On 2 June 2026, the Ministry of Industry and Trade (“MoIT”) issued Circular No. 29/2026/TT-BCT, effective 20 July 2026, regulating the operation of Vietnam’s Competitive Wholesale Electricity Market (“VWEM”), replacing the previous wholesale market framework and incorporating a number of reforms introduced following the Electricity Law 2024, to be amended.
While Circular 29 may initially appear to be a technical market-operation regulation, its significance extends well beyond dispatch and settlement procedures. The Circular reflects the reality that Vietnam’s electricity sector has undergone a profound transformation since the earlier wholesale market rules were developed. Vietnam now operates a power system characterised by substantial renewable energy penetration, implementation of the direct power purchase agreement (“DPPA“) mechanism, increasing interest in battery energy storage systems (“BESS“), the expiry of certain preferential pricing mechanisms applicable to renewable energy projects and a renewed policy emphasis on domestic gas utilisation.
Circular 29 seeks to accommodate these developments without fundamentally altering the underlying architecture of the VWEM.
The Circular introduces a number of notable reforms. Most significantly, it formally recognises new categories of market participants, including renewable energy projects participating in the DPPA mechanism, renewable energy projects whose preferential pricing mechanisms have expired, independent battery energy storage systems, pumped-storage hydropower projects and BOT power projects that have been transferred following expiry of their BOT arrangements.
The Circular also introduces a formal definition of BESS, thereby bringing standalone energy storage facilities within the wholesale market framework for the first time. This represents a significant step in the evolution of Vietnam’s electricity market because storage technologies are increasingly important for balancing intermittent renewable generation and maintaining system reliability.
Equally important, although less likely to attract immediate attention, are the reforms concerning domestic gas-fired generation. Circular 29 introduces and develops the concept of a “Nhà máy nhiệt điện khí có ràng buộc phải sử dụng tối đa nguồn nhiên liệu khí” and expands the concept of “sản lượng điện năng bao tiêu” to include electricity output associated with the utilisation of domestic gas resources. These provisions indicate that, notwithstanding the expansion of renewable energy, domestic gas utilisation continues to occupy a strategically important position within Vietnam’s power sector.
From an investor perspective, Circular 29 therefore conveys two messages simultaneously. First, the wholesale market is being modernised to accommodate new technologies and commercial arrangements. Second, Vietnam continues to pursue market reform within a framework that preserves regulatory mechanisms designed to support energy security, fuel security and system reliability.
The resulting framework is increasingly sophisticated and market-oriented, but remains distinctly policy-driven.
Why Circular 29 Matters
The significance of Circular 29 cannot be understood without considering how dramatically Vietnam’s electricity sector has changed over the past decade.
When the earlier wholesale market regulations were introduced, Vietnam’s generation mix was dominated by conventional thermal generation and hydropower. Renewable energy participation was limited, direct electricity procurement mechanisms did not exist and utility-scale battery storage was not contemplated within the market framework.
That environment no longer exists.
Vietnam now possesses one of the largest renewable energy fleets in Southeast Asia. Large corporate consumers increasingly seek access to renewable electricity through the DPPA mechanism. Investors are actively evaluating storage opportunities. The first generation of solar and wind projects developed under preferential pricing regimes is transitioning into a new commercial environment. At the same time, Vietnam continues to develop domestic gas-to-power projects as part of its broader energy strategy.
The wholesale market rules therefore required updating.
Circular 29 should be viewed as MoIT’s attempt to align the operation of the VWEM with these developments while maintaining the core principles that have historically characterised Vietnam’s electricity market reform programme.