Under a new proposal by the Ministry of Industry and Trade, eligible electricity users in Vietnam will be allowed to select their electricity providers starting in 2027. Prices will be negotiated directly between the customer and the retail electricity unit.

This plan is part of a draft decision by the Prime Minister that outlines the roadmap, principles, and structural reforms needed to develop a competitive electricity market in Vietnam. The draft has been completed by the ministry and is currently under review by the Ministry of Justice.

Three phases of market development

The roadmap identifies three distinct phases of competition:

Phase 1: Competitive power generation market – operational since 2012.

Phase 2: Competitive wholesale electricity market – officially launched in 2019, allowing broader transactions among generators, wholesalers, retailers, and large electricity users.

Phase 3: Competitive retail electricity market – planned to launch in 2027. This phase will operate alongside the wholesale market and expand retail-level competition between electricity users and retail suppliers.

Retail market competition will be introduced progressively, aligning with the country's development stage and electricity trading mechanisms.

Structural and pricing reforms

The proposed model separates state management and commercial operations. Natural monopolies like electricity transmission and distribution will be kept distinct from competitive activities like generation and retail sales.

Electricity transactions in the competitive market will occur via a spot market and bilateral contracts. Spot prices will be announced for each trading cycle by the market operator.

The Ministry of Industry and Trade will oversee and regulate the entire market operation.

Details of the retail market model

Retail electricity units - either reorganized from existing power corporations or newly formed - will buy electricity from producers and wholesalers through bilateral contracts or spot markets.

Customers will then have the right to choose a retail supplier. Prices will be agreed upon between the customer and the retail unit, in line with the competitive retail market framework.

If a customer is ineligible or chooses not to participate, they will continue purchasing electricity from the current provider at regulated state-set rates.

Electricity distributors must ensure fair, transparent, and non-discriminatory access to the grid for all retailers and wholesale buyers under their jurisdiction.

Conditions for customer participation in the retail market will be defined by the Ministry of Industry and Trade in accordance with the phased development.

International experience and consumer benefits

The ministry emphasized that successfully restructuring the electricity sector, completing the wholesale market, and reforming retail pricing are key to launching an effective retail electricity market.

Global experiences show that separating natural monopoly segments (transmission, distribution) from competitive segments (buying, selling) reduces monopoly barriers. It enhances competition, transparency, and fairness - laying a foundation for a thriving retail market.

Retail pricing reforms will also eliminate cross-subsidies and introduce regional pricing, allowing retailers to compete and adjust prices based on actual costs. This not only fosters market efficiency but also protects consumers and promotes the power sector’s long-term sustainability.

Tam An