Vietnam's Emerging Battery Energy Storage (BESS) Market: Growth Driven by Policy Support and Real Demand

According to InfoLink’s forecasts, the share of emerging markets outside China, the U.S., and Europe in global newly installed energy storage capacity is expected to rise significantly from about 7% in 2024 to around 18% by 2026.

Across Southeast Asia, countries such as Indonesia, Malaysia, Thailand, Vietnam, and the Philippines are entering a phase of accelerated energy storage adoption, driven by structural energy transition demand and policy incentives. Among these markets, Vietnam, as one of the major economies in the Association of Southeast Asian Nations (ASEAN), has experienced particularly acute power system challenges, including regional supply-demand imbalances between the northern and southern grids, increasing penetration of renewable energy, and insufficient conventional peak-shaving capacity. These factors create favorable conditions for the initiation and scaling of Vietnam’s domestic electrochemical energy storage market.

Against this background, this article examines the key drivers underpinning Vietnam’s energy storage market demand and provides an outlook on its future development.
 

Rising electricity demand and structural imbalances in the energy mix: the foundation for energy-storage demand

Rapid economic growth driving strong electricity demand

Vietnam’s economy maintains robust growth momentum in 2025. According to the World Bank, Vietnam’s GDP growth is projected to remain at around 6%, mainly supported by continued industrial expansion and resilient export performance. Vietnam’s Power Sector Supply-Demand Forecast 2025, published by the Ministry of Industry and Trade (MOIT), projects that national electricity consumption will increase by roughly 13.5% YoY, with the industrial sector accounting for about 72% of total demand. Key contributors include industrial clusters in electronics, textiles, and new energy manufacturing.

Expanding manufacturing investment, accelerating urbanization, and upgrading household consumption are jointly pushing up Vietnam’s overall electricity demand, placing increasing pressure on power-generation structure optimization, grid peak-shaving capacity, and system flexibility, thereby establishing a solid demand foundation for energy-storage deployment.
 

Rising renewable penetration and insufficient peak-shaving capacity

In terms of the power-generation mix, coal-fired and hydropower plants continue to provide baseload and balancing functions in Vietnam. However, renewable energy capacity has been expanding at a much faster pace than conventional generation. Under the Power Development Plan VIII (PDP8) and its revised version, the share of solar and wind power in total installed capacity is targeted to reach 25%–31% and 14%–16%, respectively, by 2030, while the share of thermal power is set to gradually decline.

Given estimates from Vietnam’s MOIT and InfoLink, the share of renewable energy in Vietnam’s power generation mix is projected to increase from 35% in 2024 to 38% in 2025. Within this total, solar power is expected to rise from 22% to 25%, and wind power from 8% to 10%. Over the same period, the share of thermal power generation is set to decline from 41% to 39%.

As the contribution of renewable generation continues to rise, the power system faces heightened volatility during periods of strong solar irradiation and high wind speeds, significantly increasing the demand for peak regulation and reserve capacity. Under these conditions, energy storage is evolving from a supplementary solution into critical infrastructure that supports high renewable penetration, grid integration, and effective power absorption.

Table: Changes in Vietnam’s power generation mix by source

Source: Vietnam’s MOIT; compiled by InfoLink.
 

North–south imbalance and dry-season supply gaps: energy storage to be a potential solution

Vietnam’s power system is currently characterized by pronounced regional structural imbalances. The central and southern regions, which benefit from superior solar irradiation and wind resources, host a large concentration of solar and wind projects. In contrast, the northern region accommodates the country’s primary industrial load centers and population hubs. Constrained by the pace of expansion of 500 kV and sub-500 kV transmission corridors, as well as localized grid weaknesses, Vietnam faces a coexistence of renewable-rich supply in the south and rapidly growing electricity demand in the north. As a result, renewable curtailment still occurs during some periods, alongside transmission bottlenecks.

Meanwhile, hydropower accounts for a higher share of the northern region’s generation mix. During the dry season, lower hydropower output, combined with rapid growth in industrial electricity demand, further amplifies spatial supply-demand imbalance, reinforcing “surplus in the south while deficit in the north.” These combined supply–demand and transmission constraints have directly given rise to two typical energy storage application scenarios.

