particularly LNG, are exposed to imported fuel price and supply risks.
Although gas-fired plants can technically ramp output up and down quickly, they may not necessarily be dispatched flexibly if gas supply and power purchase agreements create incentives for plants to maintain high output over extended periods.
Developing gas-fired power therefore involves more than building plants. It also requires appropriate fuel supply and power purchase agreements, LNG port and storage infrastructure, and mechanisms that recognize the value of available capacity alongside actual electricity generation.
Over the longer term, nuclear power could become an important baseload source because it can provide stable, large-scale generation with low carbon emissions during operation. However, it cannot be deployed rapidly in the short term. The revised Power Development Plan VIII targets the commissioning of the Ninh Thuan 1 and Ninh Thuan 2 nuclear power plants between 2030 and 2035, with combined capacity of 4,000-6,400 MW.
According to the International Atomic Energy Agency (IAEA), a large-scale nuclear power project typically takes around 10-15 years from program preparation to the commissioning of its first reactor. Construction alone can take several years, with timelines heavily dependent on management capacity, licensing, supply chains and the availability of skilled workers.
Nuclear power is therefore an important part of the long-term solution, but it cannot be regarded as firm capacity ready to be deployed before 2030. During the transition, Vietnam will still need to develop dispatchable generation, power grids, energy storage and demand-side management measures in parallel to maintain system reliability.
Wind and solar power will play an increasingly important role in Vietnam’s clean electricity mix. But replacing part of coal-fired generation while maintaining system reliability will require coordinated investment in transmission networks and flexible generation sources.
The revised Power Development Plan VIII targets 10,000-16,300 MW of battery storage capacity and 2,400-6,000 MW of pumped-storage hydropower by 2030. However, the installed capacity of storage systems does not directly indicate how much electricity they can supply.
For example, a battery system with a capacity of 1,000 MW and a two-hour discharge duration can deliver only 2,000 MWh of electricity. This is substantially different from a generation source capable of supplying power continuously for many hours or days.
The power grid also determines whether electricity can be delivered from areas with strong wind and solar potential to demand centers when the system needs it. Expanding renewable energy must therefore go hand in hand with transmission investment, storage deployment and flexible dispatchable generation.
Some of the new capacity that needs to be built could be avoided by shifting when electricity is consumed. Industrial facilities can reschedule certain production processes, batteries at consumer sites can help meet peak demand, and self-consumed rooftop solar can reduce demand for grid electricity during the day. EVN has urged major customers to prepare load-shifting plans to cope with periods of tight peak capacity.
Electricity imports and regional grid interconnections could provide additional room to balance supply and demand. However, they must be assessed alongside transmission constraints, the reliability of supplies from partner countries and the risks of external dependence.
Options for Vietnam
In an interview with The Investor, Lauri Myllyvirta, co-founder and chief analyst at the Centre for Research on Energy and Clean Air (CREA), noted that electricity security has two dimensions: ensuring sufficient capacity during peak demand and limiting dependence on imported fossil fuels. He said coal-fired units under construction or undergoing refurbishment should be capable of operating more flexibly.
The CREA expert argued that building additional thermal power plants could be economically justified only when capacity at a specific location has particularly high value for the system, such as where the grid is congested or backup capacity is needed. In such cases, planners would have to accept that the plants might operate for relatively few hours and have shorter operating lifetimes.
Energy expert Lam Pham of Ember proposed a clearer boundary: Vietnam could retain some existing coal-fired capacity in the short term to ensure reliability, but coal-fired generation should gradually decline, with a specific retirement schedule for each plant.
Coal should be dispatched when the system genuinely needs its capacity rather than automatically used as baseload generation. Investment in power grids, energy storage, demand response and flexible generation must be planned and implemented before the corresponding coal-fired plants are shut down.
The 500kV transmission line section between Nam Dinh 1 Thermal Power Plant and Thanh Hoa province, central Vietnam. Photo courtesy of Vietnam News Agency.
