Vietnam's new electricity pricing reform: What Peak-hour tariffs and Two-part pricing mean for investors

Vietnam's electricity sector is entering a new phase of market reform. Within just a few months, regulators have introduced a revised time-of-use tariff schedule while simultaneously piloting a two-part electricity tariff that separates capacity charges from energy consumption. Although these initiatives may appear to be independent regulatory adjustments, together they represent a much broader shift in Vietnam's electricity pricing philosophy, from charging primarily for electricity consumed to charging according to both when electricity is used and how much capacity consumers require from the grid.

For manufacturers, commercial consumers, renewable energy developers and foreign investors evaluating Vietnam, these reforms extend well beyond electricity bills. They provide an early indication of how Vietnam intends to modernize its power market, improve system efficiency, and create stronger economic signals for investment in flexible energy technologies.

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The new time-of-use (TOU) tariff is already in force. Under Decision No. 963/QD-BCT, issued by the Ministry of Industry and Trade (MOIT) on April 22, 2026, the national grid operator redrew the boundaries of peak, off-peak and normal hours, compressing the peak-pricing window into a single evening block running from 5:30PM to 10:30PM.

For now, the rule applies to production and business customers, the segment that has long been billed under TOU rates. But the MOIT is weighing whether to extend a version of the same peak-hour logic to residential customers [1], a much larger and more politically sensitive group that has so far been billed only on tiered, volume-based rates regardless of when power is consumed.

Image source: evening_tao via Magnific

Why the clock moved up

The reason behind the National Power System and Market Operator's (NSMO) proposal to introduce the new peak-hour pricing schedule before the next regular adjustment of Vietnam's average retail electricity tariff becomes clear when looking at the data. According to official nationwide electricity demand data published by NSMO, the country's load profile has changed fundamentally over the past decade. The daily demand peak no longer occurs at midday but has shifted to the late afternoon and evening, typically between 3:00PM and 10:00PM [2].

That shift is structural, not seasonal. Solar generation, which once helped flatten the midday load, contributes almost nothing after sunset. Wind output is weather-dependent, and small hydropower plants produce less during the dry season. As a result, the grid leans increasingly on dispatchable but expensive sources, coal, gas turbines, imported LNG and, in the tightest hours, oil-fired units, to cover a demand spike concentrated in a handful of evening hours. Air-conditioning use during heatwaves, concentrated in the 7PM to 11PM window, has become one of the single largest drivers of that spike.

Seen this way, the new peak-hour window is less a technical tweak than a price signal aimed squarely at that evening surge, an attempt to make the cost of electricity reflect the cost of keeping expensive backup capacity ready for a few hours a day, rather than spreading that cost evenly across every kilowatt-hour sold.

A second reform, moving more slowly

Running alongside the peak-hour change, and on a considerably longer timeline, is Vietnam's shift toward a two-part electricity tariff, one that separates the bill into a capacity charge, tied to a customer's registered maximum load, and an energy charge, tied to actual consumption.

State utility Vietnam Electricity (EVN) began piloting the model in October 2025 for production customers averaging more than 200,000 kWh a month, initially only simulating the new charges on invoices without collecting payment under the new formula [3]. The rollout is deliberately gradual. A parallel-invoicing phase from January to June 2026 lets customers see both billing methods side by side without any change in what they actually pay. An official trial is set to run from July 2026 through July 2027, during which regulators plan to track how demand patterns, customer behavior and EVN's revenue respond before deciding how far to expand the mechanism, a process the MOIT has said will extend to broader customer groups from August 2027, once smart-meter coverage and data infrastructure are further along.

Two clocks, one direction

Individually, each reform addresses a different weakness in the old system. The peak-hour adjustment targets the timing of demand; the two-part tariff targets the sizing of it, by charging separately for the capacity a customer reserves rather than folding that cost into a flat per-kWh rate. Together, they push the market toward the same underlying principle: a customer who draws a stable, predictable amount of power at times that suit the grid should pay less than one who draws sharply and unpredictably at the moment the system is most stretched.

The combined effect is already visible in how different segments experience the market. Factories running steady, round-the-clock operations are positioned to benefit from both reforms at once, a high, consistent load factor works in their favor whether the bill is split by capacity and energy or shaped by a peak-hour clock. Restaurants, hotels and other evening-dependent businesses face the opposite squeeze, caught by a peak window that lines up precisely with their busiest hours and unable, by the nature of their business, to shift that demand elsewhere. Where households will land depends heavily on whether, and how, the ministry ultimately extends time-of-use logic to residential bills.

Policy implications: More than a tariff reform

Beyond their immediate impact on electricity bills, the two reforms collectively signal a broader policy direction for Vietnam's power sector.