First, the deployment of energy storage systems in the southern regions to smooth the output volatility of utility-scale wind and solar power generation and enhance local renewable absorption. Second, the use of storage in the northern region to compensate for reduced hydropower output during the dry season, shave peak demand, and alleviate ramping and peak-shaving pressure on coal- and gas-fired generation units.
 

Policy incentives and mechanisms advancing in tandem: a clear growth outlook for energy storage

Planning targets and grid-side implementation: 1.2 GW of projects scheduled by 2026

Vietnam’s government has explicitly incorporated energy storage into its medium- to long-term power system transformation pathway under PDP8 and its revisions. In the 2025 update, targets for electrochemical energy storage were raised to 10–16.3 GW by 2030 and nearly 96 GW by 2050, underscoring the policy stance that positions energy storage as a key enabler for integrating high shares of renewable energy into the power system.

Against this backdrop, Vietnam Electricity (EVN) has outlined grid-scale battery energy storage system (BESS) deployment plans within its 2026–2030 northern grid development. These plans propose multiple BESS installations, ranging from 0–5 MW to 110–275 MW, strategically located across Hanoi and its surrounding load centers.

At the distribution level, EVN has assigned cumulative BESS construction targets of 1.2 GW to its regional subsidiaries—Northern Power Corporation (EVNNPC), Hanoi Power Corporation (EVNHANOI), Central Power Corporation (EVNCPC), Ho Chi Minh City Power Corporation (EVNHCMC), and Southern Power Corporation (EVNSPC)—with a requirement for commissioning by 2026. While these projects entail a degree of execution uncertainty due to the need for self-financing by the responsible entities, these projects nonetheless provide a clear demand reference for grid-side energy storage installations in 2026. These facts indicate a structural shift in which energy storage has evolved from an optional investment to a system-level solution for addressing regional supply–demand imbalances.
 

PV-plus-storage tariff premiums: Short-term returns supported

Under Decree No. 58/2025/ND-CP, effective March 2025, Vietnam refined Electricity Law provisions on renewable and new energy, authorizing MOIT to set region- and technology-specific tariffs. Accordingly, MOIT issued Decision No. 988/QD-BCT in April 2025, alongside Circular No. 09/2025/TT-BCT, establishing nationwide differentiated maximum feed-in tariffs for solar plants with and without energy storage.

Source: Vietnam’s MOIT; compiled by InfoLink.

The provisions specify that to qualify for the BESS-specific rates, the system must have a rated power and energy capacity of at least 10% of the PV plant’s installed capacity, a minimum duration of two hours, and contribute no less than 5% of annual grid-connected output. In tariff terms, storage-equipped projects typically receive a 10%–15% price premium over non-storage projects, subject to regional and project-type variations, providing a clear and quantifiable incentive for PV-plus-storage deployment.
 

Investment incentives and market reform: Medium- to long-term returns remain dependent on mechanism refinement

Beyond pricing mechanisms, Vietnam offers a broad investment incentive framework for renewable energy and related projects, including energy storage, covering corporate income tax incentives, land and infrastructure support, and import duty exemptions.

For the power market and grid dispatch, Vietnam has yet to establish a comprehensive pricing and trading framework for energy storage. Standalone storage lacks clear, replicable market-based cash flows, constraining utility-scale BESS deployment. Under the Vietnam Wholesale Electricity Market (VWEM), MOIT is drafting a circular on the pricing mechanism for electrochemical energy storage, covering metering, price formation, and power purchase agreement (PPA) structures, to enable storage to participate in peak shaving, frequency regulation, reserves, and other ancillary services with compensation. In line with the revised PDP8 target of 10-16.3 GW of BESS by 2030, regulators are considering a phased rollout of more mature energy storage market participation rules, including ancillary services markets and potential capacity compensation.

