Solar could help Vietnam avoid almost USD 600 million from coal and gas imports, as Iran war drives up energy prices

Key points

• Vietnam has the highest share of renewable power generation in Southeast Asia, with about 13% of its total power produced from solar and wind as of 2024.
• Compared to the ASEAN-5 countries (Indonesia, Thailand, Malaysia, the Philippines, Singapore), Vietnam also saw the largest and fastest solar growth between 2018 and 2024, mainly supported by feed-in tariff policies.
• According to our analysis, solar power helps Vietnam avoid a total USD 594 million (approximately VND 15.6 trillion) from potential coal and gas imports, as prices for both commodities soar from the Iran war. These savings could help fund healthcare for about 2.2 million citizens annually.
• Southeast Asia countries currently meeting power demand through imports could shield themselves from high prices and support future energy security by pivoting to solar and wind.

Coal and gas prices rise as Iran conflict amplifies

One consequence of the current conflict in the Middle East is soaring energy prices in Asia. Asian liquefied natural gas (LNG) prices hit USD 16 per million British thermal units (mmBtu) as of March 11, up 49% from February 27, a day before the war broke out. Prices of Asian Newcastle coal, Asia’s benchmark, rose to USD 150 per tonne on March 9, the highest since November 2024, Bloomberg News reported. Prices have been affected by major supply cuts as a result of the war. Asian countries account for most of the oil and gas flows from the Strait of Hormuz, which is now effectively closed.

Higher global fossil fuel prices increase power generation costs by raising the operating costs of coal and gas power plants. For Asian countries with highly regulated markets, the government will have to absorb these extra costs, putting pressure on reserves and public services. In countries where generation costs are passed on to consumer power bills, like the Philippines and Thailand, this could mean higher electricity bills for the population. 

Rising energy prices could also push up inflation in Asia, especially in countries with high energy imports, as was seen during the last energy crisis in 2022. That could mean countries like Thailand and Singapore, the top importers of crude oil and LNG in Southeast Asia, are especially vulnerable. 

However, countries with a higher share of solar and wind power – such as Vietnam – can expect to be relatively more protected from rising energy prices.

Vietnam leads in solar and wind generation in Southeast Asia

Vietnam has the highest solar and wind generation compared to the ASEAN-5 (Indonesia, Malaysia, Thailand, Singapore and the Philippines), according to data from energy think tank Ember (see Figure 1). 

In 2024, Vietnam’s solar and wind generation totalled 38.7 TWh, representing about 13% of its power generation. Comparatively, the share of solar and wind in each of the ASEAN-5 countries remained under 5%.

Figure 1

Vietnam’s feed-in tariff policy supported strong solar growth

Vietnam saw solar capacity rise dramatically from 2017 to 2020. This growth was largely due to supportive policies. In 2017, the government implemented a feed-in tariff that paid solar generators for the energy they sell to the grid. This provided incentives for rooftop solar systems that generate extra power beyond the building’s needs. 

Between 2017 and 2020, the incentive structure varied from an initial rate of USD 0.935 per kWh to USD 0.838 per kWh before expiring at the end of 2020. During the period in which it was available, the feed-in tariff helped solar grow from just 28 MW of capacity in 2017 to 16.7 GW by 2020, nearly a 600-fold increase (see Figure 2).

Figure 2

How much could Vietnam avoid in fossil fuel imports by its use of solar?

With gas and coal prices now rising sharply, Zero Carbon Analytics estimated how much Vietnam could avoid spending on imports through its use of domestically generated solar power. To do this, we calculated how much it would cost Vietnam to replace its  25.9 TWh of solar generation with coal and gas imported at prices during the first week of March, the initial week of the attacks on Iran.

We found that Vietnam’s solar generation could help the country avoid USD 594 million (approximately VND 15.6 trillion) in coal and gas imports, assuming current benchmark prices remain at similar levels for a year.¹Calculations were based on average front month Newcastle coal futures and JKM futures prices between March 2 and March 6, 2026.

