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Robust growth in electricity demand is expected to be a key driver of comprehensive reform in Vietnam’s electricity sector and to spur a new investment cycle in generation capacity.
VNDirect Securities’ updated sector outlook says 2025 marks the start of a new investment cycle in renewable energy, with renewables investment expected to accelerate from 2026 onward. The firm also highlights substantial room for growth in electricity consumption, supported by Vietnam’s ongoing industrialization and modernization.
Electricity demand is further supported by strong foreign direct investment (FDI) inflows and domestic consumption trends. VNDirect notes that FDI disbursements in Vietnam posted a compound annual growth rate of more than 9% year-on-year in 2024-2025, despite global trade risks. FDI has been concentrated in high-tech manufacturing, electronics, and data centers—industries with high electricity consumption—making them a main driver of electricity demand growth.
On the domestic side, rapid urbanization, rising household incomes, and electrification trends in transportation and services are expected to push electricity demand higher.
With a target of two-digit GDP growth in 2026-2030, electricity consumption is expected to grow at a compound annual growth rate (CAGR) of 8-10% over the same period, assuming an average elasticity of about 1.0x. VNDirect says sustained strong demand growth will be a major driver for comprehensive reform of the electricity sector and for a new cycle of investment in power generation capacity.
VNDirect warns that Vietnam still faces the risk of local power shortages during peak hot seasons, particularly in El Niño-dominated years. The risk is heightened because more than half of the designed capacity is weather-dependent. The North is singled out, where the system relies heavily on hydropower amid rising demand and peak load.
The firm adds that local electricity shortages could weigh on Vietnam’s ability to attract FDI into high-tech industries and data centers, where reliable power supply is a top prerequisite for investors.
To mitigate shortage risks, Vietnam needs to invest more in reliable power sources such as gas-fired generation (including LNG) or increase the share of non-weather-dependent sources. The goal is to widen the gap between total system design capacity and potential peak demand.
VNDirect expects a modest near-term outlook for gas-fired generation because gas-fired plants are forecast to lag other sources next year due to high generation costs. The firm also notes that many BOT plants at Phu My no longer have long-term power purchase agreements.
The scale of the Nhon Trach and Ca Mau plants will depend heavily on the share of capacity allocated in the coming years.
Domestic gas-fired power prospects could improve from 2027, VNDirect says, as the Lô Bê 4–Ô Môn project is expected to receive its first gas and four plants at the Ô Môn power center come online during 2027-2030. Decree 100/2025/ND-CP requires gas-fired projects using domestic gas to operate and fully dispatch according to gas supply capacity, which VNDirect says should support stable operation and a high capacity factor for plants at the Ô Môn power center.
VNDirect also notes that reaching LNG power capacity targets by 2030 under Power Plan 8 will be challenging. However, it sees upside for LNG development, citing LNG/LNG as a baseload substitute for coal and its role in supporting renewables through flexibility and operational stability.
The firm believes leading project developers with execution experience, such as POW, could benefit from the LNG power investment trend in Vietnam.
On renewables, VNDirect says the legal framework has been relatively complete since the post-FIT era. It points to positive developments in 2025, including many renewable projects being bid and implemented, most of which are wind power. Projects are also trending larger in scale, with participants including well-capitalized or experienced players such as REE, TruongThanh Group (TTVN), and VinEnergo (Vingroup).
VNDirect reiterates that 2025 will mark the start of a new cycle of renewable energy investment, with renewables investment accelerating from 2026 onward.
In the stock market space, VNDirect favors companies with growth potential in capacity expansion aligned with the energy transition, as well as service firms that can benefit from the value chain of project investment in generation and grid.
For power generation project sponsors, VNDirect selects REE for the renewable energy investment story and POW for LNG-based electricity, described as a transitional form of energy moving toward green energy.
For the services sector, PC1—identified as the leading electrical infrastructure construction company in Vietnam—will benefit from demand for transmission lines. VNDirect also expects electrical consulting firms such as TV1 and TV2 to benefit from backlog arising from consulting and EPC contracts for power projects.
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