EU and Vietnam Advance €430M Green Energy Partnership for Bac Ai Hydro Project

The European Commission and Team Europe partners have announced a €430 million financing package to advance Vietnam’s Bac Ai Pumped Hydro Storage Project, a flagship investment under the Just Energy Transition Partnership (JETP). The announcement was made during the Global Gateway Forum, following a meeting between EU Commissioner Jozef Síkela and Vietnam’s Deputy Prime Minister Bùi Thanh Sơn.

The initiative marks a major milestone in EU-Vietnam energy cooperation, strengthening efforts to accelerate the country’s clean energy transition, enhance power grid stability, and reduce carbon emissions.

A Cornerstone for Vietnam’s Energy Transition

The Bac Ai Pumped Hydro Storage Project—one of Vietnam’s largest energy infrastructure undertakings—will provide the flexibility and reliability required for large-scale integration of renewable energy sources, particularly solar and wind. The project is essential for balancing supply and demand in Vietnam’s fast-growing energy system, enabling the country to reduce dependence on fossil fuels while ensuring energy security and grid resilience.

Commissioner Síkela underscored the project’s importance in realizing Vietnam’s climate commitments:

“The Bac Ai project is a cornerstone of our joint efforts to build a cleaner, more reliable energy system that supports sustainable growth and attracts private investment. This demonstrates Team Europe’s determination to deliver on Vietnam’s Just Energy Transition Partnership. Through Global Gateway, we are turning commitments into concrete results for people, the planet, and our shared prosperity.”

Advancing Vietnam’s Just Energy Transition

The Just Energy Transition Partnership (JETP), co-led by the European Union and the United Kingdom, was launched to help Vietnam move toward a greener and more resilient energy system. It supports the government’s target to achieve net-zero emissions by 2050 and to rapidly scale up renewable generation while phasing down coal-fired power.

Under JETP, international partners, including Team Europe, are mobilizing more than €2.8 billion in combined public and private financing for Vietnam’s energy transition. The partnership not only supports energy investments but also helps design policy frameworks, technical assistance, and workforce upskilling to ensure a fair and inclusive transition.

The Bac Ai project embodies this approach, providing large-scale energy storage that allows renewable generation to expand without compromising system reliability. Pumped hydro storage acts as a natural battery—storing energy during periods of excess generation and releasing it during high demand—thereby stabilizing the grid and enhancing efficiency.

Team Europe’s Coordinated Effort

The financing package represents the collective strength of Team Europe, bringing together the European Union, Member States, and their development finance institutions. Key contributors include:

• European Union (EU) – providing grants and technical support under the Global Gateway strategy.

• EIB (European Investment Bank) – Europe’s public bank financing climate and infrastructure projects.

• AFD (Agence Française de Développement) – leading France’s development cooperation efforts.

• KfW (German Development Bank) – supporting sustainable infrastructure and climate projects.

• CDP (Cassa Depositi e Prestiti) – Italy’s national promotional institution.

• PROPARCO – the private sector arm of AFD, focusing on sustainable private investment in emerging markets.

Through this coordinated financing model, Team Europe ensures high environmental, social, and governance (ESG) standards, promoting long-term, sustainable growth over short-term gains.

Deepening the EU–Vietnam Partnership

The Bac Ai project builds on an expanding EU–Vietnam partnership in sustainable development, particularly through the Global Gateway initiative. Between 2021 and 2027, the EU’s direct financial commitment to Vietnam totals at least €293 million, complementing broader Team Europe investments exceeding €2.8 billion in the Just Energy Transition Partnership.

Additional regional programs focus on green energy connectivity, including integration with the ASEAN Power Grid, which aims to create a more interconnected and resilient Southeast Asian energy network.

Global Gateway: Europe’s Vision for Sustainable Investment

The Global Gateway Forum, where the announcement took place, gathers leaders from governments, financial institutions, civil society, and the private sector to promote sustainable, high-standard infrastructure investment.

Global Gateway is the European Union’s global investment strategy, designed to mobilize up to €300 billion by 2027 across digital, energy, transport, health, and education sectors. The initiative aims to close the global investment gap while fostering “lasting links, not dependencies.”

A Shared Commitment to Clean Growth

The Bac Ai Pumped Hydro Storage Project is not only a landmark in Vietnam’s green transition but also a symbol of international solidarity in tackling climate change. By aligning finance, policy, and innovation, the EU and Vietnam are creating a model for sustainable energy partnerships that balance economic growth with environmental responsibility.

As Vietnam continues to expand its renewable energy capacity, the Bac Ai project stands as a beacon of progress, reflecting the shared vision of a decarbonized, inclusive, and sustainable future for both nations and the broader Indo-Pacific region.