Innovating energy systems: Economic paradigm shifts and policy architectures for power market reform in Vietnam

The global transition to sustainable energy is critical for achieving development goals and addressing climate change. Beyond technology, economic paradigm shifts are now seen as essential to reshaping power markets and accelerating this transition. This paper explores key economic transformations driving the shift, focusing on innovative financial mechanism such as green bonds, blended finance and de-risking tools that mobilize capital for clean energy. It also examines the role of carbon pricing instruments like Emissions Trading Systems in incentivizing decarbonization and the rise of decentralized business models, including Virtual Power Plants and Energy-asa-Service and their implications for market structures and revenue streams. Drawing from international case studies and a review of current literature, the study identifies effective policy frameworks and financing strategies. Applying these insights to Vietnam’s energy context, it offers targeted recommendations to attract investment, reform power market design and strengthen the green finance ecosystem. This research contributes to a deeper understanding of the economic levers vital for enabling a sustainable, inclusive and resilient power sector aligned with Vietnam’s net-zero goals.