In the electricity industry report, SSI Securities Corporation said that electricity consumption growth in November slowed to 2.4% due to the slowdown in export activities and the index of industrial production (IIP). SSI forecasts that electricity demand growth for the whole year 2022 could be at 6.4% and decrease to 5% in 2023.
On the other hand, worsening hydrological conditions, and increased demand for thermal power, while coal and gas prices remain high despite a year-on-year decline and rising lending interest rates are weighing on Vietnam Electricity (EVN). This will have an indirect impact on power plants. If a more severe recession occurs, electricity demand could be negatively affected.
Source: General Statistics Office of Vietnam, EVN
Specifically, SSI cited information from the National Oceanic and Atmospheric Administration (NOAA) showing that hydrological conditions can remain positive until the first quarter of 2023 and reverse in the second half of 2023.
Currently, the water level of the hydroelectric reservoir has decreased slightly compared to the previous month and October 2022. Assuming that in 2023 the probability of less favorable hydrological conditions will be higher, SSI believes that power output from hydropower plants will witness a negative growth of 8% over the same period.
In addition, SSI believes that prices in the competitive generation market (CGM) in 2023 are expected to be flat compared to 2022, equivalent to 1,463 VND/kWh as higher thermal power demand will offset the weakening demand nationwide. Maintaining a high world coal price will benefit coal-fired power plants using domestically-mixed coal.
SSI recognizes risks to existing renewable energy (RE) projects due to competition from new RE projects deployed in the near future with lower selling prices.
Considering the weakening demand across the country, EVN can reduce the efficiency of high-cost energy sources (including old RE projects with high selling prices).
In 2022, EVN recorded a negative business situation due to escalating fuel prices. This may affect debts, and the time of payment of exchange rate difference losses incurred will be delayed, affecting the business situation of power generation companies.
With the above challenges facing EVN, SSI believes that the retail price of electricity may increase in the coming time, thereby reducing pressure on power generation companies.