This substantial setback has underlined the wide-ranging effects of energy disruptions, impacting various sectors of the economy.

Businesses in northern region have reported losses of up to 10% of their revenues due to these power interruptions. State-owned utility Vietnam Electricity Group (EVN) has projected around US$75 million in lost revenue due to unserved energy during this period.

Vietnam’s power sector has been a crucial driver of its economic growth for the past three decades, contributing to development and widespread electricity access. However, the May-June power outages have exposed vulnerabilities that require immediate attention.

By the end of 2021, 99.8% of the population had had access to electricity. In response to soaring demand, the power sector increased its generation capacity by 16 times, from 5 gigawatts in 2000 to 81 gigawatts in 2023. The transmission network also expanded nearly fourfold during the same period.

Yet, there was a peak demand supply deficit of 5.4 gigawatts in May. The situation improved in June and eventually normalized in July. Power shortages have worsened, as the summer of 2022 saw a peak demand supply deficit of 1.8 gigawatts.

These economic challenges stem from a supply imbalance, with demand growth outpacing capacity in northern provinces. Delays in crucial investments and reliance on hydro and coal-based energy sources have compounded the issue.

While the southern region had a surplus capacity of about 20 gigawatts, transmission limitations hindered its accessibility. Vulnerabilities to climate change and commodity risks were exposed, particularly the impact of the El Nino weather phenomenon on water availability and electricity demand.

The World Bank proposed several solutions, including securing the schedules for power plant commercial operations in 2024 and 2025, expediting investments in power transmission lines, and diversifying supply sources.

Source: Saigon Times