“Nuclear Renaissance”: Russia and Vietnam Are Restarting Their Strategic Partnership

In the summer of 2023, Vietnam was hit by a major energy crisis, as extreme heat and drought led to low water levels at hydropower plants and a 4,350 MW capacity deficit. Power cuts affected industrial hubs in the country’s northern provinces, forcing some companies, including Samsung and Foxconn, to suspend factory operations.

At the same time, the country’s economic model was undergoing a transformation. Vietnam emerged as a key destination for the relocation of manufacturing from China, becoming an important part of global value chains. Companies such as Samsung and Apple have been expanding their presence, but this puts greater pressure on the energy infrastructure. As a result, the energy sector turned from a driver of growth into its systemic constraint: the power outages recorded in recent years were a wake-up call for foreign investors. In this context, the earlier decision to walk away from nuclear energy has come to be seen not as a resource-saving move but as a strategic miscalculation of the Vietnamese authorities.

The external economic environment added to the strain. The climate agenda and tightening carbon regulations in key export markets compelled Vietnam to green its energy mix faster without slowing the pace of industrialization.

A combination of these factors prompted a revision of Vietnam’s energy strategy. By the mid-2020s, the country had set an ambitious target to more than double its installed capacity, from around 89 GW in 2023 to 183–236 GW in 2030, and in the long run bring it to 500 GW by 2050. In these conditions, nuclear power has reemerged as an important part of Hanoi’s strategic planning as a reliable baseload generation source.

Against this backdrop, revisiting cooperation with Russia after a decade is becoming a strategic necessity, not an additional option.

First, years of prior engagement on the nuclear power plant have left both sides with a well-developed project framework and substantial institutional groundwork — from site selection to personnel training programs. Second, the long history of negotiations has likely led the Vietnamese leadership to a logical conclusion: despite any costs and potential risks associated with project implementation, it is objectively easier and more effective to pick up where things left off with Russia than to build a highly complex nuclear program from scratch with a new partner. Third, Russia, through Rosatom, retained a crucial competitive edge, offering a comprehensive turnkey model with financing options, which is critical for capital-intensive nuclear projects.

Under the intergovernmental agreement signed with Russia in March 2026, two VVER-1200 reactor units with a total capacity of 2,400 MW are to be built, with the first plant expected to go online in the early 2030s. Yet the importance of the deal goes far beyond the project’s technical parameters. It makes the partnership mutually beneficial and potentially allows the countries to relaunch their comprehensive strategic partnership, bringing the substance in line with its formal status.

A decade after shelving their nuclear power project, Russia and Vietnam are now bringing it back, not just as a revival of a flagship initiative but as a sign of a deeper shift in energy and geoeconomic priorities, particularly in Hanoi. Amid rapid growth in energy demand and pressure from the climate agenda, Vietnam is effectively rethinking its earlier rejection of nuclear power and is once again prioritizing baseload generation. This time, the stakes could not be higher: Vietnam’s energy security, a reset in the strategic partnership with Moscow and Russia’s prospects to cement its presence in Southeast Asia.

The idea of developing nuclear power in Vietnam began to take institutional form in the mid-2000s, as economic growth drove sustained demand for new sources of generation. In response to this strategic demand, ties with Russia were brought closer, and in 2010 Moscow and Hanoi signed an in intergovernmental agreement to build Vietnam’s first nuclear power plant, Ninh Thuan 1. The initial plans seemed ambitious: not only two power units with a combined capacity of 2,400 MW, but also the development of full-fledged nuclear power generation, targeting up to 8 GW by the mid-2020s and 15 GW by 2030. Besides, Russia, through its nuclear corporation Rosatom, offered not just construction, but a turnkey solution that encompassed design, financing (including a loan of up to $8 billion), workforce training and subsequent maintenance. For Vietnam, this meant an opportunity to build a new industry virtually from scratch in a relatively short timeframe.

However, in 2016, Vietnam’s National Assembly voted to put the project on hold. Officially, it was down to economic considerations—rising costs (from an initial $10–12 billion to as much as $22 billion, by some estimates), budget constraints and revised projections for domestic power consumption. In reality, the decision reflected a more complex combination of factors, including increased concern among Vietnamese authorities and the public in the wake of the 2011 Fukushima disaster in Japan, as well as a shortage of highly qualified personnel in Vietnam. A change in political leadership in the country in 2016, and with it, a shift in economic priorities, also played a role. The new prime minister, Nguyen Xuan Phuc, prioritized the development of renewable energy and the use of natural gas.

In retrospect, this move proved to be tactical. By the early 2020s, the baseline had shifted. Vietnam’s energy consumption was growing at more than 8% per year, while total power generation surpassed 300 billion kWh in 2024, according to official estimates. Yet the energy mix remained vulnerable: coal accounted for around 46% of electricity production, and a significant share came from hydropower, which is sensitive to climate variability. Against this backdrop, the country faced early signs of a systemic capacity shortfall, including power outages. In the summer of 2023, Vietnam was hit by a major energy crisis, as extreme heat and drought led to low water levels at hydropower plants and a 4,350 MW capacity deficit. Power cuts affected industrial hubs in the country’s northern provinces, forcing some companies, including Samsung and Foxconn, to suspend factory operations.