From an industry perspective, Olivier Marquette, president of AES Vietnam, said coal-fired power would continue to contribute to system reliability during the transition and support the integration of additional renewable energy because it can provide dispatchable generation when needed. However, he viewed coal as part of a broader mix that includes gas-fired power, renewables, storage and other flexible sources, rather than as the sole solution.
According to the AES executive, no single technology can meet every energy need. The optimal generation mix depends on each country’s circumstances and will evolve as technology advances, infrastructure expands and low-carbon solutions become more economically viable.
The three perspectives point to a practical requirement: decisions on whether to retain, refurbish or retire individual coal-fired plants must be based on operational data and the specific conditions of each grid area. Assessments should cover plant availability, efficiency, operating hours, fuel costs, emissions of particulate matter, sulphur dioxide (SO₂), nitrogen oxides (NOₓ) and carbon dioxide (CO₂), ramping capability, and the expected commissioning dates of replacement sources.
On that basis, plants still needed for system reliability could continue operating for a defined period. Refurbishment projects or lifetime extensions would need to demonstrate economic viability and additional value to the power system as a whole. Older, less efficient units, by contrast, should have clear retirement schedules, accompanied by plans for asset management and worker support.
Financial mechanisms must also reflect the changing role of these plants. Vietnam already has a market capacity price and payment mechanisms for certain ancillary services, but these may not fully capture the value of units that must remain available despite being dispatched for only a limited number of hours. If additional payments for available capacity are introduced, the underlying need, grid location, technical standards and duration of the mechanism must be clearly defined.
Planning and system operators should therefore identify areas where firm capacity is lacking, procure reserve capacity, frequency regulation and voltage support services against verifiable technical standards, and compare total system costs across options. These could include refurbishing existing plants, investing in transmission networks and storage, building new generation capacity or implementing measures to reduce peak demand.
In a report on Vietnam published in November 2024, the International Energy Agency (IEA) said unabated coal-fired power generation would peak in the mid-2020s and then gradually decline as renewable energy and flexible generation sources expand.
To assess whether supply could remain secure as coal is phased down, the IEA modelled hourly electricity supply and demand throughout 2050 and tested the system under different weather conditions in a scenario in which the power sector achieves net-zero emissions.
The results indicated that a system with a very high share of wind and solar power could still maintain adequate supply and flexibility, provided Vietnam expands and modernizes its grid, develops storage and demand response, and manages hydropower appropriately to balance seasonal needs. However, these findings are based on a model that assumes replacement generation sources and infrastructure are fully deployed at the required scale.
The international lessons and technological limitations of coal-fired power examined in this series point to one key requirement: Vietnam must prepare sufficient replacement generation, infrastructure and operational capabilities before reducing coal’s role under a clear, measurable and adjustable phase-out roadmap.
Shutting plants before replacement sources are ready could increase the risk of power shortages. Conversely, extending the life of coal-fired plants or investing in additional capacity without accounting for future operating hours could increase emissions, transition costs and the risk of stranded assets.
During the transition, coal-fired plants that remain necessary for system reliability could continue operating for a defined period, subject to requirements on efficiency, emissions control, ramping capability and a clear timetable for retirement or conversion.
Any investment in refurbishment or lifetime extensions should be assessed according to its value to the power system as a whole, including grid location, availability, the ability to supply capacity when needed and the expected commissioning dates of replacement sources.
As renewable energy accounts for an increasing share of the power mix, baseload power should be assessed in terms of the entire system’s ability to ensure reliable supply, rather than being defined solely by a type of plant that operates continuously.
This capability depends on the coordinated contribution of hydropower, gas-fired power and other flexible generation sources, nuclear power over the longer term, renewables, storage, electricity imports, demand response and transmission networks. A new baseload power strategy will be viable only if it simultaneously ensures reliability, economic efficiency and emissions reduction.
Within this framework, coal-fired power could retain a transitional role for a defined period, linked to the pace at which replacement resources become available, while keeping Vietnam on track to achieve its net-zero target by 2050.