Vietnam is confronting barriers to energy storage deployment, setting an example for the wider ASEAN region, writes Sunita Dubey.
For years, Southeast Asia’s clean energy transition has been advancing with one critical piece missing: a viable commercial framework for battery energy storage systems (BESS). While renewable energy targets across the Association of Southeast Asian Nations (ASEAN) have grown increasingly ambitious, storage has lagged — not due to technological immaturity, but because markets have failed to properly value the services batteries provide.
The markets are facing a problem in which cost reductions and technological capabilities are advancing faster than policies and regulations.
Vietnam is now solving that equation
With the implementation of Circular No. 62/2025/TT-BCT on 26 January 2026, Vietnam becomes the first major ASEAN economy to introduce a formal two-part tariff structure for BESS. This regulatory shift marks a decisive move away from energy-only compensation toward a framework that pays batteries for both availability and delivery — a model widely recognised in mature storage markets but long absent in Southeast Asia. The implications extend well beyond Vietnam’s borders.
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Storage gap in ASEAN energy transition
Across Southeast Asia, renewable energy capacity has expanded rapidly. Vietnam and Thailand have seen explosive solar growth; the Philippines is advancing wind and solar pipelines; Indonesia and Malaysia are scaling renewable energy ambitions under national decarbonisation plans. Yet energy storage has remained largely underdeveloped.
The challenge has been economic and policy-related, not technical.
Most ASEAN markets compensate BESS solely for discharged electricity, treating them like conventional generators rather than flexibility assets and multi-service infrastructure. This creates several structural barriers:
- Revenue volatility: Storage earns only when dispatched, leaving developers exposed to uncertain income streams.
- Policy ambiguity: Storage often falls between regulatory categories — neither generation nor transmission, thus complicating licensing and market participation.
- Financing constraints: Without predictable cash flows, lenders and investors view BESS and other flexible sources as high-risk infrastructure.
As RE rises, these shortcomings become increasingly costly. Curtailment, grid congestion, and system instability are growing across the region — all issues that storage systems are designed to address but are rarely incentivised to solve.
Vietnam’s two-part tariff is a structural shift
Circular 62 fundamentally alters how Vietnam values BESS by introducing a dual-revenue mechanism:
- Capacity Charge: BESS projects are paid for availability, ensuring predictable and stable income to support recovery of upfront capital expenditure and improve bankability.
- Energy Charge: Additional compensation is provided for electricity discharged, covering operational costs and performance-related expenses.
This structure mirrors established frameworks in advanced energy markets and recognises storage for what it truly provides: reliability, flexibility, and grid support — not just energy.
For Vietnam, the timing is critical. The country faces increasing renewables curtailment, rapid solar and wind integration challenges, and the need to align with its PDP8 Revised commitments. Circular 62 offers a mechanism to unlock private capital while strengthening system resilience.
The importance of BESS value stacking
Globally, the financial viability of BESS depends on “value stacking” — the ability for a battery to provide and be paid for multiple services across the power system.
In mature markets, batteries simultaneously capture value from:
- Energy arbitrage
- Capacity markets
- Frequency regulation
- Ancillary services
- Grid congestion relief
- Reserve and balancing markets
ASEAN markets, by contrast, largely restrict batteries to a single revenue stream. Vietnam’s two-part tariff is therefore significant because it opens the door to multi-layer compensation, even if only partially at first. Over time, this structure can evolve to include additional flexibility services and performance-based payments.
Without value stacking, BESS remains underutilised and financially fragile. With it, batteries become system-wide assets that reduce costs, defer infrastructure investment, and enable deeper renewable energy penetration.
Why Vietnam’s move matters for ASEAN
Vietnam’s reform sets a precedent in a region where policymakers are searching for ways to integrate variable renewables without destabilising their grids. By formalising capacity payments for storage, Vietnam provides a practical model that others can adapt.
This is particularly important as ASEAN enters a phase characterised by:
- High renewable growth paired with limited flexibility
- Rising curtailment losses
- Increasing peak demand volatility
- Delays in grid expansion and modernisation
Without scalable storage deployment, renewable integration across ASEAN will face structural limits. Vietnam demonstrates that regulatory innovation, not technology, is the real unlock.
Market reforms ASEAN will need next
Vietnam’s progress also highlights the reforms still required across the region to unlock full storage value:
1. Clear regulatory classification of storage: Define BESS as a standalone asset class across power laws and grid codes.
2. Capacity-style remuneration mechanisms: Provide predictable revenue streams tied to availability and reliability.
3. Access to ancillary and balancing markets: Allow batteries to compete with thermal assets for frequency and reserve services.
4. Hybrid project integration rules: Enable co-located solar/wind + storage to operate under unified power purchase agreements (PPAs).
5. Standardised contracts and dispatch frameworks: Reduce investor uncertainty and align risk allocation.
Vietnam has implemented the first critical reform: paying BESS for readiness, not just output. The rest of ASEAN now faces a choice — follow early and accelerate the transition, or delay and confront rising grid instability.
Vietnam now leads ASEAN in providing bankable storage economics — a position likely to influence regional regulatory direction.
The road ahead for Vietnam and ASEAN’s energy storage adoption journey
Vietnam’s BESS monetisation framework is more than a national reform; it is a regional signal. As international investors observe the first credible revenue structure for storage in Southeast Asia, pressure will grow for neighbouring markets to follow suit.
The next phase of ASEAN’s energy transition will not be defined solely by how much renewable energy is installed, but by how effectively it is integrated. Storage and the ability to monetise its full value sit at the heart of that challenge.
Vietnam has taken the first decisive step — and the rest of ASEAN is likely to move closer behind.
About the Author
Sunita Dubey is a seasoned climate and energy transition leader with over 25 years of experience. She is renowned for her work in shaping global climate strategy, managing multi-million-dollar portfolios, and forging high-impact partnerships across Asia, Africa, and the Americas to drive inclusive, clean energy solutions.
Read Sunita Dubey’s September 2025 Guest Blog for Energy-Storage.news, ‘Vietnam’s path from zero BESS deployments to meeting ambitious 2030 energy storage targets.’