Vietnam’s Transition to Two-Part Electricity Tariffs

Vietnam is entering a critical phase in its power market reform. Starting in late 2025, the Ministry of Industry & Trade and Vietnam Electricity (EVN) have piloted a Two-Part Tariff (TPT) system, separating charges into Capacity (kW) and Energy (kWh).

This reform goes beyond a technical pricing adjustment. It represents a structural shift toward cost‑reflective pricing, improved system efficiency, and a more investment‑ready electricity market. For foreign investors, developers, and large electricity consumers, the transition to TPT reshapes how power costs, grid flexibility, and energy storage value are assessed in Vietnam.

Understanding the Policy: From Energy-Based to Capacity-Based Pricing

For decades, Vietnam has relied on a one-part tariff based solely on actual consumption (kWh). However, this model fails to reflect the true costs of maintaining infrastructure and backup capacity, especially as the grid integrates more variable renewable energy.

Under the TPT model, a customer’s total electricity bill is determined by two distinct components:

Total Electricity Bill = (Capacity Price × Registered Peak Capacity) + (Energy Price × Electricity Consumption)

• Capacity Charge (Fixed): This relates to the initial investment and the maintenance of infrastructure (power plants, transmission lines, and substations), required to ensure electricity is available on demand, even when no energy is being consumed.

• Energy Charge (Variable): Reflects the marginal cost of electricity production, including fuel and variable operating expenses.

By separating these elements, the TPT framework supports two key objectives: improving infrastructure cost recovery for the power system and encouraging customers to actively manage peak demand through load optimization.

Implementation Roadmap (2025 - 2027+)

To limit market disruption and allow stakeholders to adapt, the government has adopted a phased implementation approach:

Market Impacts and Key "Winners"

The transition will significantly alter the electricity bill structure for various sectors:

Industrial Manufacturing

Factories with stable, flat load profiles (high load factors) stand to benefit the most. Simulations show that a typical factory consuming more than 200,000 kWh/month could save approximately 4% in total costs compared to the one-part tariff [1].

Commercial & Service Sectors

Establishments like malls or hotels with high peak demand during noon and evening may see capacity charges accounting for 25-35% of their bills, creating strong incentives for peak-shaving solutions.

Independent Power Producers (IPPs) & Developers

The shift to TPT is a game-changer for IPPs, especially those investing in Battery Energy Storage Systems (BESS) and flexible power sources. The TPT framework represents a structural improvement in revenue certainty. Capacity‑based remuneration rewards grid readiness and availability, not just energy output, strengthening cash‑flow stability and enhancing overall project bankability.

The Power Grid (EVN)

The policy is expected to reduce national peak demand, thereby easing pressure on the power system and significantly lowering the need for incremental investment in generation and grid infrastructure dedicated solely to peak hours.

Strategic Opportunities for the Renewable Energy Sector

The TPT plays an important role in completing Vietnam’s energy framework, particularly in support of PDP8 objectives.

Monetization of BESS

A key policy milestone is Circular No. 62/2025/TT‑BCT, effective from January 26, 2026, which introduces a dual‑revenue mechanism for BESS projects:

• Capacity Payments: BESS developers will be paid for availability, providing predictable, fixed revenue that improves project bankability and helps recover high upfront CAPEX.

• Energy Payments: Revenue from actual electricity delivered to the grid.

By allowing BESS to be paid both for availability and for energy delivery, the policy fundamentally reshapes the investment case for energy storage, making BESS a commercially viable and attractive option in Vietnam for the first time.

Commercial & Industrial Solar-plus-Storage

With the introduction of capacity charges, the ROI for Rooftop Solar combined with BESS becomes much more attractive. Businesses can use solar and batteries to: 1) Reduce Peak Demand and accordingly lowering the maximum kW registered with EVN to minimize fixed capacity charges; and 2) Load Shifting by storing cheap solar energy to use during expensive peak hours or when capacity limits are reached.

Energy Management Systems (EMS) and Advisory Services

As electricity bills become more complex, there is a growing market for EMS and smart control technologies. Consulting firms that can help enterprises optimize their load profiles, shifting production to off-peak hours or integrating smart HVAC systems, will be in high demand.

Practical Considerations for Investors

• Audit Load Profiles Immediately: Large consumers should analyze their current peak demand versus average consumption to quantify the potential impact of the TPT.

• Invest in "Smart" Infrastructure: Priority should be given to Smart Metering and data management systems to monitor capacity in real-time.

• Evaluate BESS Integration: For renewable developers, the new Capacity Charge for storage under Circular 62 provides a stable revenue stream that should be factored into new project financial models.

• Monitor Regulatory Updates: Stay aligned with MoIT’s Phase 2 "Paper Pilot" in early 2026 to understand specific tariff levels (VND/kW) as they are announced.

Conclusion

Vietnam’s move toward a Two‑Part Electricity Tariff marks a significant step in the country’s power market evolution. By better reflecting the true cost structure of electricity and rewarding system flexibility, the policy supports more efficient investment decisions and accelerates the integration of renewable energy and storage.

For international investors and energy companies evaluating Vietnam, early understanding of the Two‑Part Tariff framework is critical to positioning capital, technology, and business models for the next phase of market development./.

[1] EVN (2025), Sample of Notice of electricity bill calculation results: Paper-based Trial Calculation Using the Two-Component Retail Electricity Tariff, Link