Vietnam Electricity Group (EVN), Vietnam's primary electricity provider, held its annual conference on Jan. 2, to review the past year's performances and announce new objectives. The attention was focused on how to resolve the power shortages issue and whether electricity prices will rise again.
According to EVN's report, Vietnam's electricity generation and imports amount to 280.6 billion kWh in 2023, an increase of 4.56% compared with 2022. However, the northern region faced serious electricity shortages, significantly impacting manufacturing industries and people’s lives. Besides the objective factors of drought, the inadequate ability for power dispatching posed the most challenge for EVN.
Last year, Vietnam faced face high temperatures and droughts, which caused a sharp drop in the proportion of hydropower generation from 35% to 28.8%. Besides that, some thermal power plants failed, and repairs were slow, coupled with insufficient coal supplies, resulting in power shortages in northern Vietnam. Despite renewable energy resources in the southern region being sufficient, the limitation of the transmission grid hindered power-supply to the northern region.
EVN vows no more power shortages
To prevent a recurrence of power shortage issues, EVN pledges to accurately assess and monitor electricity demand, coordinate the construction of power systems in regions, ensure the standardization and optimization of power supply, and guide power plants in comprehensive preparations to mitigate the impact of coal, natural gas, and fuel shortages.
Nguyen Anh Tuan, General Director of EVN, said, "EVN will be more proactive in electricity transactions, especially in renewable energy, following market mechanisms, harmonious distribution of benefits, and risk-sharing principles. We are committed to strict operational discipline, prevent further incidents, and not to waste social resources."
Also, EVN strives to complete 190 projects of 110-500 kV power grids this year, including the Quang Trach - Pho Noi 500kV transmission line project, circuit 3 by June under the direction of the Prime Minister.
However, Nguyen Anh Tuan mentioned the uncertainties of climate impact on hydroelectric power generation and the instability of EVN's finances due to fluctuations in fuel prices and exchange rates, which remain the dilemma of EVN.
Electricity prices are expected to rise again this year
The Vietnamese government increased electricity prices twice within a year in 2023. However, EVN's electricity production and operational costs remain high, despite electricity sales revenue reaching approximately 497 trillion Vietnamese dong (around 207 billion USD), accounting for a growth of 5.4% from 2022, EVN still recorded consecutive second-year losses.
Vietnam encourages private power generation expansion, leading to a steady decrease in EVN's generation proportion, currently accounting for 37.3% of the total power generation. Consequently, EVN has to purchase a large amount of electricity from other power generators. Coupled with government constraints imposed on retail electricity prices, led to EVN's purchasing costs comprised 80% of EVN's retail electricity prices, which is higher than other national electricity companies (around 40-50%). This figure doesn't include expenses for transmission, distribution, operational management, and taxes. Therefore, EVN needs to increase electricity prices as a way to sustain its operations.
Nguyen Hoang Anh, Chairman of Commission for the Management of State Capital at Enterprises (CMSC), stated that without any adjustment of electricity price, EVN's financial losses cannot be resolved. Hence, the government has approved quarterly adjustments in electricity prices, and the adjustment range does not exceed 5%.