This article was originally published on Mekong Eye as Creative Commons.
Over the past year, global tech giants like Google, NVIDIA and Microsoft have expressed an interest in investing in data centers in Viet Nam. With many policymakers hopeful about the country becoming a key digital hub in Southeast Asia, some critical questions arise: Can Viet Nam’s power grid support this digital transformation, and at what cost?
Why data centers matter?
Data is often called “the new oil,” a term coined by British data scientist Clive Humby in 2006. Like oil, data must be refined – in this case, processed by data centers – to unlock its value. These digital “refineries” are now the backbone of the modern economy, but they come with a heavy energy price tag.
Technically, a “1 MW data center” means it can draw 1 megawatt (MW) of electricity at any given time to power servers, networking equipment, cooling systems and other infrastructure. A single 100 MW facility could consume as much electricity as 270,000 average Vietnamese households, according to my calculations using EVN data.
.jpg){kind=link}
Globally, data centers account for 1-2% of electricity consumption, and this figure is expected to rise sharply with the growth of AI, cloud computing and digital services. According to the International Energy Agency (IEA), electricity demand from data centers could more than double by 2030, reaching 945 terawatt-hours, more than the entire annual electricity use of Japan.
AI alone is expected to quadruple energy consumption in optimized data centers within six years.
Unlike factories that can shift operations to off-peak hours, data centers run 24/7 and require constant power and cooling. In the US, the IEA estimates data centers could drive nearly half of electricity demand growth by 2030, more than steel, aluminum and cement combined.
Viet Nam’s grid already under strain
Viet Nam now has 51 MW of operational data center capacity, with another 11 MW under construction and 28 MW planned, according to Cushman & Wakefield. Ho Chi Minh City accounts for about 50% of that, with local telecom firms leading the charge.
But a massive expansion is on the horizon: Viettel, a state-owned telecom company, plans to build 24 new data centers across Viet Nam by 2030, totaling 560 MW, a more than tenfold increase. If realized, this would position the country as a major regional hub for cloud infrastructure and digital services.
However, this rapid growth poses serious challenges: Viet Nam’s power grid is already under pressure, especially during the dry season.
Many still recall the widespread blackouts in the northern region during May and June 2023, when an intense heatwave and severe drought drastically reduced hydropower output. These conditions forced the shutdown of major plants, including Sơn La, the country’s largest hydropower facility, leading to widespread blackouts in the north.
The shutdown instantly removed 5,000 megawatts (MW) from the grid, enough to power two million homes for an entire year.
The crisis disrupted industrial zones and manufacturing hubs, exposing how fragile the country’s energy infrastructure was to climate extremes and rising demand. Adding hundreds of megawatts of constant demand from data centers could push the system to breaking point.
The invisible subsidy
Viet Nam’s electricity prices for industrial users are among the lowest in Southeast Asia, due to state regulations and cross-subsidies. Industrial customers, including foreign investors, often pay less than the actual cost of generation, while households, public services and commercial users bear a larger burden.
If multinational tech companies are charged at subsidized rates for industrial users, the difference would be covered by the state and effectively passed on to Vietnamese citizens. This invisible subsidy distorts national priorities and widens inequality.
It also raises a fundamental question: Should ordinary Vietnamese families pay more for electricity so that global corporations can power their AI models and cloud services?
Climate commitments at risk
Viet Nam has made bold pledges under its Power Development Plan 8 (PDP8) and the Just Energy Transition Partnership (JETP) to reduce coal dependency and scale up renewables. But rapidly expanding energy-intensity data centers could complicate these efforts.
The IEA notes that while emissions from data centers will rise, their share of overall emissions can remain small if countries accelerate clean energy deployment. Yet in Viet Nam, renewable energy faces bottlenecks: curtailment, a lack of storage, grid congestion and unclear market signals have stalled many solar and wind projects.
So where will the electricity come from if a 50 MW data center opens tomorrow? Without major grid upgrades and storage deployment, the answer could be more coal or gas, undermining climate commitments.
This challenge is not unique to Viet Nam.
“Where will the electricity come from if a 50 MW data center opens tomorrow? Without major grid upgrades and storage deployment, the answer could be more coal or gas, undermining climate commitments.”
In Singapore, data centers accounted for about 7% of the country’s total electricity consumption in 2020. The government responded by implementing a temporary moratorium on new data centers and introducing stringent energy efficiency standards.
Malaysia has also experienced grid strain and increased fossil fuel use as its data center sector expanded rapidly. The Malaysian government plans to charge a premium for energy and water to data centers to mitigate the environmental impact and encourage the use of renewable energy.
Viet Nam is already on the frontlines of climate change: from saltwater intrusion in the Mekong Delta to record-breaking heatwaves. Siting energy-intensive infrastructure in vulnerable areas adds more risk.
Moreover, in times of scarcity, will schools, hospitals and local communities have to compete with servers for electricity?
Rethinking investment priorities
This is not to say that Viet Nam should turn away foreign investment or digital infrastructure. On the contrary, digital growth presents an important opportunity for economic advancement.
But the country must define the terms under which this growth occurs. Hosting the cloud should not come at the expense of grid reliability, public fairness or climate leadership.
To enable sustainable data center development, Viet Nam needs clear, future-ready policies. First, data centers should be required to procure a significant share of their electricity through direct power purchase agreements (DPPAs) with renewable energy producers.
At the same time, a tiered electricity pricing structure should be introduced to reflect the true cost of supply for large-scale industrial users. This would ensure fairness, reduce cross-subsidization and alleviate the burden on residential customers.
Additionally, robust national standards for energy efficiency, water use and climate resilience are also essential to minimizing the environmental footprint of these energy-intensive facilities. Parallel to that, Viet Nam must accelerate grid modernization and expand transmission capacity from renewable-rich regions to ensure that clean energy can reliably meet growing demand.
Strategic siting is equally important. In my view, provinces like Lâm Đồng, Khánh Hòa, Gia Lai and Quảng Trị offer abundant solar and wind resources that can be harnessed locally to power data centers.
Encouraging development in these areas not only supports the clean energy transition, but also helps ease pressure on the already strained grids in urban hubs like Hanoi and Ho Chi Minh City.
Equally crucial is public engagement. Involving local communities and civil society in decision-making around data center development can ensure transparency, build trust and align outcomes with local interests.
Viet Nam’s appeal as a technology hub is undeniable, driven by its young, dynamic workforce, strategic location and improving infrastructure. But as we build the digital economy, we must also build the foundation for a sustainable energy future.
This is a pivotal moment. Viet Nam must make thoughtful, deliberate choices to shape a digital economy that is inclusive, resilient and green, rather than short-sighted, extractive and fragile.