Energy Security: A Growing Concern
In recent years, the demand for electricity has been on a steady rise. Rapid industrialization and urbanization have put a strain on the current power generation capabilities, prompting continuous efforts and development to meet the growing demand for residential and industrial use. During the period of 2022-2023, GDP growth has outpaced the growth in electricity output, posing a significant risk of power shortage.
The Ministry of Industry and Trade has approved the 2024 National Power Supply and Operation Plan under Decision No. 3110/QD-BCT. According to the plan, the total electricity output from power plants (at the generator terminals) and imports for the entire country in 2024 is projected to be 306,259 billion kWh, an increase of 9.14% compared to the same period last year. If this target can be achieved, energy security will be ensured.
Growth rate of electricity output and GDP during 2013-2024F
(Unit: Percentage (%))
Source: EVN and Ministry of Finance
The total output of the entire system, including both production and imports, has also been growing steadily over the years, with a compound annual growth rate (CAGR) of 8.18% from 2013 to 2023.
Electricity output of the entire system during 2013-2024F
(Unit: Billion kWh)
Source: EVN and Ministry of Industry and Trade
Gas-fired Thermal Power: A Promising Future
The power industry value chain comprises three main stages: production and generation, transmission and distribution, and retail. Production and generation require substantial capital investment, making it a stage that involves entities outside the Vietnam Electricity Group (EVN). Some of the major investors include: Power Generation Corporations (EVNGENCO), PetroVietnam (PVN), and Vietnam National Coal and Mineral Industries Group (Vinacomin).
Transmission and distribution are fully under the management of EVN, as these activities are related to national defense, security, and the protection of national interests as per Decree 94/2017/ND-CP on goods, services, and areas of exclusive state involvement in commercial activities.
In the distribution and retail stage, power generators sell directly to EVN, power corporations, and industrial parks. These entities then distribute to end consumers.
According to Power Plan VIII, the national power development plan for 2021-2030 with a vision to 2045, the power generation structure will undergo a shift towards a gradual reduction in coal-fired thermal power, with a corresponding increase in the share of gas-fired thermal power and renewable energy.
Specifically, electricity from gas-fired thermal sources currently accounts for 8.9% of Vietnam’s power generation mix. This proportion is projected to rise to 20.97% by 2030 and further increase to over 24% by 2045. This outlook bodes well for gas-fired thermal power companies in general and POW in particular.
Vietnam’s Electricity Generation Mix during 2023-2045F
(Unit: Percentage (%))
Source: Power Plan VIII
Corporate Analysis Department, Vietstock Consulting
