Energy demand to outpace supply in short term (NTH)
Electricity demand has been growing steadily since 2021 and is expected to surpass domestic output in the short term.
According to VietinBank Securities (VBS), electricity demand in Viet Nam is projected to grow by 8.5 per cent annually in the next five years, mostly coming from manufacturing and construction sectors.
The fast-paced demand is forecast to exceed domestic output by 13.3 billion kWh in 2023 and 27.7 billion in 2025, leaving the country with no choice but to import liquefied natural gas and generate more thermal power to pick up the slack.
VBS did not expect renewable energy to contribute much to the output between 2023 and 2025 as there are still a number of obstacles in the way of green projects. However, the transition to renewable energy has been well underway and this type of energy is expected to take the front seat after 2025.
Vietnam Electricity was concerned that the backup capacity rate would drop steadily after 2023, leading to electricity shortages in the short term.
Specifically, the backup capacity rate is projected to fall to 18 per cent in 2025 with electricity output falling short of demand by 27.7 billion kWh. In the North, the rate is likely to stay as low as 10 per cent during the period.
Mirae Asset said the country has planned to purchase electricity from Laos to fill the supply-demand gap.
To this end, the Nam Mo-Tuong Duong Electricity Transmission Line has been built to transmit electricity from Nam Mo Hydropower Plant to Viet Nam. The line has reached 91 per cent of its completion and is slated to operate in November.
On the bright side, electricity producers raked in huge profits in Q3/2022 on the back of the mounting power demand.
Mien Trung Power Investment & Development JSC (HNX: SEB) made revenue of VND66 billion, up 50 per cent year-by-year. Its after-tax profit hit VND31.3 billion, soaring over one-hundred-fold against last year.
Nuoc Trong Hydropower JSC (HNX: NTH) followed suit with an after-tax profit of VND10.4 billion, over twenty times higher than the figure in 2021. A Vuong Hydropower JSC was riding high with earnings of VND180 billion, nearly fourfold more profitable than that of the previous year.
Vinh Son-Song Hinh Hydropower JSC (HOSE: VSH) earned VND220 billion, in contrast to Q3/2021 when it was running at a loss of VND42 billion. Pha Lai Thermal Power JSC (HOSE: PPC) posted a net profit of VND155 billion, against a loss of VND35 billion in Q3 last year.
Other producers that made big money in Q3 amid rising power demand include Hai Phong Thermal Power JSC with an after-tax profit of VND41 billion, Quang Ninh Thermal Power JSC with VND147 billion, Ba Ria Thermal Power JSC with VND86.5 billion, and Thac Ba Hydropower JSC (HOSE: TBC) with VND105 billion.
ACB Securities said energy security is a top priority for the Vietnamese Government since the energy sector is the country's engine of growth.
The company also said the sector's outlook is bright in the short term thanks to firms' post-pandemic recovery.