Overall, near-term returns for energy storage projects mainly rely on the limited tariff premium from “PV + storage.” Grid- and distribution-level BESS projects of EVN remain largely at the pilot or demonstration stage, with no stable cash flow base. In the medium to long term, bankable and replicable revenue models will largely depend on the pace and quality of power market reforms and mechanism design over 2026–2030.
 

Supply chain deployment leads, while utility-scale energy storage projects have yet to enter a fast-track phase

Driven by policies and demand expectations, international and Chinese companies are positioning Vietnam as a key hub in Southeast Asia for the battery and energy storage supply chain, with strategies centered on local manufacturing, technology licensing, and regional supply chain integration.

Internationally, Fluence Energy and South Korea’s ACE Engineering brought a fully automated 35 GWh/year BESS manufacturing facility online in Bac Giang Province in August 2025, supplying Vietnam as well as Asia-Pacific, Europe, and the U.S., and positioning Vietnam as a regional manufacturing and export hub.

Chinese companies widely regard Vietnam and Indonesia as key hubs for the overseas expansion of China’s battery and energy storage supply chains. Tianneng has established its first overseas manufacturing base in Vinh City, Nghe An Province, with Phase I operational since 2024, covering lead-acid and lithium batteries for two-wheelers, light electric vehicles, and energy storage. In November 2025, Goldwind signed an agreement with Vietnam’s GG Industries to transfer full BESS manufacturing technology and supply a 5 GWh/year automated production line in Hung Yen Province for C&I and grid-side ESS. China Huadian Corporation (including China Huadian Engineering) has invested USD 2.8 billion in Vietnam and plans to further increase the share of wind, biomass, and energy storage projects in its portfolio.

In addition, Chinese companies such as Gotion High-tech, Hithium, Growatt, Desay Battery, and Sunwoda are increasingly integrating into Vietnam and the broader ASEAN supply chains through localized cell and PACK production, as well as inverter and system integration.

As these projects progress, Vietnam is building an energy storage manufacturing base covering cell production, PACK integration, system integration, and selected key materials, exporting products and solutions to neighboring markets such as Indonesia and Thailand under a “Made in Vietnam for ASEAN” model. However, despite the revised PDP8 target of 10–16.3 GW of BESS by 2030, energy storage deployment in Vietnam, particularly standalone and utility-scale grid-side projects, has yet to materialize at a scale commensurate with the plan.

Before power market reforms and energy storage pricing mechanisms are fully in place, utility-scale, market-based storage investments remain constrained by unclear revenue structures and immature business models. Consequently, rapid progress on the manufacturing and supply chain side remains misaligned with the more measured pace of project deployment.
 

Conclusion and outlook

Overall, Vietnam’s energy storage demand is underpinned by a solid system foundation, with north–south supply imbalances, rising renewable share, and the overlap of dry-season and industrial loads driving long-term structural demand for flexible grid resources. PDP8 has raised the 2030 BESS target to 10–16.3 GW, alongside EVN’s assigning 1.2 GW of energy storage deployment at the distribution network level, signaling energy storage’s integration into national power planning and engineering practice. However, project rollout remains cautious, with near- to mid-term returns mainly relying on “PV + storage” tariff premiums and EVN-led projects, while standalone and utility-scale grid-side storage are still nascent. Whether energy storage can scale during 2027–2030 will depend on the effective rollout of ancillary services, electricity pricing, and capacity compensation mechanisms that enable replicable business models.

Vietnam’s energy storage market is not an immediate breakout opportunity but a growth market with policies and business models still evolving. For Chinese companies, a more rational approach is not to wait for full market maturity, but to establish an early position through localized manufacturing, regional supply chain integration, and the export of technical standards, thereby securing advantages on the manufacturing and services side. At the same time, companies should selectively engage in the first wave of engineering deployments, focusing on PV-plus-storage projects and EVN-led grid and distribution-level BESS pilots.

Over the next decade, Vietnam’s power transition is likely to enter a more complex and challenging phase, with the maturity of its energy storage sector shaping both Southeast Asia’s deployment trajectory and Chinese companies’ positioning and profit potential in ASEAN’s energy transition. For firms with battery and ESS capabilities, this represents a timely window to accelerate deployment and secure strategic positions.