First, regulators are gradually moving toward cost-reflective electricity pricing, allowing prices to better reflect the actual cost of supplying electricity at different times and under different operating conditions. This represents an important step away from traditional averaged tariffs toward a more market-oriented pricing mechanism.

Second, the reforms recognize demand flexibility as a valuable system resource. Rather than relying solely on new power generation to meet rising evening demand, policymakers are increasingly encouraging consumers to modify when and how they use electricity through stronger price signals.

Third, the reforms lay important groundwork for future electricity market development. Time-sensitive pricing and capacity-based charging are widely regarded as prerequisites for more advanced mechanisms such as demand response, ancillary service markets, battery energy storage participation and, ultimately, a more competitive electricity market.

Business implications across different sectors

Manufacturers

Manufacturers operating continuous production lines or maintaining stable electricity demand profiles are likely to benefit from both reforms. Higher load factors improve the economics under two-part tariffs, while production schedules that avoid evening peak hours can reduce TOU charges.

Commercial Buildings, Hotels and Retail

Businesses with demand concentrated during evening operating hours may experience higher electricity costs. Since their peak business hours often coincide with system peak demand, opportunities to shift consumption are relatively limited. Energy efficiency upgrades and battery storage may therefore become increasingly attractive.

Industrial Parks

Industrial park developers may begin incorporating centralized battery storage, demand management systems and energy monitoring platforms into infrastructure planning as electricity pricing becomes increasingly dynamic.

Data Centers

Vietnam's rapidly growing data center sector should pay particular attention to the evolution of capacity-based charging. Operators with high peak demand but relatively low load factors could face significantly different cost structures under future tariff designs.

Opportunities for foreign investors

The reforms also create new opportunities across Vietnam's energy value chain.

Companies providing battery energy storage systems (BESS), energy management software, industrial automation, smart metering, demand response solutions and energy-as-a-service models are likely to find a more favourable commercial environment as electricity pricing becomes increasingly differentiated.

Likewise, foreign manufacturers planning greenfield investments in Vietnam should begin incorporating electricity load profiles into site selection and facility design. Optimizing production schedules, integrating rooftop solar with battery storage, and deploying digital energy management systems could become increasingly important sources of operational competitiveness rather than merely sustainability initiatives.

Challenges and remaining uncertainties

Despite the clear direction of reform, several uncertainties remain.

The methodology for calculating future capacity charges has yet to be finalized. The pace of smart meter deployment will influence how quickly residential customers can participate in TOU pricing. Businesses must also prepare for potential adjustments to tariff structures as regulators evaluate pilot results over the coming years.

Consequently, investors should regard current reforms as the beginning of a transition rather than the final market design.

Conclusion

Vietnam's latest electricity pricing reforms should not be viewed simply as revisions to tariff schedules. Instead, they represent early building blocks of a more flexible, market-oriented electricity system in which the timing, predictability and intensity of electricity consumption increasingly determine economic value.

For foreign investors, particularly those in manufacturing, renewable energy, energy storage and industrial infrastructure, understanding these pricing reforms is becoming an important component of investment planning. Businesses that begin analysing load profiles, improving operational flexibility and integrating digital energy management technologies today are likely to be better positioned as Vietnam's electricity market continues its gradual transition toward cost-reflective pricing.

While implementation details will continue to evolve through pilot programs and future regulations, one strategic direction is already becoming clear: electricity in Vietnam is no longer being priced simply as a commodity, but increasingly as a service whose value depends on when, how, and how predictably it is consumed.

At MSC Vietnam Consulting, we believe these reforms will influence not only electricity costs but also investment decisions across manufacturing, logistics, commercial real estate and clean energy. As Vietnam continues to introduce market-based electricity pricing, businesses should incorporate electricity demand analysis into project feasibility studies, site selection and long-term operational planning. Early preparation will help investors capture emerging opportunities while managing future pricing risks.

References

[1] Lao Dong News (2026), Ministry of Industry and Trade proposes to apply peak hour electricity prices to domestic electricity users, https://news.laodong.vn/kinh-doanh/bo-cong-thuong-de-xuat-ap-dung-gia-dien-gio-cao-diem-voi-nguoi-dung-dien-sinh-hoat-1724845.ldo 

[2] NSMO, https://www.nsmo.vn/dashboard/tonghop 

[3] Vietnam Electricity (2025), Pilot implementation of two-component retail electricity tariff from October 2025, https://en.evn.com.vn/d/en-US/news/Pilot-implementation-of-two-component-retail-electricity-tariff-from-October-2025-60-142-501015