These savings comprise USD 49.3 million (approximately VND 1.3 trillion) from gas import costs and USD 545.4 million (approximately VND 14.3 trillion) from coal imports.²We assumed that coal and gas could replace solar in proportion to their respective shares of total generation, as they make up more than 99% of fossil fuels in the mix. We assumed the ratio of coal imports to domestic supplies would remain the same at about 50% imports. For gas, Vietnam’s LNG-based power generation share is assumed using reported operational capacity of 1.6 GW of LNG-to-power plants relative to the country’s ~8.9 GW total gas-fired power capacity, implying that ~15% of gas power capacity currently relies on imported LNG. This ratio is therefore applied as the assumed share of power generation derived from imported LNG.

In other words, prioritising clean energy in its power mix could help Vietnam avoid the impacts of soaring global energy prices from the current war. These avoided costs – USD 594 million – could help fund the annual healthcare needs of about 2.2 million citizens.³Zero Carbon Analytics analysis based on media reports that Vietnam’s average healthcare spending has reached about USD 270 per person annually, which means USD 594 million could fund healthcare for about 2.2 million people.

Vietnam’s power mix continues to prioritise fossil fuels, slowing the transition and the savings it could bring

However, while Vietnam has a high solar share in its power mix, it still prioritises coal and gas, like its ASEAN neighbours. Coal made up 50.3% of power generation in 2024, around half of which was sourced from imports in a trend that shows no sign of slowing: Vietnam led Southeast Asia’s coal import demand growth, as coal imports hit a record high in 2025. 

Under its revised Power Development Plan (PDP8), the country also aims to develop 22.4 GW of LNG-fired power by 2030, which would represent almost 15% of total power generation. The country started importing LNG in 2023, and signed its first multi-year supply contract with Shell earlier this year. LNG imports are expected to partially offset declining domestic gas production for power generation. 

This shift towards LNG imports on top of existing coal imports means Vietnam will source more than a third of its power from imported fuels by 2030.⁴A total of 40% of power will come from imports by 2030, 25% from coal (assuming the current split remains the same) and 15% from LNG. This represents significant exposure to global price shocks, such as is underway now. Future energy security is better served by prioritising solar and wind in its power mix over LNG and coal. 

Solar plus batteries can shield countries from volatile gas costs and their impacts

Previous conflicts, such as the Ukraine war in 2022, have already shown that LNG is especially vulnerable to price shocks. In 2022, LNG prices in spot markets averaged USD 34 per mmBtu in Asia, more than twice the annual average in 2021. Sustained high fuel prices in 2022 led to higher inflation and food prices for consumers in Asia, a pattern that may emerge as a result of the current conflict.

Vietnam could be relatively shielded from increasing global coal and gas prices compared to its ASEAN neighbours thanks to its higher use of solar power. 

Countries in Southeast Asia are well-placed to transition to solar power

This pivot to more renewable generation is a potential solution for other ASEAN countries looking to shield themselves from the price volatility of imported fuels. Such a shift makes economic sense: solar power is already the cheapest source of power generation, especially compared to gas, in Malaysia, Thailand and the Philippines. 

Additionally, the cost of batteries – which provide an increasingly viable solution to the intermittency of solar power – hit record lows in 2025. This strengthens the economic case for building out solar power to meet rising energy demand. 

In a moment when global energy prices are rising sharply as a result of geopolitical events, it also makes sense to plan now for future energy security – ensuring that energy is cheap and stable at home despite global disruptions.

• 1
  Calculations were based on average front month Newcastle coal futures and JKM futures prices between March 2 and March 6, 2026.
• 2
  We assumed that coal and gas could replace solar in proportion to their respective shares of total generation, as they make up more than 99% of fossil fuels in the mix. We assumed the ratio of coal imports to domestic supplies would remain the same at about 50% imports. For gas, Vietnam’s LNG-based power generation share is assumed using reported operational capacity of 1.6 GW of LNG-to-power plants relative to the country’s ~8.9 GW total gas-fired power capacity, implying that ~15% of gas power capacity currently relies on imported LNG. This ratio is therefore applied as the assumed share of power generation derived from imported LNG.
• 3
  Zero Carbon Analytics analysis based on media reports that Vietnam’s average healthcare spending has reached about USD 270 per person annually, which means USD 594 million could fund healthcare for about 2.2 million people.
• 4
  A total of 40% of power will come from imports by 2030, 25% from coal (assuming the current split remains the same) and 15% from LNG.