At the same time, the country’s economic model was undergoing a transformation. Vietnam emerged as a key destination for the relocation of manufacturing from China, becoming an important part of global value chains. Companies such as Samsung and Apple have been expanding their presence, but this puts greater pressure on the energy infrastructure. As a result, the energy sector turned from a driver of growth into its systemic constraint: the power outages recorded in recent years were a wake-up call for foreign investors. In this context, the earlier decision to walk away from nuclear energy has come to be seen not as a resource-saving move but as a strategic miscalculation of the Vietnamese authorities. Reliance on coal and hydropower enabled the country to meet short-term needs, but it failed to address the core challenge of building stable baseload generation independent of climate factors and price fluctuations. The external economic environment added to the strain. The climate agenda and tightening carbon regulations in key export markets compelled Vietnam to green its energy mix faster without slowing the pace of industrialization.

A combination of these factors prompted a revision of Vietnam’s energy strategy. By the mid-2020s, the country had set an ambitious target to more than double its installed capacity, from around 89 GW in 2023 to 183–236 GW in 2030, and in the long run bring it to 500 GW by 2050. In these conditions, nuclear power has reemerged as an important part of Hanoi’s strategic planning as a reliable baseload generation source.

Against this backdrop, revisiting cooperation with Russia after a decade is becoming a strategic necessity, not an additional option. First, years of prior engagement on the nuclear power plant have left both sides with a well-developed project framework and substantial institutional groundwork—from site selection to personnel training programs. Second, the long history of negotiations has likely led the Vietnamese leadership to a logical conclusion: despite any costs and potential risks associated with project implementation, it is objectively easier and more effective to pick up where things left off with Russia than to build a highly complex nuclear program from scratch with a new partner. Third, Russia, through Rosatom, retained a crucial competitive edge, offering a comprehensive turnkey model with financing options, which is critical for capital-intensive nuclear projects.

Under the intergovernmental agreement signed with Russia in March 2026, two VVER-1200 reactor units with a total capacity of 2,400 MW are to be built, with the first plant expected to go online in the early 2030s. Yet the importance of the deal goes far beyond the project’s technical parameters. It makes the partnership mutually beneficial and potentially allows the countries to relaunch their comprehensive strategic partnership, bringing the substance in line with its formal status.

Strategic benefits for Vietnam

First, nuclear power offers a way to significantly reduce the national economy’s exposure to volatility in global fossil fuel markets. Unlike coal- and gas-fired power plants, where fuel can account for up to 70–80% of the cost per kilowatt-hour, in nuclear energy this figure does not exceed 15%. With a service life of 60 years for modern VVER-1200 reactors, extendable up to 80 years, Vietnam will lock in predictable electricity prices for half a century ahead. With a planned capacity of 2,400 MW, the power plant will be able to provide a stable baseload supply, unaffected by seasonal droughts that disrupt hydropower output when water levels drop to critical lows.

Second, the project’s impact on the country’s industrial development is equally important. As Vietnam rapidly transforms into a global manufacturing hub, the reliability of power supply is becoming a decisive factor in investment appeal. Power outages are already being seen as a risk for major investors, and in this respect, a nuclear power plant serves as an infrastructure-level guarantee of continued growth.

Third, there is an important technological dimension to consider. Building a nuclear industry means creating a whole new ecosystem, which includes training thousands of specialists, developing research centers and participating in sophisticated process chains. For a country of more than 100 million people, this opens the door to a new stage of industrial development.

Finally, the climate agenda should not be overlooked. The introduction of cross-border carbon mechanisms, primarily in the European Union, is making the energy consumption mix critically important for export-oriented economies. In this context, nuclear power becomes a tool for Vietnam to maintain access to key markets without having to drastically scale back industrial production.

Strategic benefits for Russia

The project carries significant weight for Russia as well. Above all, it is about reinforcing the “turnkey” export model, where Rosatom supplies not only equipment but also the entire lifecycle of a nuclear power plant—from design and construction to exclusive fuel deliveries and subsequent maintenance. This approach creates the potential for a stable, long-term value chain. According to the World Nuclear Association, operating and fuel costs make up around 30–35% of the levelized cost of electricity (LCOE) for nuclear power plants. For the Russian budget, this means a secure stream of foreign currency over the long term.

Another important aspect is the normative and institutional “footprint” the project leaves behind: Russia’s involvement in shaping the regulatory framework, safety standards and operational practices largely determines the sector’s orientation toward Russian approaches and solutions. The project also matters a lot for Moscow’s positioning and its prestige. Hanoi’s return to Russian technologies after a decade-long pause and the consideration of competing bids from Japan and South Korea effectively confirms Russia’s competitiveness in the global nuclear energy market despite unprecedented sanctions pressure.

