Vietnam may increase electricity prices next year

02/04/2019 | Market news
The Ministry of Industry and Trade and Vietnam Electricity (EVN) are saying that pressure’s increasing to raise power prices in 2019.
Power 1543720201 5210 1543720210 680x0
Power 1543720201 5210 1543720210 680x0

Speaking at a meeting Friday on the production of EVN, the country's biggest power producer, Nguyen Anh Tuan, head of the ministry's Electricity Regulatory Authority, said his agency is developing a power supply plan for 2019, which includes four different scenarios based on the predicted growth rates of electrical load as well as the predicted amount of water received by hydropower plants.

In all scenarios, the total electricity generated by coal-powered thermal power plants would increased by 116 million kWh, putting pressure on EVN to increase electricity prices.

"In 2019 we can still guarantee there will be enough electricity, but during times of tension on our generators we would have to mobilize oil factories. We are still developing a plan but we would like to request consumers to save electricity," Tuan said.

Furthermore, it is forecast that next year, hydropower plants' reservoirs would receive much less water and the supply from Vietnam's gas fields is also declining.

Tuan has therefore instructed EVN's coal suppliers to consider imports in calculating the amount of fuel they can supply.

Speaking at the meeting, Dinh Quang Tri, acting general director of EVN, asserted that in terms of total electricity output, EVN is capable of supplying enough electricity for the next two years but pricing will be a problem.

According to Tri, the total output of hydropower plants is estimated to decrease by nearly 4 billion kWh so EVN would have to increase the output of thermal power plants powered by coal and oil.

As the cost of each kWh of electricity generated from oil is nearly VND5,000 ($0.2), while the current electricity price for households is only VND1,720 ($0.13) per kWh, this will cause significant loss to the utility, he claimed.

Tri also said that EVN is considering 4-5 different options for electricity prices next year, which would soon be submitted to the Ministry of Industry and Trade.

Another factor that could affect electricity price in 2019 is a 5 percent increase to coal prices that would come into effect this month, Tuan said.

"Coal accounts for a significant proportion of electricity's production cost so this exerts a huge pressure on the electricity industry. When developing a scenario for electricity prices we have to take all these costs into account."

Additionally, the growth in electricity demand in Vietnam is still above 10 percent and is skyrocketing in some areas, posing yet another pricing challenge next year. To counter this, Tri has proposed that households install solar panels on their roofs.

According to his calculations, if each household installs panels capable of generating 3-5 MW, they would have enough electricity for their daily lives.

"Promoting home solar power will partially solve the issue of electricity shortage in the south," Tri said, adding that he hopes the government would soon issue relevant regulations so EVN could develop deployment plans, determine prices and technical standards of solar panels for consumers to install.

Vietnam currently relies largely on hydropower and thermal power plants for its electricity needs. However, its hydropower potential is almost fully exploited and its oil and gas reserves are running low. Thermal energy is expected to account for over 48 percent of the country’s power production next year.

Vietnam, one of Asia’s fastest-growing economies, has been struggling to develop its energy industry.

World Bank country director for Vietnam Ousmane Dione said at a recent forum that Vietnam will need to raise up $150 billion by 2030 to develop its energy sector.

Dione added that electricity demand in the country will grow by about 8 percent a year for the next decade, Reuters reported.

Source: VNExpress

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