The $2.2bn power plant is planned to be built in the Hai Chau and Hai Ninh communes in Hai Hau district, Nam Dinh province, and under the build-operate-transfer (BOT) basis for 25 years.
ACWA Power chief investment officer Rajit Nanda said: "This agreement is an important stepping stone for our first project in Vietnam."
"We acknowledge the support of the Ministry of Industry and Trade for this project, and believe that this marks the start of a long and fruitful relationship between ACWA Power and Vietnam."
Scheduled to be commissioned in mid-2016, the thermal project will use coal as fuel to generate electricity which will be supplied by state coal mining group Vinacomin.
Separately, ACWA Power and China-based Silk Road Fund have signed a memorandum of understanding (MoU) to jointly explore investment and power project development opportunities in the UAE, Egypt and across the region.
Under the terms of the MoU, the firms will co-operate on projects including the 1,200MW Hassyan clean coal power plant project in the UAE, as well as the 2,250MW Dairut combined cycle power project in Egypt.
Additionally, ACWA Power will be responsible for the implementation and development of the projects while Silk Road Fund will make equity investments in the projects.
Silk Road Fund will also provide the debt financing for the projects.