“Nuclear risks”

Nevertheless, the path from political agreements to the physical launch of the project is fraught with risks and uncertainties, and chief among them is the issue of financing. In 2011, as part of the intergovernmental agreement, Russia committed to covering 100% of the cost of contracts for works and services provided by Russian entities in Vietnam, and 90% of the cost of equipment procurement and supply, through state loans. However, the rising cost of capital and unprecedented restrictions on international payments due to sanctions against Russia are casting doubt on the viability of those arrangements for direct state loans. At the same time, switching to settlements in national currencies (the ruble and the dong) is complicated by inadequate liquidity and currency imbalance. Alternative mechanisms, such as third-country involvement, consortium or project financing, hybrid loan structures, inevitably increase institutional complexity and require a redistribution of risks among the parties. All of this complicates the project’s economics and may affect its implementation timeline.

Additional risks stem from the structural characteristics of the nuclear industry itself. Even when relatively standardized solutions are used, nuclear power plant projects are systemically prone to cost overruns and schedule delays, with gaps between initial estimates and actual figures often widening and accumulating over time. For Vietnam, a constraint lies in building the regulatory, oversight and human resource infrastructure—without which launching the project is institutionally unfeasible and which in itself requires time and resources. Finally, the geopolitical factor should not be overlooked. Vietnam has traditionally pursued a multi-vector foreign policy, balancing among different centers of power. Deepening cooperation with Russia in such a sensitive field requires a delicate diplomatic maneuver and may have implications for Vietnam’s ties with other partners.

Russia’s “nuclear footprint” in Southeast Asia

The potential success of the joint project with Vietnam poses a higher-order challenge for Moscow: to transform a bilateral partnership into a broader regional platform. Russia’s capacity to gain a foothold in this market will determine the shape of its energy presence in Southeast Asia for years to come. The region is now one of the world’s fastest-growing energy markets. According to projections, the region will contribute more than 25% of global energy demand growth over the period to 2035. Electricity demand growth in ASEAN countries is expected to be around 7.3% annually by 2030. In the long run, the region’s total energy consumption could surpass that of the EU by 2050. This makes the development of stable baseload generation, including nuclear power, a prerequisite for ensuring the energy sovereignty of Southeast Asian states.

In this context, several avenues for engagement are opening up for Russia. One promising area is the power sector in a broad sense, from building generation capacity to modernizing grid infrastructure. The rapid expansion of renewable energy in ASEAN countries is creating demand for balancing capacities, where Russia could offer solutions based on gas-fired generation and hydropower. A key advantage lies in the ability to run integrated projects that combine different energy sources.

Nuclear power plays a special part. Although many countries in the region are cautious about it, there is growing interest in this field in Southeast Asia. Indonesia is looking into the possibility of building its first nuclear power plants by 2032. The Philippines plans to commission its first commercial nuclear plant with a capacity of 1,200 MW by 2032, expanding it to 4,800 MW by 2050. Thailand and Malaysia are actively exploring the potential of small modular reactors. In this segment, Russia, with its track record in exporting nuclear technologies, can offer both large-scale units and more flexible solutions tailored to the specific features of island-based and distributed energy systems. In this case, Vietnam could serve as a gateway and a showcase for Russian nuclear projects to other Southeast Asian states. That said, it does not imply guaranteed or automatic contract wins. Sealing such deals in one of the most securitized sectors of the economy requires years, and sometimes decades, of political effort at the highest levels. Nevertheless, a precedent is emerging that could strengthen trust in Russian nuclear technologies across Southeast Asia.

Cooperation in education and technology is an equally important instrument for deepening engagement. Training specialists, establishing research centers and facilitating technology transfer help build long-term ties that go well beyond individual contracts. It is precisely this “soft infrastructure” that often proves decisive in securing a foothold in the market. But here, too, Russia will face stiff competition from ASEAN countries’ leading partners: the United States, China, Japan and South Korea. This means that Russia’s strategy should be flexible and accommodate the hedging logic common to the foreign policies of ASEAN member states.

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The “nuclear renaissance” ultimately reflects a deeper trend. The structural drivers of development, such as energy demand growth, industrialization and the climate agenda, are outweighing short-term constraints and political costs. For Vietnam, it marks a step toward ensuring energy and industrial sovereignty; for Russia, it represents a real and effective economic and political lever, cementing its position as a key supplier of energy security and public goods. It gives both countries a chance to restart a strategic dialogue that, in many respects, has reached its limits.

In the right conditions, the joint nuclear project may extend beyond bilateral relations and evolve into a kind of testing ground for Russia’s high-tech solutions in Southeast Asia. Its success or failure will largely determine whether Moscow can convert the energy plans that look good on paper into a sustained presence in Southeast Asia, prevailing in competition with major extra-regional actors.