Vietnam Burns Record Coal as Iran War Stalls the Country's Gas-Fired Power Ambitions

Vietnam Burns Record Coal as Iran War Stalls the Country's Gas-Fired Power Ambitions Vietnamese coal imports surged to 5.4 million tonnes in April while coal generation hit a record, as LNG supply disruptions undercut gas-fired project economics across Asia. Vietnam's electric coal imports jumped to a record 5.4 million tonnes in April, Kpler data show. Coal-fired electricity production rose 12.3% year-on-year to a record 17,864 GWh the same month, as a heatwave across the country collided with LNG supply disruptions triggered by the Iran war. The numbers represent a sharp reversal for a country that had been planning to build gas-fired thermal power capacity as the backbone of its energy transition.^5,7 The LNG market that was supposed to supply Vietnam's new gas plants has been upended. Spot prices have roughly doubled since Iranian retaliation to US-Israeli strikes damaged around 17% of Qatar's LNG export capacity and choked flows through the Strait of Hormuz. Asian LNG imports have fallen sharply, the biggest demand hit in years, according to Energy News Beat. Vietnam's gas-fired power projects cannot compete for cargoes at these prices.^6,7 Across Asia, the pattern is the same. South Korea's coal-based electricity jumped 39.7% year-on-year to 10,733 GWh in April. Seoul lifted the 80% capacity limit on coal plants and postponed the retirement of three coal units totalling 1.5 GW. Japan suspended the 50% capacity-factor cap on inefficient coal plants for a year, freeing utilities to run older units harder. Coal already accounts for about 29% of Japan's power mix. The policy shift is expected to save around 0.7 billion cubic metres of LNG.^5,6 DBX Commodities estimates that Asian thermal coal imports in May, excluding China and India, rose 9.4% to 31 million metric tonnes. Bangladesh has increased coal-fired generation and coal-based electricity imports this month. "The conflict will significantly reduce Asian LNG demand growth in 2026," said Lucas Schmitt at Wood Mackenzie.^5,4 Vietnam's gas-fired power plans were supposed to run on a different set of assumptions. Gas was meant to replace coal gradually, with LNG terminals and pipeline infrastructure feeding new thermal plants. The Hormuz crisis has invalidated the price assumptions underpinning those projects. Until LNG supply routes reopen and prices normalise, gas-fired power in Vietnam costs too much to build and too much to fuel.⁶ The demand side is only getting more intense. Power consumption from data centres, electric vehicles, and green industrial parks across Southeast Asia is expected to rise by more than 100 terawatt-hours over the next three to four years, according to a Bain and Company and Standard Chartered report. Meeting that demand will require more than $200 billion in investment, with more than half targeted at data centres.^2,1 But the investment pipeline is unreliable. Only about 60% of the $540 billion in announced green investments across power and EV supply chains in the region is considered likely to proceed. Renewable energy projects in Vietnam, Thailand, and Indonesia have seen 50-60% cancellation rates over the past five years, driven by regulatory uncertainty, permitting delays, and limited grid capacity. Southeast Asia's green economy is currently valued at $290 billion and projected to reach $430 billion by 2030, but the gap between ambition and execution is wide.² Vietnam Electricity Generation Corporation 1 has proposed investing in three floating solar projects on hydropower reservoirs in Lam Dong province with a combined capacity of nearly 270 MW and estimated investment of around $170 million. The projects represent a practical approach to adding clean capacity, but the scale is modest against the country's booming demand.⁸ King coal, as the Economist put it, is dirty and dangerous but far from dead. South Africa's energy transition alone is expected to cost $47 billion, mostly from private investors. Yet progress remains painfully slow across every developing economy that signed up to the Just Energy Transition Partnership. The G7's ambition to accelerate the shift from coal to clean energy is running into the reality that coal is the only fuel that is available, affordable, and scalable when LNG supply falls apart.³ "The longer this war continues, the more shifts we will see," said Andre Lambine at S&P Global Energy. For Vietnam, the shift is already here. The question is whether it becomes permanent. If LNG prices stay elevated through 2027, the economics of gas-fired power in Southeast Asia may never recover to the point where the planned projects make financial sense.⁵