Song Lo hydropower plant (Photo: VNA) Tuan said electricity production requires natural resources, whichare finite and being depleted, including hydropower. Coupled with the financialchallenges faced by EVN, minor decreases in fuel prices do not have an effectsignificant enough to bring electricity prices down.
According to Tuan typically Vietnam's hydropower outputaccounted for 35% of total output. However, due to droughts in 2023, manyhydropower reservoirs were at dead water levels, resulting in hydropoweraccounting for just 28.4% of total output.
Meanwhile, coal-fired thermal power, which typically accounts for33.2%, managed to account for 46.2% of total output in 2023. Gas turbine andoil-fired thermal power, normally making up 10.3%, accounted for 9.8%. Importedelectricity had a very low share of 1.46%, and renewable energy with aninstalled capacity of 26.9% only achieved 13% in production.
For now, hydropower remains the most stable output but it can onlymeet less than a third of the nation's demand for electricity. Renewable energyremains expensive due to earlier incentive policies, which have driven itsprices as high as 9.35 US cents per FiT1, higher than EVN's electricity retailprices.
"With our output structure, the cost to produce electricitymainly relies on natural resources. As resources are depleting, the cost willincrease. This must be communicated clearly to our customers," Tuan said.
According to EVN, the average total cost of electricitygeneration, transmission and distribution is 2,092.78 VND/kWh, while theselling price is 1,950 VND/kWh.
"Of the 2,092.78 VND/kWh, the production cost of buyingelectricity from EVN units and non-EVN enterprises is approximately 1,620VND/kWh, equivalent to 80% of our total operating costs. In other countries,the cost of buying electricity is typically about 50% compared to the sellingprice, with the remaining 50% allocated to transmission, distribution andoperational management. Meanwhile, we only have 20% for these processes, makingit very difficult for EVN and its units to balance our books," said Tuan.
EVN's efforts to optimise costs and improve savings in recentyears have not produced significant results, at least not enough to address itsfinancial challenges. Therefore, adjustments to retail electricity pricingpolicies in 2024 are necessary to address EVN's financial difficulties.
Total revenue from electricity sales for the entire group in 2023is estimated to reach 497 trillion VND, a 5.4% increase year-on-year. The totalconsolidated asset value of EVN as of the end of 2023 is estimated at 630.53 trillionVND, 94.7% compared to 2022, with equity capital of 201.53 trillion VND, 89.4%compared to 2022.
According to the director-general, Vietnam's total power capacityhas reached over 80,000 MW, an increase of nearly 3,000 MW compared to 2022,with renewable energy exceeding 21,000 MW, making the country the top ASEANrenewable producer.
However, due to management issues, there were shortages in thecountry's northern regions in June last year.
He said the shortages occurred due to various unfavourablefactors, including both objective and subjective reasons. These included a lowpower reserve in the northern region, and the impact of El Nino leading toprolonged drought and reduced water flow to hydropower reservoirs, especiallyin the northern region. Other causes included high demand for supplementaryload, as well as malfunctions in many coal-fired thermal power plants acrossthe system due to the increased water temperature for cooling, extended repairwork, and troubleshooting at some non-EVN coal-fired thermal power plants./.
VNA
