Singapore | Publication | June 2025
This article was written in collaboration with Partner, Vu Le Trung and Associate, Vu Ha Anh of VILAF
One of the key highlights of Vietnam’s revised Power Development Plan VIII (PDP8) is the significant increase in the targets for Battery Energy Storage Systems (BESS).
The original PDP8 approved in 2023 had set out a target of 300MW of BESS capacity by 2030. The revised PDP 8 (approved by the Prime Minister via Decision No. 768/QD-TTg) now targets between 10,000 MW and 16,300 MW of BESS capacity by 2030.
This increase reflects Vietnam’s commitment to integrating more renewable energy sources into its grid. Under the revised PDP8 onshore and nearshore wind capacity is forecast to reach between 26,066 MW and 38,029 MW by 2030, while offshore wind capacity is projected to be 17,032 MW by 2035. Solar power capacity targets have been raised to between 46,459 MW and 73,416 MW. BESS capacity will support this growing share of solar and wind power in Vietnam’s energy mix, helping to stabilize the grid and manage peak demand. PDP8 requires concentrated solar power (CSP) projects developed under PDP8 to integrate a storage system of at least 10% of the project’s installed capacity with the storage time being 2 hours.
Vietnam began implementing BESS systems from 2019. However, due to the lack of a complete set of policies and regulations for BESS development, most BESS systems in Vietnam are after-the-meter systems and are generally small (<100 kW), installed in homes with rooftop solar panels. A few medium-scale systems have been installed after the meter or in small off-grid networks.1
On 31 August 2023, Decision No. 1009/QD-TTg of the Prime Minister came into effect in Vietnam to approve the Scheme on Implementation of the Political Declaration on Establishing the Just Energy Transition Partnership with Vietnam (the JETP Declaration). Among the key objectives were the upgrade of the power transmission and distribution system, acceleration of the roadmap to build a smart power system, and development of an energy storage system. This requires, among other things, supporting investments in better energy storage technologies and applying such technologies in combination with solar power and other types in energy storage or in areas near load centers. The Vietnamese government subsequently issued Notice No. 356/TB-VPCP on 30 July 2024, requesting the Ministry of Industry and Trade (MOIT) to set out mechanisms encouraging the development of renewable energy system integrated with BESS. Several types of incentives for rooftop solar projects were suggested for MOIT’s consideration, including tax reductions and other financial incentives.
BESS projects by application
BESS projects by integration
Battery technology
Lithium-ion batteries are the dominant type of rechargeable batteries used for BESS projects, including those currently in operation in Vietnam. The most commonly used cathode varieties in these batteries are lithium cobalt oxide (LCO), lithium manganese oxide (LMO), lithium iron phosphate (LFP), lithium nickel cobalt aluminium oxide (NCA) and lithium nickel manganese cobalt oxide (NMC). Graphite is currently widely used as the anode in lithium-ion batteries.
Other types of battery technologies include flow batteries (which are useful for long duration storage and are scalable with a longer lifespan but have a lower energy density) and sodium sulphur batteries (which have good energy density but carry safety concerns due to being operated at high temperatures). Lead acid batteries also find use in off-grid and microgrid projects in remote areas.
BESS projects require significant capital for procurement, installation, and commissioning. Batteries constitute the largest share of construction costs relating to a BESS project (this could be 40-60%). Key items balance of plant items include installing a battery management system (BMS), a power conversion system to manage the AC/DC conversion, the energy management system (EMS) and the heating, venting and air conditioner (HVAC) and thermal management system. Transformers, switchgears, cabling and protection systems constitute other balance of plant components.
Long term arrangement
A BESS project offers multiple revenue streams. A common revenue model for a BESS project is to secure income through long term arrangements - such as a tolling agreement, capacity market contracts or ancillary service arrangements - which can emerge as a viable commercial model in Vietnam. With a tolling agreement, the owner of the BESS project would lease out storage capacity of the BESS to an offtaker (e.g. Vietnam Electricity (EVN)). The offtaker can use the capacity of the BESS at its own discretion, for example, by charging the BESS during the night so that more electricity is available during the day. The owner of the BESS would manage and maintain the system, while the offtaker would have control over its operation, including charging and discharging of the BESS. A contractual revenue arrangement such as a tolling agreement provides for a stable and predictable income for the BESS owner on a VND/kW per month basis, regardless of any market fluctuations.
