Vietnam to accelerate LNG power plant development with new rule changes

Vietnam plans to adjust its rules on the government's guaranteed purchase of power from LNG-fired plants, as it seeks to attract interest from developers.

The country’s Ministry of Industry and Trade has announced that it is drafting a new decree which would raise the guaranteed offtake volume from LNG power plants to at least 75% from 65%, while extending the guaranteed period to fifteen years from ten. The Ministry elaborated that this would establish a legal framework that promotes investment, construction and commissioning of plants using imported LNG.

A guaranteed purchase of power is a long-term agreement in which a buyer commits to purchasing power from a producer at a fixed price, for an agreed duration. This provides the generator with reliable revenue and minimises price shocks for the buyer, both of which are essential for securing financing for new energy projects - while reducing market uncertainty and helping scale development.

The vision for Vietnam’s PDP-8

The amended policies favouring LNG development flow from the country’s Power Development Plan VIII (PDP-8), which was approved in May 2023. While the strategy envisions a fleet of LNG-fired power plants with a combined capacity of 22.5 GW by 2030, Vietnam currently only has two operational LNG-fired power plants with a combined capacity of 1.62 GW. 

As such, the government plans to increase momentum on development over the next five years, prioritising an overall transformation of the country’s energy landscape.

Impediments to progress

However, the move to an LNG-heavy future in Vietnam hasn’t come without its share of challenges. Concerns such as risk-sharing, currency issues, offtake agreements and regulatory delays have largely signalled the need for policy changes to attract investment, as the economy grows rapidly and power demand surges.

Across the region

In the broader Asian market, several countries are planning substantial expansions in LNG infrastructure but are facing market and policy risks. The Southeast Asian region is wholly aiming to increase its import capacity to potentially 111 MTPA, with a required investment of $11.8 billion.

While Vietnam’s progress in planned LNG development needs acceleration, the country still leads the ASEAN region alongside the Philippines, which is planning to double its LNG import capabilities (planned capacity of 30.2 MTPA) and Thailand (19.2 MTPA of operational capacity).