This chapter delves into Vietnam’s energy transition from a coal-based system to increased adoption of renewable resources like wind and solar. We explore historical trends, development barriers and financing mechanisms, pinpointing specific challenges, including ancillary and transmission limits and a non-competitive market, that constrain the use of these abundant resources to generate electricity. This study also innovatively applies dynamic principal component analysis (PCA) to measure the energy transition index in Vietnam and its evolution between 2003 and 2020. The advantages of dynamic PCA are the ability to capture both the cross-sectional and time dimensions of the input factors. Using dynamic PCA, we create an energy transition index revealing a positive, albeit complex, progression towards a greener energy mix. The increasing capacity of renewables and the policy reforms and enhanced investments, both local and international, affirm Vietnam’s ongoing journey to balance energy security, economic growth and environmental sustainability. Despite notable challenges, the collective endeavours of various stakeholders promise a sustainable trajectory in Vietnam’s energy landscape.