Hydropower will come out of its peak

Dong Nai 5 Hydropower Plant

Impact of the weather

>> What is the outlook for coal-fired power?

According to EVN, 9M22 weather recorded unpredictability with cooler hot season and heavy rainfall even during the dry season. Therefore, hydropower is preferred with high mobilization output thanks to its cheap ASP. Total hydropower output rose 30% yoy to 82bn kWh, grabbing 36.6% total output. Several hydropower plants took advantage from ideal hydrology and record impressive 9M22 business results, named by DNH, VSH, SBH, HNA, TMP and CHP.

“We see a continuation of vibrant output mobilization for hydropower to last through the rest of 2022F following the ENSO estimation from IRI. Accordingly, the La Nina phase will stay to Jan-23 with higher possibility after coming out of its peak and switching to the Neutral phase in 2023F. We see 2022F to be the high-base for hydropower as the La Nina phase has lasted for a higher-than-expected time”, said Mr. Nguyen Duc Tung, analyst at VNDirect.

>> Gas-fired output could improve in 2023-2024

Mr. Nguyen Duc Tung believes the possibility for a longer La Nina phase might be hard to occur. Thus, hydropower likely to deliver lower output into 2023-24F, leaving space for more intense mobilization of other sources. In terms of ASP, he expects the higher band price for thermal power will also drive on higher mobilization price of hydropower in the following years.

Limited growth space

The development prospect of hydropower is no longer available as its exploitation potential is basically reach limit . Excluding the capacity expansion projects, Thuong Kontum – VSH’s power plant (220MW) appeared to be among the last large-medium size hydropower to be built, putting an end for the development of this power source.

“We see the remained room for small hydropower (< 30MW) of around 6,000MW. Small hydropower plant is listed on the RE power category thanks to no fossil input and minimal impact on the surrounding landscape. Although small hydropower depends heavily on weather condition, and poorly water regulation, the power source enjoy 20-30% higher ASP than large hydropower plants due to the government’s avoidable cost policy. We see some of the heavy contestants continue to expand their small hydropower portfolio will take advantage including PC1, GEG, REE”, emphasized Mr. Nguyen Duc Tung.