Trading on the electricity market
It would also be possible for a BESS project to earn revenue without entering into a long-term agreement. A BESS project is well suited to generate profits by trading on the electricity market by taking advantage of the of price fluctuations in this market. The BESS units ‘physically’ store the electricity during the period between purchase and sale.
A framework around integrating BESS into the wholesale electricity market is under consideration by the MOIT, under which it can be expected that BESS projects would be allowed to participate in the wholesale electricity market by buying electricity during off-peak hours (low prices), selling stored electricity during peak demand (high prices), and also providing ancillary services like frequency regulation and spinning reserves.
Vietnam has a day-ahead electricity market (DAEM) which is managed by the National Load Dispatch Center and supervised by the MOIT. Generators, retailers, and large consumers (≥1 MW) are eligible participants and BESS operators are expected to be included as flexible participants. It is however currently a single buyer model with EVN being the sole purchaser. Vietnam’s Wholesale Electricity Market (VWEM) came into operation in 2019 with a view to transitioning from a single-buyer model (where EVN was the sole offtaker) to a multi-buyer, multi-seller model. However currently the only buyers of power in the VWEM are EVN’s subsidiaries such as the Northern Power Corporation, the Central Power Corporation and the Southern Power Corporation. There is limited flexibility among this buyer group on negotiating prices or choosing suppliers independently. The legal framework for contract enforcement, dispute resolution and market monitoring is still evolving. As well, the information systems and data exchange platforms needed to support multiple buyers are still under development. Once the VWEM is liberalized, we can expect retail electricity companies (instead of EVN and its subsidiaries) purchasing power from the VWEM and selling it to end-users. This would incentivize development of BESS capacity.
Tariff structures for BESS in Vietnam
A tariff structure for BESS projects is being developed by the MOIT, which would encourage BESS projects to use time-of-use pricing (to charge during low-demand, low-price periods and discharge during peak-demand, high-price periods). BESS projects could receive payments for available capacity, even if not dispatched.
Projects that integrate BESS with solar or wind projects may receive preferential tariffs or grid access priority (see Article 4 of Decree 58/2025/ND-CP).
It is relevant to note that the MOIT issued Decision No. 988/QD-BCT on 10 April 2025 on the pricing framework applicable to solar power projects. As per this Decision, in addition to a tariff for solar standalone power projects (without BESS), a separate tariff has been introduced for solar power projects that integrate BESS.
Revenue stacking
By combining multiple revenue streams from a single BESS project, the BESS can maximise financial returns by performing various functions simultaneously or in sequence, depending on market opportunities and technical capabilities. This can be achieved by reserving a set portion of the BESS capacity for each revenue stream.2
Noting that the regulatory and policy framework for BESS projects is under development, below are key regulatory requirements that we expect would be relevant to such projects:
Technology related risks
Supply risk
The core component of a BESS project is the battery. Thus having access to a robust battery supply chain is critical to the development of BESS capacity. Rapid growth in electric vehicles could strain battery production capacity. Moreover, geopolitical tensions and trade restrictions can disrupt battery supply chains and create risks for project development. Development of domestic battery manufacturing capacity is therefore critical. Vietnam has significant nickel and cobalt reserves, making the country well poised to become a key player in the global battery supply chain with government support and international cooperation. Notably, T&T Group, a major renewable investor with a portfolio of over 2,800MW across wind, solar, and LNG-to-power projects in Vietnam, recently announced a plan to launch joint-venture battery storage products in 2026, aiming to build Vietnam into a manufacturing and technology hub for renewable energy equipment.5
Grid connectivity
Vietnam is still developing technical standards and interconnection requirements for BESS. Uncertainty in grid compliance testing and performance expectations risk delaying completion. Delays in obtaining permits and approvals for interconnection and coordination challenges with EVN and regional grid operators are further risks to be considered from a bankability perspective.
Permitting and approvals
The permitting regime for BESS is under development in Vietnam, which would supplement the items discussed inthe regulatory and policy framework section above. In addition, acquisition of land use rights for projects in general (not just BESS projects) is a key issue in Vietnam. Conversion of land use can be time consuming and bureaucratic, especially in areas that have unclear zoning laws. As well, opposition from local communities about safety, noise and land use is a key risk experienced by BESS projects in other markets such as Taiwan. Early engagement with local authorities and communities is therefore key to mitigate this risk.
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