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Overview of Vietnam’s electricity industry

Overview of Vietnam’s electricity industry

Tuesday 08, 03 2022
Hydropower was the electricity industry segment with the strongest growth in Vietnam in 2021. In 2022, the market is anticipated to undergo major changes, with favors leaning towards renewable energy, wind power in particular.

Vietnam’s electricity industry in 2021

According to data from the Electricity of Vietnam (EVN), in 11 months of 2021, the electricity production output of the whole system reached 233.67 billion kWh, up 3.6% over the same period in the previous year.

In particular, electricity produced by EVN and power generation corporations, including joint-stock companies, reached 113.48 billion kWh, accounting for 48.56% of the electricity production of the whole system.

EVN

(Source: EVN)

2021 was a year of hydropower companies in Vietnam when the segment recorded strong growth in revenue and profit. On the contrary, thermal power companies did not share such success.

Hydropower

Vietnam’s hydropower companies had significant growth in 2021. Hydroelectricity reached 72.04 billion kWh, accounting for 30.8% of the total electricity output of the whole system.

A notable example was Thac Mo Hydropower Company, which recorded nearly 750 billion VND in net revenue in 2021, up 69%, and profit after tax reached 363 billion VND, double the level of 2020.

Can Don Hydropower Company, another hydropower company, also announced an increase in profit after tax by 60%, reaching 159 billion VND; net sales grew 28% to 425 billion VND.

Can Don Hydropower Company

Leading in terms of revenue and profit among hydropower companies on the stock exchange is Da Nhim - Ham Thuan - Da Mi Hydropower Company. Accordingly, in 2021, this company earned 2,476 billion VND in net revenue, up 47% compared to the previous year; profit after tax doubled in the same period to 1,374 billion VND and exceeded 113% of the profit target assigned for the whole year.

Coal power and gas power

Contrary to the positive developments of hydropower companies, thermal power companies recorded a slightly unsatisfactory performance in 2021.

Hai Phong Thermal Power Company, which is operating two coal-fired thermal power plants, Hai Phong 1 and Hai Phong 2, ended 2021 with net revenue of 9,026 billion VND, down 17% compared to the same period in the previous year.

Quang Ninh Thermal Power Company has also experienced a gloomy year with net revenue and profit after tax decreasing by 8% and 63% respectively compared to 2020, reaching 8,455 billion VND and 477 billion VND, respectively.

Coal power and gas power

As for gas power, Petrovietnam Power Nhon Trach 2 Company's profit after tax in 2021 reached 534 billion VND, down nearly 15% compared to 2020 results but still exceeding 15% compared to the year plan. Net sales of NT2 grew slightly during the year, but still lower than the increase in the cost of goods, causing gross profit to drop 24% during the period.

Wind power

2021 marked the end of the race for wind power in Vietnam, with 84 plants recognized for commercial operation date (COD), readied to operate before November 1, 2021, and enjoying the FIT incentive, equaling a total capacity of 3,980 MW.

Wind power

In addition, 4 projects did not make the COD, and 62 projects that signed power sales contracts but have not been completed or not yet deployed. Such projects that did not receive the FIT are expected to be transferred to the auction mechanism.

Electricity market outlook for 2022

In the short term, weather conditions will affect Vietnam’s electricity production. The late-coming La Niña will give advantages to hydropower plants in the Southern area for the first half of 2022.

El Niño will possibly return from August 2022 will lower the water accumulation capacity of hydropower plants in the Northern and Central areas. The ability of thermal power plants to continue to be mobilized will be enhanced during this period.

Gas-fired will be competing with renewable power and big thermal power projects. Gas-fired power plants in Vietnam are located mostly in the Southern provinces. Since renewable energy sources are constantly increasing in the same region, gas-fired will compete with this electricity source in the short term.

In the long term, the commitment Vietnam made at COP26 and the draft Power Master Plan 8 will affect the whole electricity market of the country.

Commitment to net emissions to zero by 2050 at COP26 will promote strong investment in liquefied natural gas and renewable energy, especially offshore wind power. That will be a big opportunity for renewable energy companies in the long term.

Power Master Plan 8 emphasizes the role of renewable energy. In particular, from now to 2030, there will be almost no further development of solar power, mainly wind power development. Offshore wind power projects will be promoted in the period from 2031 to 2045.

 

Source: vietnamfinance, VCBS, EVN

Compiled by VietnamCredit

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