VietnamCredit
VietnamCredit About Us Cafe€redit Contact Us
Login
0
USD
Go to cart
Checkout
Vietnam’s energy sector: Solar power starting to level off after strong growth

Vietnam’s energy sector: Solar power starting to level off after strong growth

Thursday 06, 02 2020
According to forecasts by the Columbia University's International Weather Research Institute, El Nino will be weakened in late 2019 and early 2020.
The government has issued a draft on solar energy price for the coming years, in which the electricity price is significantly reduced, leading to a slowdown in investment in solar power, Bao Viet Securities Joint Stock Company (BVSC) commented.

EVN's commercial electricity output has maintained a growth rate of 9-12% since 2014 and is forecast to increase by an average of 10% in the next two years. However, the growth rate of installed capacity of the whole system cannot keep pace with the growth rate of electricity demand.

In 2019, the installed capacity is expected to increase by about 15% over the same period, but most of the increase in capacity comes from solar and wind power which generate much lower commercial output in comparison with thermal power plants (specifically, solar power plants produce about 2 million kWh / 1MW, wind power plants produce about 2.8 million kWh / 1MW and thermal power plants produce about 6-7 million kWh / 1MW).

If the installed capacity is adjusted according to the generation capacity, it will increase by only 7.8% in 2019, lower than the increase of electricity demand of 10.4%. Therefore, it is likely that EVN will need to increase mobilization from oil plants with very high costs and increase electricity imports, but the risk of electricity shortage still exists if incidents occur in plants with large capacity.

15 out of 19 hydropower enterprises report profit reduction

From the second half of 2018, El Nino has had a significant impact on the Central and Central Highlands regions, making rainfall in these areas much lower than the average. Water level in many hydroelectric reservoirs is lower than dead water level and the plant cannot operate. According to EVN, the water level is more than 29 billion m3 lower than the normal level, leading to the shortage of electricity output of 12.5 billion kWh. Unfavorable weather conditions have made the business results of hydropower enterprises plummet over the same period with 15 out of 19 hydropower enterprises reporting decreases in revenues and profits.

According to forecasts by the Columbia University's International Weather Research Institute, El Nino will be weakened in late 2019 and early 2020. However, the low rainfall during the rainy season in 2019 makes hydroelectric reservoirs fail to store water, causing difficulties for hydropower businesses until at least the first half of 2020.

Solar energy is growing fast but is starting to level off

By the end of 2018, Vietnam has a number of solar plants with a capacity of less than 100MW. However, in the first half of 2019, solar power has made a great leap forward with a total installed capacity of 4,464 MW by the end of June 2019 and is expected to increase to 5,100 MW by the end of the year.
This is due to the fact that plants are putting great effort into grid connection before June 30, 2019, when the preferential policy under Decision 11 of the Prime Minister is still effective (except for Binh Thuan and Ninh Thuan, where the preferential time is extended until June 30, 2020). Currently, the government has issued a draft on solar energy price for the coming years, in which the electricity price is significantly reduced, leading to a slowdown in investment in solar power

Using coal mix helps thermal power plants have enough raw materials

Since the end of last year - early this year, the lack of coal resources has caused many thermal power plants having insufficient raw materials, so they could not take advantage of generation capacity when the electricity price soared, even plants had to temporarily stop operating in some units.
To solve the problem of coal and electricity shortage, the Prime Minister and the Ministry of Industry and Trade allowed Vietnam Coal and Mineral Group (TKV) and the Northeastern Corporation to import coal to mix with domestic coal for power generation purposes. This has helped most plants have enough resources to produce power. Although the price of imported coal is about 5-10% higher than domestic, this has not had any significant impact on the business results because coal price is transferred to electricity price in accordance with the contracted output. 
In addition, the world coal prices are in a strong downward trend when in Australia, it fell by 44.5% in late September compared to its peak in July 2018. According to a forecast compiled by Bloomberg, coal prices are expected to stabilize next year. Import coal price has a lag due to bidding time, so the price of imported coal in the recent period has not decreased as fast as the world’s but it is expected to decrease in the near future. This will help thermal power plants increase their competitiveness in the market, thus increasing profits.
 

You may also like

The construction sector to robust in the coming years
Thursday 06, 02 2020

The construction sector to robust in the coming years

The stable growth of the economic development, the sharp increase of the...
Highlights of Vietnam's electricity market in 2020 and future outlooks
Thursday 17, 09 2020

Highlights of Vietnam's electricity market in 2020 and future outlooks

Although electricity sectors in Vietnam are facing challenges due to climate...
0
0
+84 981861066