Why Pumped Hydro Storage (as a form of Long Duration Energy Storage -LDES) matters for Vietnam’s energy future?

Currently, PDP8 includes two large-scale PHS projects, Bac Ai and Phuoc Hoa, each with a capacity of 1,200 MW, scheduled for operation in 2029 and 2030. However, construction is behind schedule, despite the recent establishment of a price framework for PHS; the project implementation still faces various challenges. Other provinces such as Dien Bien, Lai Chau, Kon Tum, Khanh Hoa[1], and Dak Nong, are also proposing PHS plants[2]-[3], but these projects still require further assessment and must align with actual capacity needs. While lithium-ion batteries are increasingly deployed, they are more expensive for long-duration applications. By contrast, PHS offers a mature, durable, and cost-effective solution, yet it remains largely untapped in Vietnam. On January 03 2025, Deputy Prime Minister Bui Thanh Son signed Decision No.1710/QĐ-TTg on approving the Task of preparing the adjustment of the National Electricity Development plan for 2021-2023, with a vision to 2050. Besides encouraging Vietnam to develop RE sources, PHS was mentioned as the game changer for long-duration storage that should be prioritised to ensure energy security. This signals a strategic shift away from a fossil-dominated baseload mindset toward one increasingly built on variable renewable energy (VRE) such as solar and wind. This change is similar to the direction countries like Australia are taking, where the concept of “baseload” has been redefined, not as large, inflexible fossil fuel plants running 24/7, but as a dynamic mix of flexible and dispatchable resources, such as storage, demand response, and firm renewables.

The approved revision of PDP8- in April 2025, has opened the opportunities to unlock the potential of PHS to contribute to capacity firming for Vietnam's power sector by increasing targets for both PHS and BESS significantly from 2700 MW to 12,400-22,300 MW by 2030, and more ambitious targets in and 2050 at 116,674-117,447 MW compared to the PDP8 target of 3,600.

MW and 45,550 MW, respectively. By providing flexible power sources, PHS will critically contribute to enhancing the grid stability and reliability of Vietnam’s power system by providing ancillary services such as frequency control, black-start services, and must-run operation [4]. The revision of PDP8 also urges the mechanism to establish a market for ancillary services beyond the energy market.

Figure 1: Changes in PSH and BESS targets in revision of PDP8 (source: AMPERES compiled from PDP8 & revision)

Connecting lessons from Australia to opportunities in Vietnam

Through the Future of Electricity - Vietnam (FE-V) initiative, supported by the Department of Foreign Affairs and Trade (DFAT), AMPERES has been working to highlight the potential of PHS as a critical part of Vietnam’s energy transition. In 2024, the FE-V team organized a study visit to Australia to explore key technologies. Among the highlights, like community batteries in Victoria and hydrogen refuelling in the ACT, Snowy Hydro 2.0 stood out. Our visit to Tumut 3, with a 151-metre head, 6 gigalitres of water volume, and a reservoir area of 19 km², provided valuable.

insights into how PHS is integrated with RE to ensure system reliability. This experience resonated strongly with Vietnam’s landscape and potential.

Figure 2: inside Tumut 3 Power Station, showcasing the operational environment of the turbines

Unlocking potential: Evidence, Insights and pathway forward

Vietnam has significant untapped PHS potential. Since 2016, JICA has estimated Vietnam’s PSH potential is about 10,000 MW and currently total proposed PSH capacity by provinces in Vietnam is about 54,000 MW. However, according to the Australian National University (ANU), Vietnam has over 6,000 potential off-river PHS sites. Among them, 248 are classified as AAA, with a combined capacity of 144,000 MW. Of these, 53 are “bluefield” sites, where only one additional reservoir is needed to transform existing hydropower plants into PHS systems[5]. This is a massive opportunity for Vietnam to strengthen grid flexibility using a proven technology.

Figure 3: Potential PHS location in Vietnam (Data source: ANU, illustrated by AMPERES)

PHS is competitive in cost and lifetime. IRENA reported in 2023 that PHS is the most competitive LDES option globally, with an average installed cost of USD 149/kWh—cheaper than lithium-ion batteries (USD 235/kWh), thermal storage (USD 241/kWh), and compressed air (USD 384/kWh)[6]. Despite its high CAPEX and land requirements, PHS stands out in lifecycle cost, technology maturity, and operational lifespan. Many PHS plants can operate for 40–90 years; some, like Engeweiher in Switzerland (built in 1907), still operate today[7].

Policy clarity and implementation are key for PHS to anchor just energy transition. Decision 1710/QĐ-TTg, signed in January 2024, recognises PHS as a game-changer and calls for it to be prioritised in Vietnam’s power planning. The current PDP8 outlines an initial path for PHS but lacks the policy and regulatory clarity needed to accelerate deployment. The ongoing revision of PDP8, guided by the “open and close” principle, presents an opportunity to integrate more PHS capacity and establish a clear price framework[8]. The recent issuance of the PSH price framework under Decision No. 1198/QĐ-BCT marked a major policy breakthrough. With a set tariff of 3.457.02 VND/kWh ($0.13 USD), Vietnam provides a certain level of clarity for investors.. Moreover, well-designed PHS projects can provide local employment, contribute to water resource management, and improve resilience in remote areas. Provinces proposing PHS should receive technical support to conduct feasibility studies that align with both energy needs and community development priorities. A just transition lens will help ensure these large infrastructure investments deliver broad social and economic benefits for Vietnam.

Conclusion

As Vietnam deepens its energy transition, pumped hydro storage (PHS) stands out as a proven, cost-effective, and long-lifetime solution to firm variable renewable energy and enhance grid stability. The revised PDP8 has laid a policy foundation, but turning potential into progress requires clear pricing mechanisms, regulatory certainty, and local capacity to deliver bankable and socially inclusive projects. Now that a price framework has been issued, the next step is to ensure that this tariff can translate into viable revenue models that provide bankable revenue certainty for developers and investors in PHS to achieve the revised PDP8 targets for energy storage. By learning from international experiences like Australia’s Snowy Hydro and leveraging its vast PHS potential, Vietnam can build a flexible and resilient power system that not only supports clean energy goals but also delivers long-term economic and community benefits.

References:

[1] Khanh Hoa Newspaper: Khánh Hòa đề xuất bổ sung danh mục 13 dự án điện - Báo Khánh Hòa điện tử

[2] Đề xuất đưa Nhà máy thủy điện tích năng Ka Đô vào Quy hoạch điện VIII

[3] Trung Nam Group và loạt thương vụ chuyển nhượng dự án năng lượng

[4] FE-V: Options assessment for market mechanism beyond energy-only markets- https://static1.squarespace.com/static/5a9d042e3917eeb31ce746e7/t/66ecf7cc3822df09bf5e3af2/1726805976783/5.+EN-Market+CRR.pdf

[5] ANU-100% Renewable Energy Group-https://re100.eng.anu.edu.au/

[6] IRENA-Chapter 06. Battery storage: https://www.irena.org/Publications/2024/Sep/Renewable-Power-Generation-Costs-in-2023

[7] PSH International Forum:PSH Capabilities and Costs- https://cdn.prod.website-files.com/64f9d0036cb97160cc26feba/64f9d0036cb97160cc2712aa_IFPSH%20-%20PSH%20Capabilities%20and%20Costs_15%20Sept.pdf

[8] Vietnam Energy Online: Price Framework for PSH- https://nangluongvietnam.vn/khung-gia-nao-cho-nguon-thuy-dien-tich-nang-o-viet-nam-32860.html