The ministry approved a generation price range of VND0-3,410.64 per kWh, excluding value-added tax (VAT), to serve as the basis for power purchase agreement (PPA) negotiations between state utility Vietnam Electricity (EVN) and gas-fired power developers.

The price cap is significantly higher than tariffs for renewable energy projects. For example, onshore and offshore wind farms that began commercial operations before November 1, 2021 receive feed-in tariffs of 8.5-9.8 cents per kWh, while transitional wind projects are subject to a pricing framework of 6.42-7.34 cents per kWh.

The cap also stands roughly 55% above Vietnam’s current average retail electricity tariff of VND2,204.06 per kWh.

The ministry calculated the ceiling based on a reference gas-fired power plant with installed capacity of about 1,008 MW, assuming a natural gas price of $11.98 per million BTU, gas transportation costs of $1.87 per million BTU, and an exchange rate of VND26,378/USD.

The price framework does not represent a fixed selling price for all projects but provides the upper limit for commercial negotiations between EVN and investors.

Under Vietnam’s adjusted eighth power development plan (PDP VIII), the country plans to add nearly 37,500 MW of new gas-fired power capacity, including plants fueled by domestic natural gas and imported liquefied natural gas (LNG). By 2030, installed capacity using domestic natural gas is expected to reach 10,861-14,930 MW.

Vietnam’s energy strategy prioritizes maximizing the use of domestic gas resources for power generation before increasing LNG imports as domestic supply declines. Over the longer term, gas-fired power plants are expected to gradually transition to hydrogen as technology matures and costs become commercially viable.

By 2050, around 7,030 MW of gas-fired generation capacity is expected to operate entirely on hydrogen, while another 7,900 MW will continue using domestic natural gas or LNG.