ENERGY Industry Snapshot in 2023

The growth of a nation’s economy typically parallels the sustainable development and security of its energy sector. Recognizing the indispensable nature of the energy industry, the Vietnamese government has devoted substantial attention to shape the progress of energy industry to serve as a foundation to fuel the economy forward.  Thus, energy sector could be viewed as an attractive proxy to the promising prospects for the long-term development of the Vietnamese economy. 

Major events: We would like to review a number of major events in 2022 in order to assist investors with an interest in electricity industry be conscious about the current state:

1. 2022 is the first year of full operation for a number of renewables projects, especially wind power (second year for solar), in order to to evaluate their efficiencies under actual geographical conditions in Vietnam.

2. The National Power Plan VIII (PP8), which serves as a framework for Vietnam national energy development over the period 2021-2030, since the initial draft was submitted in Mar 2022, is still under revision and deliberation after nearly a year.  In Dec 2022, the Ministry of Industry and Trade (MoIT) re-submitted the 9th draft PP8 and now awaiting the formal approval.

3. The new price scheme for transitioning renewable energy has been issued.  In spite of disappointing investors and falling short of their expectations, the new price mechanism offers some bright points for the next renewable development phase, particularly wind generation with highest retail price for offshore. 

4. EVN’s report showed that they took an estimated loss of 28,900 bn VND in 2022, and could have incurred even a bigger loss, if had not implemented drastic measures to cut down input costs and optimized the operation of the electricity system, to the extent of rapid surge in fossil fuels input prices including oil, coal and gas, when mobilizing electricity production from thermal group. 

5. 2022 is the unusual third consecutive year of La Nina in the Northern hemisphere, which only occurs three times in fifty years. 

Outlook:  Generally, in the context of long-term effort deteriorating the global greenhouse effect, and the Vietnam’s re-commitments at COP27 to reach net Zero carbon emission by 2050, we anticipate attractive interests will shift towards either renewables such as solar and especially wind power, or less carbon-emitting types energy such as gas turbines instead of coal-fired.  

Nevertheless, in the short-term, on the basis of being impacted by the law of supply and demand of each region as well as the whole country in circumstantial economy, combined with weather conditions, coal-fired still earns an important position in the energy portfolio as a preparation for the energy-transitioning upcoming.